types of plans and illustrations

We offer all design, document and administrative services for the following types of retirement plans.

Click on Plan Type for Illustration:

• Defined Benefit		- Highest tax deductible contribution The contributions for Defined Benefit Plans are calculated based on the employees' ages and compensation. The older the employee and the more compensation (up to IRS compensation limits) the larger the contribution required for the employee.

• Cash Balance		- One of the highest tax deductible contributions The contributions for Cash Balance Plans are based on the employees' ages, compensation and employee classes. In general, the older owners or key employees are put into classes and receive a much larger contribution than other employees. This is the case even if the other employees are close in age to the owners.

• Cross-Tested		- Allows varying contribution levels among classes of - employees The contributions for Cross-Tested Plans are based on the employees' ages, compensation, employee classes and the percent of contribution decided by the employer.

• 401(k)		- Maximum flexibility in employer contribution A 401(k) Plan allows employees to defer pretax dollars for their own retirement savings. These plans can be set up with or without an employer match and, in addition to a match, can allow a discretionary employer contribution each year.

• Profit Sharing		- Maximum flexibility in employer contribution A profit sharing plan allows an employer (at the employers' discretion) to contribute and deduct from 0% to 25% of covered payroll each year.

• Money Purchase		- Fixed contribution A Money Purchase Plan allows an employer to contribute and deduct up to 25% of covered payroll per a fixed formula contained in the plan document.

• Target Benefit		- Favors participants close to retirement The contributions for Target Benefit Plans are calculated based on the employees' ages and compensation. The older the employee and the more compensation (up to IRS compensation limits) the larger the contribution required for the employee.

Illustration note: The numbers of participants included in the illustrations were limited for simplicity and comparability. However, all of the plans are able to serve from one to hundreds of participants.

DEFINED BENEFIT PLAN
ILLUSTRATION

(Provides the Highest Contribution and Tax Deduction)

The contributions for Defined Benefit Plans are calculated based on the employees' age and compensation. The older the employee and the more compensation (up to IRS compensation limits) the larger the contribution required for the employee. These plans are not subject to the 25% employer deduction or participant contribution limitations.

Defined Benefit Plans (DBP) work especially well with owners or key employees more advanced in age than the other employees. DBP's can even be set up for single employee businesses. The plan can be used with any number of owners, key employees and other employees. The following is only one example of how this type of plan can benefit your company:

SUMMARY OF CONTRIBUTIONS
Employee	Age	Compensation	Annual Contribution	Contribution as % of Total
Owner	60	$205,000	$144,034	90.1%
Employee 1	40	40,000	7,074	4.4%
Employee 2	35	35,000	4,371	2.7%
Employee 3	30	30,000	2,707	1.7%
Employee 4	25	25,000	1,656	1.1%
Total Contribution			$159,842	100.0%

SUMMARY OF TAX SAVINGS
Total Contribution for Owner		$144,034
Total Contribution & Deduction	$159,842
Less: Estimated INCOME TAX SAVINGS	- 71,929
Net Cash Paid Out	$87,913	- 87,913
Owner's Contribution Paid by TAX SAVINGS		$ 56,121

CONCLUSION

Not only is the Owner receiving a contribution of $144,034 by only paying out a net cash amount of $87,913, the other employees are receiving contributions totaling $15,808 without any additional cash outlay.

Click here for a printable copy

To find out more information about this type of plan and how it could specifically help you and your company click here to request that someone contact you.

sales@pensioncon.com

Or Call us at:

Pension Consultants, Inc.

612.339.1111

Additional assumptions used in above calculations:

Rate of investment return is 5.5%.
Total Owner combined Federal & State Income Tax Rate assumed at 45%. You should consult your tax advisor as to the actual tax rates and your actual amount saved.
Contributions may vary in the future based on actual investment performance, plan, provisions and changes in tax regulations.
The numbers of participants included in the illustrations were limited for simplicity and comparability. However, all of the plans are able to serve from one to hundreds of participants.

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CASH BALANCE PLAN
ILLUSTRATION

(Provides One of the Highest Contributions and Tax Deductions)

The contributions for Cash Balance Plans are calculated based on the employees' ages, compensation and employee classes. The employer decides the percent of contribution for each employee. Since this type of Cash Balance plan heavily favors the owners or key employees, it is almost always set up in combination with a 401(k) Plan so that together they satisfy nondiscrimination requirements.

