Retirement Plans

‘Tis the Season for Qualified Retirement Plans

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The time is now.

It’s the fourth quarter…

As we like to say ‘tis the season and no I don’t mean for the holidays.

‘Tis the season for qualified retirement plans.

First and foremost, every single business out there should have some type of qualified retirement plan.

These are absolutely fabulous planning tools and your business clients they need to have these plans.

You need to introduce them to these concepts.

So there’s a lot of plans out there but we can help you find the most suitable plan for your clients.

Allow us to help you whether it’s

  • A 401(k) plan
  • or a Profit Sharing Plan
  • or some type of Defined Benefit Plan
  • or Traditional Plan
  • or how about a Cash Balance Plan
  • or even a Fully-Insured 412(e)(3) Plan

We have the right answers for your clients.

We are the experts so you do not have to be.

It’s a win-win for everybody!

For your clients, they get a fabulous retirement plan benefit for them and their business and all in a potentially tax-favored basis.

For you, you get to introduce them to this concept.

You get to be their hero!

It’s your value-added and you can do this all about growing your practice as well.

So it’s the fourth quarter…

Is it too late for these plans?

Absolutely not!

We can establish plans all the way up through December 31st of this year.

That’s right 12/31!

Now we don’t recommend that you wait that long, but we do have the ability.

We’ve got the experience and we’ve got the expertise to literally do last-minute plans all the way through 12/31.

So don’t hesitate!

Please contact us now.

Let us help you introduce these concepts to your client and we can give your client an invaluable benefit that they’ll need for the rest of their life.

Retirement Plans

Maximum Pension Limits for 2020

Each year, the IRS sets limits for pension plans. These limits are reviewed annually and adjusted for inflation. The following are some important limits in effect for 2020:

  • Maximum compensation for plan purposes is $285,000
  • Maximum monthly benefit for defined benefit plans ages 62 to 65 is the lesser of 100% of compensation or $19,166.67 with an annual benefit $230,000
  • Highly Compensated Employee compensation $130,000+
  • Maximum Defined Contribution / Profit Sharing Contribution $57,000
  • Maximum SEP Contribution $57,000
  • Maximum 401(k) Contribution $19,500. Catch-up Contribution for age 50 and over $6,500
  • Maximum SIMPLE Contribution $13,500

Click here for a PDF copy of the 2020 limits.

Retirement Plans

Traditional Plan vs. 412(e)(3) Plan

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When you get to 65, you have X-benefit…

$10,000 a month…the number is irrelevant…

You can do the Traditional Plan, provides the same benefit, the $10,000 a month

It’s just how you get there.

You can invest in the market, the market will appreciate more than a very conservative investment in the 412.

So it’s not, the beauty of the 412 as you pass it…

It’s called Fully-Insured cause you pass it on to an insurance company, the liability, but the insurance company says as long as you pay these very conservative premiums…

We will 100% guarantee that for the rest of your life when you get to retirement until you pass away – you can live until you’re 110 – we’re going to pay you that benefit!

Now conversely, in the Traditional Plan – I said it cost $100,000 in a 412, in a Traditional if I have decent market performance, it might only cost me $70,000 a year.

Now conversely though, I can put $70,000 a year away and when I turn 64 the market, we can have a 9/11 event or we can have a Black Friday or whatever it was (Friday I think it was when the market crashed…)

The market can cut in half and then my reserve at 64 cuts in half and now I have one year until I retire to make that up.

So that’s why the conservative nature of the 412, sometimes people really like that!

Retirement Plans

Life Insurance for Advisors

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So life insurance…

So many advisors, they’re afraid of it, they don’t understand it.

There are so many wonderful benefits and ways to utilize life insurance for your business clients.

Terrific planning strategies you can simply help your client, at the same time you can help enhance your practice.

It’s a wonderful planning tool, whether it’s from deferred compensation plans to keyman policies to buy sell arrangements…

How about qualified retirement plans.

These are all wonderful planning tools, wonderful strategies which utilize life insurance for your business clients.

Qualified retirement plans…do you have one?

If so talk to your clients about adding a death benefit.

It’s an absolute terrific way to add life insurance on a tax-favored basis and all at the same time provide a very meaningful benefit and a planned completion component to your plan.

No qualified retirement plan for your client.

No problem! Talk to us…

We can establish a plan for your client!

This is our expertise, this is what we do. We make it easy for you!

You establish a plan which provides a very meaningful retirement income benefit.

It could also include a death benefit and all these benefits are on a potentially tax-advantaged basis to your client.

It’s a win-win!

