Cash Balance Plans The Ultimate Hybrid

Retirement Plansfor

High Income Partners & Business Owners

Ken GoldmanSemi – Retired

former business owner

Are You Ready to Start Looking for Work Again

at 70?

Options

Survey Question

Do you know what an Pension Actuary does?

Survey Question

Do you feel that your corporate plan will provide enough money

for your retirement?

Mark DunbarFounder

There are two basic retirement plans

Defined Contribution• 401(k)• Employees contribute• Employer matches a

percentage• Unknown payout at

retirement• Self‑directed

Defined Benefit Plans

• Employer Sponsored• Original Pension Plan• The benefit (or the amount

paid out at retirement) is predetermined

• Does not depend on the employees’ contribution

Cash Balance Plans• Not Well Known• Different contribution levels

for owner vs. ‘rank and file’• Bankruptcy Protection• Clearly defined liability• Timely contribution

changes are possible

Cash Balance Plans allow for highly compensated staff to defer up to $250,000 annually.

Hybrid Cash Balance PlansDefined Contribution

Plan Defined Benefit Plan+

Hybrid Retirement

Plans

You can save up to $2.5 million

in 10 years

Tax Deferred IncomeAnnual Income of $400,000 –

the top $100,000 tax breakdown

• $100,000 – Gross Income

• ( 39,600) – Federal Tax (39.6%) the top tax rate

• ( 3,300) – Indiana State Tax (3.3%)

• ( 2,900) – Medicare Tax (both sides 2 x 1.45%)

• $ 54,200 – Take Home Pay

After Tax vs. Pre Tax Investment

$54,200 ---- 10 years @ 5% ------------ $88,300$100,000 ---- 10 years @ 7% --------- $196,700

220% Increase

Would you rather pay the money to taxes?

or

Accumulate interest on the money you would have paid to taxes.

History of Retirement Planning

1875 1913 1926

American Express Companyestablishes the first private pension plan

Congress enacts the first federal income tax law

The Revenue Act of 1926 exempts trust income coming from pension plans from an employee’s current taxable income.

1935 1974 1978

Social Security is enacted, establishing age 65 as thenormal retirement age

The Employee Retirement Income Security Act of 1974 (ERISA)

The Revenue Act of 1978 establishes 401(k) plans

2012 2016

Cash Balance Plans make up 25% of all defined benefit plans

Proposed IRS Regulations

The Pension Protection Act of 2006 (PPA) is enacted

2006

40.1 million Americans are covered by defined benefit plans and 60.4 million Americans are covered by defined contribution plans

1999

US Life Expectancy (1900 – 2010)

1900 1910 1920 1940 1950 1960 1970 1980 1990 2000 20100

10

20

30

40

50

60

70

80

90

4648

54

58

66

7071

7475

7778

Attorneys

• Insert a three partners

Three Partners

Without a Plan

Cash Balance Plans jumped 43%

$1 Trillion Nationwide

Firms with 25 or less employees have the majority of Cash Balance plans

SQUEEZE 20 YEARS INTO 10

Older Owners can squeeze 20 yrs of retirement savings into 10 yrs by utilizing Cash Balance plans.

$700,000 401(k) + $2,500,000 Cash Balance

$3,200,000

Dentist case Study #1

Retirement in Ten Years plus the Sale of a Business

$1 MillionExit

Strategy

Perpetuity Plan

Are You Ready to Start Looking for Work Again

at 70?

Your Choice…

The No Downside Offer

A comprehensive review of your current retirement planAt No Charge

9 times out of 10We improve benefits after a review

Dust Off Your Plan

Call Mark Dunbar(412) 263-0102

mdunbar@dbzinc.comrevisitmy401k.com

A copy of this presentation can be down loaded on the website.