Cash Balance plans work especially well where owners or key employees and some of the other employees are more advanced in age. They work best for a business with at least 8 employees. The following is only one example of how a Cash Balance & 401(k) Plan combination can benefit your company.

SUMMARY OF CONTRIBUTIONS
Employee	Age	Compensation	Employee 401(k) Elective Deferral	Employee 3% Safe Harbor Contribution	Employee Profit Sharing Contribution	Employee Cash Balance Contribution	Total	Contribution as % of Total
Owner	60	$205,000	$16,000	$6,150	$21,850	$67,000	$111,000	82.3%
Employee 1	55	55,000		1,650	2,006	1,045	4,701	3.5%
Employee 2	50	50,000		1,500	1,825	950	4,275	3.2%
Employee 3	45	45,000		1,350	1,643	855	3,848	2.9%
Employee 4	40	40,000		1,200	1,460	760	3,420	2.5%
Employee 5	35	35,000		1,050	1,278	665	2,993	2.2%
Employee 6	30	30,000		900	1,095	570	2,565	1.9%
Employee 7	25	25,000		750	913	475	2,138	1.5%
Total Contribution			$16,000	$14,550	$32,070	$72,320	$134,940	100.0%

SUMMARY OF TAX SAVINGS
Total Contribution for Owner		$111,000
Total Contribution & Deduction	$134,940
Less: Estimated INCOME TAX SAVINGS	- 60,723
Net Cash Paid Out	$74,217	- 74,217
Owner's Contribution Paid by TAX SAVINGS		$ 36,783

CONCLUSION

Not only is the Owner receiving a contribution of $111,000 by only paying out a net cash amount of $74,217, the other employees are receiving contributions totaling $23,940 without any additional cash outlay.

Click here for a printable copy

To find out more information about this type of plan and how it could specifically help you and your company click here to request that someone contact you.

sales@pensioncon.com

Or Call us at:

Pension Consultants, Inc.

612.339.1111

Additional assumptions used in above calculations:

Total Owner combined Federal & State Income Tax Rate assumed at 45%. You should consult your tax advisor as to the actual tax rates and your actual amount saved.
Contributions may vary in the future based on actual investment performance, plan, provisions and changes in tax regulations.
The numbers of participants included in the illustrations were limited for simplicity and comparability. However, all of the plans are able to serve from one to hundreds of participants.

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CROSS-TESTED PLAN
ILLUSTRATION

The contributions for Cross-Tested Plans are based on the employees' age, compensation, employee classes and the percent of contribution decided by the employer.

Cross-Tested plans (also known as New Comparability Plans) work extremely well where the owners or key employees are more advanced in age than other employees. They can also be set up in conjunction with a 401(k) plan. The plan can be used with any number of owners, key employees and other employees. The following is only one example of how a Cross-Tested employer profit sharing plan can benefit your company:

SUMMARY OF CONTRIBUTIONS
Employee	Age	Compensation	Annual Contribution	Contribution as % of Total
Owner	60	$205,000	$41,000	86.3%
Employee 1	40	40,000	2,000	4.2%
Employee 2	35	35,000	1,750	3.7%
Employee 3	30	30,000	1,500	3.2%
Employee 4	25	25,000	1,250	2.6%
Total Contribution			$47,500	100.0%

SUMMARY OF TAX SAVINGS
Total Contribution for Owner		$41,000
Total Contribution & Deduction	$47,500
Less: Estimated INCOME TAX SAVINGS	- 21,375
Net Cash Paid Out	$26,125	- 26,125
Owner's Contribution Paid by TAX SAVINGS		$ 14,875

CONCLUSION

Not only is the Owner receiving a contribution of $41,000 by only paying out a net cash amount of $26,125, the other employees are receiving contributions totaling $6,500 without any additional cash outlay.

Click here for a printable copy

To find out more information about this type of plan and how it could specifically help you and your company click here to request that someone contact you.

sales@pensioncon.com

Or Call us at:

Pension Consultants, Inc.

612.339.1111

Additional assumptions used in above calculations:

Total Owner combined Federal & State Income Tax Rate assumed at 45%. You should consult your tax advisor as to the actual tax rates and your actual amount saved.
The contribution and percents to the groups can vary year to year at the discretion of the employer, within legal limits.
The numbers of participants included in the illustrations were limited for simplicity and comparability. However, all of the plans are able to serve from one to hundreds of participants.

