Retirement Plans

At Applied Asset Management, our technical knowledge of retirement plans allows us to address plan design issues, perform plan and cost analyses, and present custom strategies designed to fit your personal and business objectives. Covering the full spectrum of retirement plans, we help you determine an appropriate solution for your business, whether that is a 401(k), 403(b), SEP IRA, Simple IRA, defined benefit plan or profit sharing plan. Our advisors have obtained the Pension Plan Consultant (PPC) designation which demonstrates our knowledge of ERISA requirements for employer-sponsored retirement plans and show the ability to carry out plan services with a fiduciary standard of care.

Client A owns a S-Corporation with 25 employees who came to us looking to reduce their tax liabilities and improve the retirement plan benefits for their employees. This client currently offered a Simple IRA plan , which limited the amount both the employees and employer could contribute to just $13,000 per year.

After our initial consultation, we found that the business owner and spouse were receiving nearly $900,000 per year in K-1 distributions resulting in a significant personal tax liability. We recommended terminating the Simple IRA plan and implementing a 401k retirement plan with profit sharing to help maximize owner contributions and tax deferment. We also recommended that Client A offer a defined benefit plan which allowed them to defer another $236,000 per year in retirement savings. All told, client was able to reduce their K-1 distributions from $900,000 to approximately $550,000 resulting in an approximate tax savings of $130,000 per year.

Client B is a sole proprietor working in a service industry who was referred to us by another client. Client B’s gross revenues from their business were approximately $200,000 per year with a net business income of around $160,000. Client is married with 3 children and had been contributing to a SEP IRA per the recommendation of his accountant.

After reviewing his tax returns and overall financial picture, we recommended client stop contributing to his SEP IRA and instead open a Solo 401k account which would allow him to contribute up to $56,000 per year (combined 401k contribution plus profit share) versus his previous amount of $40,000 in his SEP. Because SEP plans cap contribution limits to 25% of income ($160,000 x 25%) client was able to save an additional $16,000 per year pre-tax in a solo 401k vs a SEP-IRA.

*These results are for illustrative purposes only and should not be deemed a representation of future results. Circumstances, solutions, and/or results are based on specific facts tied to unique client situations. Favorable results cannot be guaranteed even in a similar scenario. Each specific set of circumstances will differ depending on client needs and profile. Actual results may be more or may be less than those shown. Past performance does not guarantee future results. This assessment is that of the writer, and not the recommendations or responsibility of Cetera Advisor Networks LLC or its representatives.