Pre-Sale
Collection of Census Data (i.e. birth date, date of hire, annual compensation) Establishment of a Client report & an Overall Plan Budget.
Pre-Sale
Identify prospect(s). Initial out-reach to prospect(s).
Pre-Sale
Meet with the client to review the client report and discuss plan design.
Implementation
Collection of all necessary paperwork, including Administrative Services Engagement Agreement.
Implementation
In addition to the signed Implementation Documents, the actuaries will need copies of any current 401(k)/profit sharing plan documents.
Implementation
Preparation of all Insurance Illustrations.
Implementation
Contemporaneously with the underwriting process, the actuaries will draft the Plan Document(s). Upon completion, they will be overnighted and/or sent electronically to the client (copies to FA) for signature.
Implementation
Schedule para-medical examination appointments(Blood, urine, and health questions). Collection of all necessary medical files.
Implementation
Establish all necessary investment accounts at the agreed upon bank branch.
Funding
Upon notification of life insurance coverage approval, make arrangements to have the policy(s) premiums wired from the Retirement Account to the insurance company.
Funding
Soon after the close of the client’s tax year, the client will receive a package from the actuaries requesting end of year census data including final compensation for all employees. The FA will provide a Retirement Account history indicating dates and amounts of deposits in and transfers out of the Account as well as and end of year account valuation.
Funding
Based on the end of year census data and the plan account valuation, the actuaries will determine the final plan contribution and communicate such contribution to the FA and client.
End of Year Procedure
Set-up Annual Reviews with the client(s) & PensionQuote Inc. to review contribution budget.
End of Year Procedure
All contributions to the plan must be made into the Retirement Account prior to the filing of the corporate income tax return but no later than 9/15.
End of Year Procedure
The client will receive insurance premium notices from the insurance company, and must fund those policies from the Retirement Account, or risk policy lapse. FAs should calendar the policy issue dates in order to be prepared each year to fund the policies from the Retirement Account.
End of Year Procedure
Check-in with your client and the CPA on a semi-annual basis. Do a good job then ask for referrals.
Background:
Split-Funded Defined Benefit Pension (DB) Plans can provide a solution for clients seeking larger income tax deductible contributions than are available in a defined contribution plan (e.g., profit sharing/401(k), SEP, Simple IRA, etc.). PensionQuote, Inc. is a Third-Party Administrator (TPA) specializing in the design and administration of customized DB plans. PensionQuote’s Executive Offices are in Coral Gables, Florida with administrative facilities in Fairfield, New Jersey. PensionQuote Inc. provides marketing and administrative services nationally to financial institutions and broker dealers, point-of-sale material and assistance for Financial Advisors, and Certified Professional Accountants.
Target Market: High-Income Business Owners
- Who are contributing maximums to their current defined contribution plan (e.g., profit sharing/401(k), SEP) and desire significantly more (at least $100,000 more) income tax deductible annual contribution?
- Who wish to accumulate additional retirement income?
- Who desire a creative business continuation solution?
- With significant, consistent earned income, and have the ability to fund a plan with at least $100,000 for at least 5 years.
Target Market: Examples
Lawyers, Physicians, Family Partnerships, Small Family Businesses, Consultants, Entrepreneurs, Contractors, Real Estate Brokers, Architects, Computer/Software companies, Lobbyists, Entertainers, Auditors, University Professors with outside income, clients who receive Board of Director income, Venture Capital Firms, Private Equity Firms, and Hedge Funds
- Any Business Entity qualifies – S-Corps, C-Corps, LLPs, LLCs, Sole Proprietorships (as long as there is “earned income”, a plan may be implemented).
Your client wants to move forward and implement a plan – what are the initial steps?
Part I – Plan Installation Documents and Life Insurance Applications
a) Contact PensionQuote Inc. (800.717.4723) and request an Implementation Package including a Fee Schedule, and Administrative Services Engagement Agreement. If this is your first implementation, please have Sam (our Sales and Marketing Manager) walk you through the paperwork. Additionally, Sam is available to review the documents with the client.
b) Collection of Census Data (i.e. birth date, date of hire, annual compensation) Establishment of a Client Report, an Overall Plan Budget, and Insurance Illustrations. Insurance applications are completed. You may contact our specialists for assistance and guidance. PensionQuote Inc. may provide the associated insurance ledgers and Qualified Plan Forms.
c) Establish a Retirement Account in the name of the new plan (e.g., “The ABC Medical Group, PA Retirement Plan”). PensionQuote Inc. provides the plan Tax ID# to assign to the plan/account. Important: Have the client make a deposit into the Retirement Account in an amount at least equal to the life insurance premiums included in the plan design. The balance of the plan contributions to the Defined Benefit and Profit Sharing plans may occur up until the client files their corporate tax return but no later than 9/15 (assuming a 12/31 fiscal).
d) Meet with client and complete all forms referenced in A and B above. The signed Implementation Documents, signed Fee Schedule, and Fee are sent to PensionQuote Inc. (forms may be scanned/emailed then originals sent overnight). PensionQuote Inc. may assist with the life insurance applications/forms.
Part II – Document Review and Life Insurance Underwriting
a) Upon receipt, PensionQuote Inc. will review Implementation Documents and contact the FA should any information be missing or additional information required. In addition to the signed Implementation Documents, the actuaries will need copies of any current 401(k)/profit sharing plan documents and in most cases, a recent tax return.
b) Your Insurance Specialist will review/complete the life insurance applications and will arrange to have them forwarded to the insurance carrier.
c) The client will be contacted to schedule a paramedical exam (blood/urine, health questions), and collection of all necessary medical files.
d) Upon notification of life insurance coverage approval, make arrangements to have the policy(s) premiums wired from the Retirement Account to the insurance company. PensionQuote Inc. or your Insurance Specialist will provide wire instructions.
Part III – The Split Funded Defined Benefit Plan
a) Contemporaneously with the underwriting process, the actuaries will draft the Plan Document(s). Upon completion, they will be overnighted and/or sent electronically to the client (copies to FA) for signature.
Important: Plan documents must be signed by client on or before 12/31 (assuming a 12/31 fiscal). Client will keep the originals and send duplicate signed signature pages back to the actuaries.
Part IV – End of Year Procedures
a) Soon after the close of the client’s fiscal year, the client will receive a package from the actuaries requesting end of year census data including final compensation for all employees.
Important: Client needs to make sure with their CPA that they take the appropriate earned income by 12/31 ($265,000 for 2015). Based on the census data, the actuaries will prepare final numbers for the current year deduction. A call with the CPA prior to 12/31 is customary.
b) The FA will provide a Retirement Account history. This history will indicate the dates, amounts of deposits in, and transfers out of the Retirement Account, as well as and end of year account valuation. The easiest way to provide this information is to have PensionQuote listed/copied on the monthly Retirement Account statements which are sent to the client.
Part V – Funding the Plan
a) Based on the end of year census data and the plan account valuation, the actuaries will determine the final plan contribution and communicate such contribution to the FA and client. Set-up an Annual Reviews with the client(s) & PensionQuote Inc. to review contribution budget.
b) All contributions to the plan must be made into the Retirement Account prior to the filing of the corporate income tax return but no later than 9/15.
c) The client will receive insurance premium notices from the insurance company and must fund those policies from the Retirement Account or risk policy lapse. FAs should calendar the policy issue dates in order to be prepared each year to fund the policies from the Retirement Account.
d) Check-in with your client and the CPA on a semi-annual basis. Do a good job, then ask for referrals.