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401(k) PLAN
ILLUSTRATION

A 401(k) Plan allows employees to defer pretax dollars for their own retirement savings. These plans can be set up with or without an employer match and, in addition to a match, can allow a discretionary employer contribution each year. Many 401(k) plans are set up as Safe Harbor plans coupled with a cross-tested employer discretionary contribution. The plan can be used with any number of owners, key employees and other employees. The following is only one example of how a 401(k) Plan can benefit your company:

SUMMARY OF CONTRIBUTIONS
Employee	Age	Compensation	Employee 401(k) Elective Deferral	Employee 3% Safe Harbor Contribution	Employee Profit Sharing Contribution	Total	Contribution as % of Total
Owner	60	$205,000	$16,000	$6,150	$21,850	$44,000	87.1%
Employee 1	40	40,000	0	1,200	800	2,000	3.9%
Employee 2	35	35,000	0	1,050	700	1,750	3.5%
Employee 3	30	30,000	0	900	600	1,500	3.0%
Employee 4	25	25,000	0	750	500	1,250	2.5%
Total			$16,000	$10,050	$24,450	$50,500	100.0%

SUMMARY OF TAX SAVINGS
Total Contribution for Owner		$44,000
Total Contribution & Deduction	$50,500
Less: Estimated INCOME TAX SAVINGS	- 22,725
Net Cash Paid Out	$27,775	- 27,775
Owner's Contribution Paid by TAX SAVINGS		$ 16,225

CONCLUSION

Not only is the Owner receiving a contribution of $44,000 by only paying out a net cash amount of $27,775, the other employees are receiving contributions totaling $6,500 without any additional cash outlay.

Click here for a printable copy

To find out more information about this type of plan and how it could specifically help you and your company click here to request that someone contact you.

sales@pensioncon.com

Or Call us at:

Pension Consultants, Inc.

612.339.1111

Additional assumptions used in above calculations:

Total Owner combined Federal & State Income Tax Rate assumed at 45%. You should consult your tax advisor as to the actual tax rates and your actual amount saved.
Employees may also defer up to the legal maximum without any effect on the owner.
The contribution and percents to the groups can vary year to year at the discretion of the employer, within legal limits.
The numbers of participants included in the illustrations were limited for simplicity and comparability. However, all of the plans are able to serve from one to hundreds of participants.

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PROFIT SHARING PLAN
ILLUSTRATION

A profit sharing plan allows an employer (at the employer's discretion) to contribute and deduct from 0% to 25% of covered payroll each year. The plan can be set up to allow, within legal limits, a higher percentage contribution to the higher compensated employees. The plan can be used with any number of owners, key employees and other employees. The following is only one example of how a Profit Sharing Plan is able to provide the owner or key employee the maximum amount (based on 2004 tax regulations) and benefit your company:

SUMMARY OF CONTRIBUTIONS
Employee	Compensation	Annual Contribution	Contribution as % of Total
Owner	$205,000	$41,000	65.7%
Employee 1	40,000	6,581	10.6%
Employee 2	35,000	5,758	9.2%
Employee 3	30,000	4,935	7.9%
Employee 4	25,000	4,113	6.6%
Total Contribution		$62,387	100.0%

SUMMARY OF TAX SAVINGS
Total Contribution for Owner		$41,000
Total Contribution & Deduction	$62,387
Less: Estimated INCOME TAX SAVINGS	- 28,074
Net Cash Paid Out	$34,313	- 34,313
Owner's Contribution Paid by TAX SAVINGS		$ 6,687

CONCLUSION

Not only is the Owner receiving a contribution of $41,000 by only paying out a net cash amount of $34,313 the other employees are receiving contributions totaling $21,387 without any additional cash outlay.

Click here for a printable copy

To find out more information about this type of plan and how it could specifically help you and your company click here to request that someone contact you.

sales@pensioncon.com

Or Call us at:

Pension Consultants, Inc.

