CPA's may find it useful to review the results of the annual Plan Sponsor survey conducted by Plan Sponsor magazine - the survey was answered by some 5,000 plan sponsors of various sizes. Some useful comparative statistics are included in the survey results write-up.
http://www.plansponsor.com/MagazineArticle.aspx?id=6442456027
Do not pay much attention to the charts of vendor ratings - many of the good vendors do not have enough responses sent in to show up on the survey and in some cases I suspect a certain amount of "ballot box stuffing" going on by some vendors through active campaigns to get their clients to answer favorably.
Monday, November 30, 2009
Friday, November 6, 2009
2009 and 2010 Safe Harbor Cross Tested Basic Mathematics
For a business owner over age 50, one of the best designs for a 401(k) Plan where there are a number of younger employees (as compared to the age of the owner), would be a Safe Harbor Cross Tested 401(k).
Consider making a 4.42% of pay contribution for the non-owners consisting of a 3% Safe Harbor and a 1.42% additional Profit Sharing.
This will allow the business owner to do $22,000 in Salary Deferrals plus $32,500 in Profit Sharing for the $54,500 limit. This assumes the business owner is making over $245,000 in salary or income after all contributions and that the allocations pass certain discrimination testing based on projected benefits.
See this very small case study
http://www.401kacademy.com/401kpdf/shctsmallhighearnings.pdf
Should the owner be able to afford more than the $54,500 for themself and the 4.42% contribution for the support staff, consider using a 401(k) Cash Balance Combo Plan where an owner in their 50's might be able to put away an additional $100,000 to $180,000 depending upon their age.
Submit census information consisting of name, date of birth, date of hire, ownership and annual compensation estimate to paul.carlson@plandesign.com for an illustration of what can be done.
Consider making a 4.42% of pay contribution for the non-owners consisting of a 3% Safe Harbor and a 1.42% additional Profit Sharing.
This will allow the business owner to do $22,000 in Salary Deferrals plus $32,500 in Profit Sharing for the $54,500 limit. This assumes the business owner is making over $245,000 in salary or income after all contributions and that the allocations pass certain discrimination testing based on projected benefits.
See this very small case study
http://www.401kacademy.com/401kpdf/shctsmallhighearnings.pdf
Should the owner be able to afford more than the $54,500 for themself and the 4.42% contribution for the support staff, consider using a 401(k) Cash Balance Combo Plan where an owner in their 50's might be able to put away an additional $100,000 to $180,000 depending upon their age.
Submit census information consisting of name, date of birth, date of hire, ownership and annual compensation estimate to paul.carlson@plandesign.com for an illustration of what can be done.
Retirement Plan Limits for 2010 same as for 2009
Limits for 2009 and 2010 are the same
Salary deferrals if under age 50: $16,500
Over age 50 (by last day of the Calendar Year) Make-up contribution: $5,500
So, salary deferral limit for someone age 50 or more: $22,000
Annual Additions Limit (from all sources): $49,000
If over age 50, maximum Annual Additions limit: $54,500 (assuming $5,500 in deferrals)
Compensation that can be counted for plan purposes: $245,000
For more limits, see http://www.401kacademy.com/401kpdf/limitationschart.pdf
Salary deferrals if under age 50: $16,500
Over age 50 (by last day of the Calendar Year) Make-up contribution: $5,500
So, salary deferral limit for someone age 50 or more: $22,000
Annual Additions Limit (from all sources): $49,000
If over age 50, maximum Annual Additions limit: $54,500 (assuming $5,500 in deferrals)
Compensation that can be counted for plan purposes: $245,000
For more limits, see http://www.401kacademy.com/401kpdf/limitationschart.pdf
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