RETIREMENT PLANNING
The 412(i) plan is a tax-qualified, defined benefit pension plan for most business owners and their key executive employees that must be funded with a combination of life insurance and annuities, or annuities alone. The guarantees of the 412(i) plan are derived from the life insurance and/or annuity contracts that are used to fund it and are dependent on the claims paying ability of the issuing life insurance company.
Generally, if you're in your peak earning years, the 412(i) defined benefit pension plan may be desirable, particularly if you:
1.) Are 45 years of age or older
2.) Own a small company or professional practice with five or fewer employees that's highly profitable, and have a steady revenue stream and cash flow, since level annual or more frequent contributions to the 412(i) plan are required
3.) Have a substantial tax liability and want a potentially significant income tax deduction each year
Retirement planning for the most part in today’s market presents many challenges for business owners. The values of assets in 401(k) plans, profit sharing plans and stock market investments may have significantly declined. Even with recent value changes in the U.S. equity markets, many investors worry because the value of their “nest egg” is not what they thought it would be.
When it comes to planning for a secure future as a successful business owner, you are probably concerned with:
■ Maximizing retirement contributions
■ Maximizing retirement contributions
■ Minimizing current income taxes
■ Having life insurance protection
■ Offering guaranteed retirement benefits for yourself and your employees
A 412(i) plan may be appropriate for your business if:
■ It is a sole proprietorship, partnership, LLC, S Corporation or C Corporation
■ If you are a professional or a small business owner
■ You or your key employees are over 50 years old
■ You have ten or fewer employees
■ You and your employees are in your peak earning and tax-paying years
As a business owner you must meet the following requirements to qualify for a 412(i) plan:
THE NEED
Business owners have an array of retirement planning options. However, determining which one offers the opportunity you need to help achieve your retirement goals in a cost-effective and easily administered way can be a challenge. Traditional qualified retirement plans are funded with tax deductible business dollars, but may not allow you, the business owner, to contribute as much as you would like. Non-qualified retirement plans, unlike 412(i) plans, use after-tax dollars, and offer virtually unlimited funding, but does not offer tax deductions.
If you are looking for the ability to contribute more pre-tax dollars than is possible with traditional retirement plans, a 412(i) plan may be a great option.
A SOLUTION
We offer a suite of products and services to implement your plan.
■ Choices in administration – When using our products in a 412(i) plan, you may use your own TPA or, if you do not have a relationship with a TPA, we can coordinate the process for you. We have conveniently packaged the work flows and arrangements to streamline the administration process that occurs between the carrier, the producer and your TPA.
■ Choices in life insuranceproducts – We offer a broad spectrum of traditional whole life insurance and fixed annuity
■ Consistently high financial strength ratings – Since 412(i) defined benefit plansare guaranteed, be sure they are backed by a company that is extremely strong like a mutual company that has consistently maintained strong financial ratings.
THE BENEFIT
A 412(i) plan can be a powerful retirement planning tool because of the many benefits it offers:
■ Current income tax deductions for the employer
■ Valuable life insurance protection
■ Dividends can be used to reduce future contributions
■ The participant may elect to take over the permanent life insurance policy upon retirement
Please contact us for more information today