612.339.1111

Additional assumptions used in above calculations:

Total Owner combined Federal & State Income Tax Rate assumed at 45%. You should consult your tax advisor as to the actual tax rates and your actual amount saved.
Employees may also defer up to the legal maximum without any effect on the owner.
The contribution and percents to the groups can vary year to year at the discretion of the employer, within legal limits.
The numbers of participants included in the illustrations were limited for simplicity and comparability. However, all of the plans are able to serve from one to hundreds of participants.

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MONEY PURCHASE PENSION PLAN
ILLUSTRATION

A Money Purchase Pension Plan requires an employer to contribute and deduct each year a fixed percentage, up to 25%, of compensation, where the percentage is defined in the plan document. The plan can be used with any number of owners, key employees and other employees. The following is only one example of how a Money Purchase Pension Plan is able to provide the owner or key employee the maximum amount (based on 2004 tax regulations) and benefit your company:

SUMMARY OF CONTRIBUTIONS
Employee	Compensation	Annual Contribution	Contribution as % of Total
Owner	$205,000	$41,000	65.7%
Employee 1	40,000	6,581	10.6%
Employee 2	35,000	5,758	9.2%
Employee 3	30,000	4,935	7.9%
Employee 4	25,000	4,113	6.6%
Total Contribution		$62,387	100.0%

SUMMARY OF TAX SAVINGS
Total Contribution for Owner		$41,000
Total Contribution & Deduction	$62,387
Less: Estimated INCOME TAX SAVINGS	- 28,074
Net Cash Paid Out	$34,313	- 34,313
Owner's Contribution Paid by TAX SAVINGS		$ 6,687

CONCLUSION

Click here for a printable copy

To find out more information about this type of plan and how it could specifically help you and your company click here to request that someone contact you.

sales@pensioncon.com

Or Call us at:

Pension Consultants, Inc.

612.339.1111

Additional assumptions used in above calculations:

Total Owner combined Federal & State Income Tax Rate assumed at 45%. You should consult your tax advisor as to the actual tax rates and your actual amount saved.
Employees may also defer up to the legal maximum without any effect on the owner.
The contribution and percents to the groups can vary year to year at the discretion of the employer, within legal limits.
The numbers of participants included in the illustrations were limited for simplicity and comparability. However, all of the plans are able to serve from one to hundreds of participants.

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TARGET BENEFIT PLAN
ILLUSTRATION

The contributions for Target Benefit Plans are calculated based on the employees' age and compensation. The older the employee and the more compensation (up to IRS compensation limits) the larger the contribution required for the employee. These plans are age weighted with a fixed formula contained in the plan document. These plans are subject to the IRS employer deduction limitations.

A Target Benefit Plan works especially well where the employer desires to reward those closest to retirement age. The plan can be used with any number of owners, key employees and other employees. The following is only one example of how this type of plan can benefit your company:

SUMMARY OF CONTRIBUTIONS
Employee	Age	Compensation	Annual Contribution	Contribution as % of Total
Owner	55	$205,000	$41,000	89.3%
Employee 1	40	40,000	2,033	4.4%
Employee 2	35	35,000	1,257	2.7%
Employee 3	30	30,000	900	2.0%
Employee 4	25	25,000	750	1.6%
Total Contribution			$45,940	100.0%

SUMMARY OF TAX SAVINGS
Total Contribution for Owner		$41,000
Total Contribution & Deduction	$45,940
Less: Estimated INCOME TAX SAVINGS	- 20,673
Net Cash Paid Out	$25,267	- 25,267
Owner's Contribution Paid by TAX SAVINGS		$ 15,733

CONCLUSION

Not only is the Owner receiving a contribution of $41,000 by only paying out a net cash amount of $25,267, the other employees are receiving contributions totaling $4,940 without any additional cash outlay.

Click here for a printable copy

To find out more information about this type of plan and how it could specifically help you and your company click here to request that someone contact you.

sales@pensioncon.com

Or Call us at:

Pension Consultants, Inc.

612.339.1111

Additional assumptions used in above calculations:

Total Owner combined Federal & State Income Tax Rate assumed at 45%. You should consult your tax advisor as to the actual tax rates and your actual amount saved.
Employees may also defer up to the legal maximum without any effect on the owner.
The contribution and percents to the groups can vary year to year at the discretion of the employer, within legal limits.
The numbers of participants included in the illustrations were limited for simplicity and comparability. However, all of the plans are able to serve from one to hundreds of participants.

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