In a defined benefit plan, an actuary calculates the amount of your annual deductible contribution. The magnitude of the deduction is a function of the benefits provided.1 The deductible contribution must be consistent with the limitations of law and sufficient to fund the benefits promised to you by the plan. At retirement age, the maximum monthly retirement benefit under current law is $17,500 per month. In order to guarantee that retirement benefit is funded by your normal retirement age, you must have a total of $6,909,262 in your retirement fund by the time you retire. We noted above that defined benefit plans may contain life insurance and that the cost of this insurance is in addition to the cost of providing the monthly retirement benefit of the plan. The Benefit Focused Plan fully utilizes this ability, making it an essential part of the overall strategy because: By funding the plan death benefit with life insurance, you are able to increase your contributions to the plan with resulting income tax savings. At plan inception, it will double your contribution with only a third of the increase going to insurance premiums. A Benefit Focused Plan without a death benefit will permit a first   Read more…

The estate plan may sound like a traditional defined benefit plan, but it is much more than that, the death benefit proceeds can pay for estate transfer taxes for pennies on the dollar.  What we are recommending has three elements at its core: The way these elements are defined and the relationships among them give the plan its unique character. Sponsoring Entity: An entity must have a valid business purpose. There may be one or more entities. The entities may already exist or can be created. Entity (entities) may employ both spouses.
• Entities must have infinite life. Some portion of the Entity’s income must be active or earned W-2 income. The entity may take the form of: Corporation (either C or S), Partnership, Family Limited Partnership, or Limited Liability Company. Qualified Retirement Plan and Trust: You can have one or more defined benefit plans. The plan can cover both husband and wife. The plan must satisfy rules of reasonableness of compensation. 
 Participant’s Trust The trust is usually a new trust(s). The trust can be created by the husband and the wife separately. The spouse is not a beneficiary. (View the video URL link) Bottom line, the Defined Focused Defined   Read more…

At the foundation of the proposal is a defined benefit pension plan and its special provisions that are unique to the Benefit Focused Plan, which addresses income tax, retirement security, and estate planning results. The overall plan has many elements and not all of them can be taken into account in this discussion. Be mindful that there are many factors that could cause the actual numbers of an implemented plan to vary from those estimated. The estimates are formulated to give you a better insight into the concept and workings of the plan. Here’s a quick comparison at the macro level. Income tax savings1 – As much as $2,245,280 between plan adoption and normal retirement age. This savings could be as high as $4,244,574 if your spouse is a participant in the plan. Thus, the Plan is superbly suited to high-income people who seek tax relief. These numbers are significant and worth testing the plan for suitability. Retirement security – Up to $35,000 per month combined retirement (with spouse as participant) for you and your spouse as long as either party subsists. This unique strategy can offer substantial tax deductions and lifetime income. Estate Planning – A two-part strategy that bypasses   Read more…