Client Profiles

OWNER-ONLY BUSINESS

Client Objective

Maximum contribution and tax deduction

Profile

Business Strategy Consultant age 52, set up an S-Corp for his solo practice. He wants to grow his retirement assets quickly and reduce his tax liabilities. He pays himself $300,000 in W-2 income.

Solution

OnePersonPlus Defined Benefit Plan for 10 years, combined with a OnePerson (k).

Defined Benefit Only:
2017 Business Contribution:      $186,800
Tax Savings @ 38%:                    $70,900

Defined Benefit+ 401(k):
2017 Business Contribution:      $227,000
Tax Savings @ 38%:                    $86,200

Projected Defined Benefit Only Accumulation: $2.6 Million in 10 years

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EMPLOYED WITH SIDE-INCOME

Client Objective

Reduce total tax liability

Profile

Business School Professor, age 56, makes $180,000 in salary from the University and contributes the maximum to the University’s 403 (b) plan. She also has earned at least $150,000 in sole proprietor income for the past few years from consulting and giving speeches which put her in a higher tax bracket. She plans to continue her side work until she is 62, maybe longer.

Solution

OnePersonPlus Defined Benefit Plan for 6 years based on side income

2017 Contribution: $120,000
Tax Savings on side income @ 38%: $45,600
Lower tax bracket on total income

Projected Accumulation after 6 years: $866,800
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OWNER-ONLY, HIGH FLUCTUATING INCOME

Objective

Reduce taxes, retain flexibility

Profile

Architect, age 48, has an S-Corp and pays himself $185,000 in W-2 income in 2016. He wants to save as much as possible this year but he wants flexibility as his income fluctuates.

Solution

OnePersonPlus Defined Benefit Plan and a OnePerson (k) that he funds only in high income years

2017 Defined Benefit only Contribution:$110,300
Tax Savings@ 38%: $41,900
2017 Defined Benefit + 401(k) Contribution:$139,400
Tax Savings@ 38%: $52,900
Projected Defined Benefit Accumulation at age 62: $2.24 Million

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SELF-EMPLOYED SPOUSE

Objective

Invest spousal income for retirement

Profile

Married couple with high household income would like to save more for retirement. Husband, is a highly paid executive at a public company; wife, age 60, has been earning $100,000 (after self-employment taxes) for the past three years in her bookkeeping practice and plans to keep working for another five years. They don’t need her income for cash flow and want to invest it.

Solution

OnePersonPlus DB Plan starting in 2017

Contribution to DB: $80,000
Tax Savings@ 38%: $30,400
Projected Defined Benefit Accumulation in 5 years $463,800

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MARRIED BUSINESS PARTNERS, NO EMPLOYEES

Objective

Maximize retirement savings quickly

Profile

Husband & Wife Marketing Researchers, Adam age 60,
Eva age 58, pay themselves $270,000 each in W-2 income.
They both plan to retire in 5 years.

Solution

Defined Benefit Plan with 5 years funding, optional 401(k)

OnePersonPlus Defined Benefit only
2017 Contribution: $429,500
Defined Benefit + 401(k)
2017 Contribution: $509,900
Tax Savings@38%: $163,200 for DB;  $193,700 for DB+401(k)
Projected Defined Benefit Accumulation after 5 years: $2.49 Million

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RETIREE, EARNING BOARD FEES

Objective

Reduce current year taxes and delay Required Minimum Distributions (RMDs)

Profile

Retired executive, age 70, set up an S-corporation for his Board of Directors Fees. He pays himself $200,000 in W-2 income on about $400,000 in revenue. He needs to begin taking distributions from his other retirement plans this year, and wants to reduce his tax liability on the current year earnings.

Solution

Defined Benefit Plan for 5 years with a 3-year cliff vesting schedule. No RMDs are required from this plan until 2020.

2017 Defined Benefit Contribution: $143,500
2017 Tax Savings@ 38%: $54,600
Projected Defined Benefit Accumulation in 5 years: $843,300

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PROFITABLE BUSINESS WITH 4 EMPLOYEES

Objective

Maximize owner contribution and tax savings while controlling cost of benefits for employees

Profile

Dentist, age 53 pays herself $265,000 from her successful Periodontal and Implant Surgery practice. She is willing to make contributions for her four employees but wants to receive the lion’s share for herself.

Solution

OwnersPlus Cash Balance Plan + Safe Harbor 401(k) Profit Sharing Plan

Age Compensation 401(k) Salary Deferral Safe Harbor/Profit Sharing Cash Balance Pay Credits Total Contribution
Dr. Forrester 53 $270,000 $24,000 $ 1,000 $ 171,652 $196,652
Yolanda 29 $35,000 $ 1,750 $1,250 $3,000
Stephanie 36 $45,000 $ 2,970 $1,250 $4,220
George 40 $45,000 $ 2,250 $1,250 $3,500
Maria 43 $45,000 $ 2,250 $1,250 $3,500

 

Total 2016 Contribution $210,872
Estimated 2016 tax savings $80,131*
Dr. Forrester will receive 93% of the OwnersPlus contribution toward her own retirement.

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LAW PARTNERS WANT FLEXIBILITY

Objective

Allow different contributions for partners with different compensation and cash flow needs

Profile

Business partners at different stages of their lives want a plan that can be tailored to meet their individual preferences.

Solution

OwnersPlus Cash Balance Plan and because there are no other employees, each owner also could set up and contribute to an optional OnePerson (k) plan

Name Age Compensation Cash Balance Pay Credits Notes
Dana 52 $270,000 $72,500 Wants to save 25% of her income.
Corey 58 $270,000 $170,000 Senior lawyer in the firm. Wants to put away $170,000.
Alan 51 $183,100 $105,000 Doesn’t need the cash flow – he can put away more than 50% of his income.
Carl 42 $270,000 $35,000 Youngest partner, has a new family, can only contribute $35,000.

Total compensation: $993,100
Total Cash Balance pay credits: $382,500
Total 2017 tax savings @ 38%: $145,350

Learn More about OWNERSPLUS CASH BALANCE + 401(k)

Owner-only with Fluctuating Income

Objective

Save for retirement without annual obligation

Profile

Freelance photographer, age 40 with variable income, wants to contribute intermittently – in those years that his income is high.

Solution

OnePerson (k) to which he can contribute as much as $54,000 in good years, as little as zero when he doesn’t have the cash flow.

Learn More about ONEPERSON (k)

CLIENT OF THE WEEK:

MISSED THE BOAT IN 2016?

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Eligibility Checklist

Here’s a quick test to find out if OnePersonPlus is right for you.:

  • Client is 40+ years of age
  • Client typically earns at least $100,000 annually in one of these ways:
    • Is a sole practitioner or owns business with family
    • Is self-employed as primary means of earning a living
    • Has a second occupation in which client works for himself or herself
    • Is considered an Independent Contractor rather than an employee
  • Client wants to contribute more than $50,000 annually to their retirement ora higher percent of income than allowed in a 401(k) or SEP
  • Client expects to be able to make that contribution for at least three years

VIEW TYPICAL CLIENT PROFILES

 

Typical Occupations

Other Typical Occupations

Architect Attorney Consultant Contractor Entrepreneur Financial Planner Graphic Designer Independent Corporate Director Independent Insurance Agent Manufacturer’s Rep Mortgage Broker Real Estate Agent Software Developer Writers

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