Your clients will absolutely love these benefits and you’re going to love it too because it’s value added for you.

At the same time, you can help enhance your practice.

Talk to us, give us a call.

Click on the link below, we’ll share some of these strategies with you where you can utilize these life insurance strategies and to benefit your client.

We look forward to talking to.

Contact us to learn more!

Retirement Plans

Proposed Changes to IRA Minimum Distribution Rules

On May 23, 2019, the U.S. House of Representatives approved legislation that relaxes the rules for mandatory minimum distributions for retirement savers. Currently, an individual is required to take minimum distributions from an IRA at age 70 1/2.  If the legislation, as passed by the House, is passed by the Senate and signed into law by the President, the age, at which retirees must start withdrawing from their individual retirement account(s), will increase to 72.

Here is an example to illustrate how the legislation, if enacted into law, would affect an individual’s required minimum distribution. The value of the IRA at the close of business on December 31st of the prior year is divided by the age on the table below. The minimum distribution for a 72 year old with an IRA value of $100,000 would be 100,000/ 25.6 (age 72), giving this person a payout of $3,906.25.


For use by:

  • Unmarried owners,
  • Married owners whose spouses aren’t more than 10 years younger, and
  • Married owners whose spouses aren’t the sole beneficiaries of their IRAs

Otherwise, Table I or Table II may apply

Age Distribution Period Age Distribution Period
70 27.4 93 9.6
71 26.5 94 9.1
72 25.6 95 8.6
73 24.7 96 8.1
74 23.8 97 7.6
75 22.9 98 7.1
76 22.0 99 6.7
77 21.2 100 6.3
78 20.3 101 5.9
79 19.5 102 5.5
80 18.7 103 5.2
81 17.9 104 4.9
82 17.1 105 4.5
83 16.3 106 4.2
84 15.5 107 3.9
85 14.8 108 3.7
86 14.1 109 3.4
87 13.4 110 3.1
88 12.7 111 2.9
89 12.0 112 2.6
90 11.4 113 2.4
91 10.8 114 2.1
92 10.2 115 and over 1.9


In addition, the bill removes the age limit at which a taxpayer must stop contributing to a plan. If you have any questions about the proposed or current law, or have questions on retirement planning in general, contact RMC Group today at 239-298-8210 or [email protected]

Retirement Plans

Different Types of Retirement Plans

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So we’ve got a lot of different types of qualified plans from the Defined Contribution the 401(k)s and Profit Sharing to the Defined Benefit Plans.

The most conservative and guarantees all the benefits to fully-insured 412(e)(3) but we also have for people that want to take a little more risk and invest in the market Traditional Defined Benefit Plans and Cash Balance Plans.

So some of the times people would lean towards a Traditional Plan or a Cash Balance Plan is they want to invest in the market.

In addition, Cash Balance Plans are typically fabulous for companies with more employees and especially a number of owner employees, different partners in the group, and it’s particularly important for groups with owners that have bearing ages.

Can help equalize the contributions rather than typically in a qualified plan the employees with higher wages or the owners with higher wages are typically going to put more contributions in on behalf of a donor employee versus an owner that is a younger age and their contributions can be limited.

So Cash Balance Plans can help equalize these contributions for the owner employees.

Retirement Plans

What happens if you live too long?

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So why retirement plans?

Why do businesses want to put their money there?

Their hard-earned money…

First of all everybody knows Americans, just in general are not saving it up for retirement.

We’re always worried about dying too soon…

But what happens if we live too long?

What then?

What do we do?

We don’t have the resources in our retirement years.

This is why a retirement plan is fabulous!

Put money away now in your peak earning years.

Businesses can put this money away all on a tax-favored basis so they save now and plan for tomorrow.

And for this reason defined benefit plans and defined contribution plans are fabulous planning options for business clients.

Retirement Plans

Section 199A Threshold Increased in 2019

The Tax Cuts and Jobs Act of 2017 (the “Act”) cut the corporate income tax rate from 35% to 21% for tax years beginning with 2018.  In addition, the Act reduced the top individual rate to 37%.  So, where does this leave a “pass-through entity”, such as an s-corporation, LLC or partnership, whose income is taxed to the entity’s owner at the owner’s individual rate?  The Act also added section 199A to the Code, which seeks to equalize the rate paid on business income, whether from a c-corporation or a pass-through entity, by providing a deduction to the owner of a pass-through entity.  The deduction reduces the owner’s taxable income from his business, thereby effectively reducing the tax rate paid by the owner.

