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Tax &Financial Strategies, LTD offers the TFS™
Pension Plan Audit as a tool for our clients to take advantage
of recent improvements to the laws governing pension plans
and the options provided by the financial planning industry.
We developed the TFS™ Pension Plan Audit process to
thoroughly evaluate your quali . ed pension plan and non-qualified
plans and identify potential areas of improvement. We analyze
the pension structure,the alternatives, and the goals associated
with each existing plan.Once the potential weaknesses are
identified, we compare current law against the best available
pension plan structure for your situation.
Ultimately, the TFS™ Pension Plan Audit produces a
recommendation to either maintain the current pension plan
or move to a more effective structure.
NO BETTER TIME Recent changes to the tax code have
enhanced the benefits of a defined benefit pension plan.
Some of these changes include:
• Greatly increased benefit limits
• Larger deductions
• More flexibility
While tax-qualified retirement plans must not be discriminatory,this
does not mean that you are required to provide each employee
with the exact same benefit. Moreover, the administrative
burdens formerly connected with defined benefit pension
plans can be minimized.
Among the comprehensive services that are included in the
TFS™ Pension Plan Audit, we provide:
• Plan design and consultation
• Plan and trust documents
• Recordkeeping
• Tax reporting
• Plan termination
COMPARING DEFINED BENEFIT PLANS The table below shows
the maximum deductions available to a 55-year-old business
owner under different qualified plans.
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PLAN TYPE
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OWNER MAXIMUM
DEDUCTION |
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Profit Sharing
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$ 41,000 |
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Money Purchase
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$ 41,000 |
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Aggregate Pension Plan
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$ 96,000 |
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Traditional Defined
Benefit Plan
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$ 94,500 |
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412(i)Plan
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$250,000 |
FOUR STEPS TO A CERTIFIED PENSION APPRAISAL From inception
to eventual plan termination,TFS™ will assist you in
establishing an effective pension plan. The following are
steps to a secure retirement:
1. Determine your goals and budget
2. Analyze potential plan solutions
3. Consider advanced pension plan design services
4. Adopt and fund your plan
Although employees who have not completed one year of service
or who are younger than age 21 can be excluded,all other eligible
employees must be considered for non-discrimination testing.There
are two tests that must be satisfied annually: First, at least
40% of the otherwise eligible employees must be covered in
the defined benefit plan; and secondly, the ratio of rank-and-file
employees benefiting in each plan must be at least 70%of the
ratio of the owners,their family members, and other high-income
employees.
Testing must be completed each year to ensure that your plan
isnondiscriminatory. After the end of the year, employee census
information and other plan data will be used to determine
whether your plan passes the testing and to evaluate alternatives
if changes to the plan are required.
COUNT ON US With a TFS™ Pension Plan Audit, we
will assist in:
• Confirming current census data and final plan design
• Providing plan documents for your approval
• Preparing summary plan descriptions for each participant
• Delivering required notice to employees concerning
existing plans
• Funding the new plan by the tax filing date
• Completing annual plan valuations, tax reporting, and
non-discrimination testing
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