However, this deduction is not necessarily available to every owner of a pass-through entity.  In order to take advantage of the section 199A deduction, a taxpayer must have income from a “qualified trade or business”.  The problem is that certain professions are not considered a “qualified trade or business” and would, therefore, not seem to be eligible for the section 199A deduction.  However, there is an exception for taxpayers with taxable income below a threshold amount.  Those taxpayers may be eligible for the section 199A deduction even if their income is not derived from a qualified trade or business.  The threshold amounts for 2018 were $157,500 for a single taxpayer and $315,000 for a married taxpayer.

The Act provides that the threshold amounts are indexed for inflation.  The IRS recently announced the threshold amounts for the 2019 tax year.  The threshold amount for a single taxpayer has increased to $160,700, and the threshold amount for a married taxpayer has increased to $321,400.  Further, for a single taxpayer, the deduction phases out for incomes between $160,700 and $210,700.  For a married taxpayer the deduction phases out for incomes between $321,400 and $421,400.

If you are a professional or have clients who are professionals, section 199A provides another reason to consider adopting a defined benefit pension plan.  For purposes of the section 199A deduction, taxable income is determined after allowable deductions.  For a professional with income above the threshold amount, a contribution to a defined benefit pension plan may, to the extent that the contribution is deductible, lower taxable income below the threshold amount.  So, a professional, who makes a contribution to a defined benefit pension plan, may not only reduce taxable income by the amount of the contribution, but may also be able to further reduce taxable income by becoming eligible for the section 199A deduction.  The increase in the threshold amounts makes this strategy available to even more professionals.

RMC Group has been in the pension business since 1974. Call today to learn more about our pension offerings at 239.298.8210 or email us at [email protected]. Our pension team of experts will be able to help you find the right qualified plan for your business clients!

Retirement Plans

Powerball and Mega Millions Teach You About Retirement

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Powerball and Mega Millions aren’t retirement plans.

A lot of people look at it this way and it’s kind of a hope.

The reality is that most people want to know what they have in retirement and defined benefit plans can offer that.

Defined benefit plans unlike a defined contribution can give you guaranteed income.

And why that’s important is…

There was a Harvard study about 6 or 7 years ago that came out and said that the average employee if they put the money away in their 401(k) are going to come up about 60% short of their retirement goals.

Let’s face it, business owners aren’t the average employee so it even gets worse for them.

Now I’m not saying get away from the 401(k), they’re great plans.

They offer great reasons and great opportunities.

But if you also offer in or layer in a defined benefit plan, you can offer…

  • A plan that offers the highest tax deduction currently available under the law,
  • You can help diversify reduce or even eliminate some of your stock market risk
  • You can give you guaranteed income you can’t outlive up to $225,000 a year


  • It also offers you the potential to use estate planning tools on a pre-tax basis

Something that you may want to consider offering your business owners

Retirement Plans

Pension Contribution Deductions

As long as a qualified retirement plan is established by the end of an employer’s tax year, contributions to the plan may be deducted in that tax year, even if not actually paid until the following year.  The only requirement is that contributions be made before the due date of the sponsor’s tax return, including extensions.  For example, if a corporation set up a plan by December 31, 2018, it would have until September 16, 2019, to make its contribution to the plan, assuming it filed for an extension.  (September 15, 2019, is a Sunday, so the tax return is due the following Monday.)

It is important to note that a tax return can reflect only one annual contribution, even if larger amounts are actually paid to the plan during a tax year.  This could happen when an employer makes its contribution for the first plan year in September and also makes its contribution for the second plan year in December.  This is an issue particularly relevant to fully-insured 412(e)(3) plans, which are usually established with a current effective date.

To illustrate, assume that a 412(e)(3) plan has an effective date of September 1, 2018.  Also assume that the employer is making quarterly contributions to the plan. If the employer files its tax return on March 15, 2019, it will have made three quarterly payments before the return is filed, and it can deduct those contributions on its 2018 return.  If the employer makes its final quarterly contribution on June 1, 2019, but also makes the entire second year contribution on October 1, 2019, it cannot deduct the entire amount paid on its 2019 tax return.  The deduction is limited to the amount of one annual contribution, and the employer could not deduct the balance of the total payments until the following tax year.

Late winter and early spring is a great time to discuss a retirement plan with your clients.  They are in the process of preparing their 2018 tax returns and may be surprised by how much they have already paid and how much more they may owe.  A retirement plan not only helps your clients secure their retirement, but contributions to the plan may be deductible.  In addition, adopting a plan at the beginning of a year gives your clients the ability to spread out their contributions over the entire year.  To learn more about our retirement planning process, contact RMC today at 239.298.8210 or [email protected].