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IDENTIFYING AND APPROACHING PROSPECTS

IDENTIFYING AND APPROACHING PROSPECTS. Presented by: Mary Read, CPC, QPA National Director of Qualified Plan Marketing Alliance Benefit Group-Pentegra. TC62907(0611). DISCLOSURE.

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IDENTIFYING AND APPROACHING PROSPECTS

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  1. IDENTIFYING AND APPROACHING PROSPECTS • Presented by: • Mary Read, CPC, QPA • National Director of Qualified • Plan Marketing • Alliance Benefit Group-Pentegra For Agent Use Only Not For Use With The Public TC62907(0611)

  2. DISCLOSURE This material is intended as a general discussion of qualified plan concepts and strategies. It is not intended as specific advice concerning any individual legal, tax or accounting matter. Alliance Benefit Group-Pentegra does not provide legal, tax or accounting advice. Any questions regarding your individual situation should be directed to your personal advisor on such matters. For Financial Professional Use Only- Not For Use With Public

  3. ARE YOU HAVING A GOOD YEAR? THEN SO IS UNCLE SAM… • Psychological perk in reducing current taxes • The CPA is typically a fan of minimizing or reducing the amount of taxes that have to paid • May be the key to a SBO’s retirement strategy For Agent Use Only Not For Use With The Public

  4. WHY QUALIFIED PLANS? • Business Reasons: • Enhances employee loyalty • Helps attract and retain quality employees • Motivates employees • Provides retirement security for employees • Reduces the company’s current tax obligation For Financial Professional Use Only- Not For Use With Public

  5. WHY QUALIFIED PLANS? • Tax Reasons *: • Contributions to the plan are tax deductible • Contributions are not currently income taxable to the employees • Plan earnings grow tax deferred until withdrawn • No income tax on net insured death benefits Withdrawals are subject to income tax when taken. * Distributions from qualified plans are taxed as ordinary income and, if taken prior to reaching age 59-1/2, may be subject to an additional 10% tax penalty. For Financial Professional Use Only- Not For Use With Public

  6. WHY QUALIFIED PLANS? • Retirement Reasons • Retirement Savings • Potential for savings at retirement • Guaranteed retirement benefits* • Generally protected from the claims of creditors • Tax planning diversification • After-tax Roth accounts • Asset Transfer • Distributions can be rolled to an IRA and stretched over beneficiary’s lifetime • Income tax free death benefits** * Guaranteed by employer in defined benefit plans ** Net amount at risk in life insurance policy passes income tax free; cash surrender value is taxable. For Financial Professional Use Only- Not For Use With Public

  7. BUSINESS OWNERS LIKE QUALIFIED PLANS How important are current tax deductions to the Business Owner and his/her CPA? For many Business Owners and CPAs, when it comes to saving on taxes, “there is no time like the present” For Agent Use Only Not For Use With The Public

  8. Defined Contribution Plan Deductions of up to 25% of participating payroll Maximum allocation $50,000 per year ($55,500 if age 50 or more) Defined Benefit Plan No maximum deduction No maximum contribution, only limited to what is required to fund for retirement benefit Contributions for the business owner may be in excess of $250,000 SIGNIFICANT CURRENT TAX DEDUCTIONS For Agent Use Only Not For Use With The Public

  9. ECONOMIC VALUE OF A CONTRIBUTION • Business owner earning $175,000 annually • 28% Tax Bracket * • Pays $40,319 each year in taxes • Pays $1,007,975 in taxes over 25 years * Assuming 6% flat state income tax and married filing jointly tax status using standard deduction.This is a hypothetical illustration only and is not indicative of any particular investment or performance. For Financial Professional Use Only- Not For Use With Public

  10. $17,000 TAX SAVINGS • Client creates a qualified defined contribution plan and contributes $50,000 • $17,000 deferred in taxes Over 25 years, $425,000 is put to work for the business owner ($17,000 x 25) Assuming 6% flat state income tax and married filing jointly tax status using standard deduction. For Financial Professional Use Only- Not For Use With Public

  11. TAX DEFERRAL GENERATES MONEY The $425,000 the individual may pay in income taxes over the next 25 years can translate into $811,360 *! Funding Strategy for Retirement $811,360* Lost opportunity cost Income Taxes $425,000 * 5% hypothetical return assumed. This example is purely hypothetical and for illustrative purposes only. The numbers assume yearly compounding. The returns above do not consider inflation, taxes or management expenses which will reduce your return. The illustrated results are not indicative of any particular situation and your results likely will differ from those shown above. For Financial Professional Use Only- Not For Use With Public

  12. TAX EFFICIENCY Additionally the other $33,000 is also working Funding Strategy for Retirement $2,386,355* Lost opportunity cost Income Taxes* $425,000 * $50,000 per year assuming 5%. Assuming 6% flat state income tax and married filing jointly tax status using standard deduction. For Financial Professional Use Only- Not For Use With Public

  13. WHAT IF THERE ARE EMPLOYEES? • The employees may not cost anything • In fact, not having a plan may cost more than having one For Financial Professional Use Only- Not For Use With Public

  14. True or False:The cost to contribute to employees’ accounts in a qualified plan may be less than the current tax savings you could receive. REASONS FOR A QUALIFIED PLAN • Current tax deduction, and • Deferred taxes After Tax Analysis Sample Case Profit Sharing: Plan Sponsor’s Tax Rate 40% Plan Sponsor’s Total Contribution $104,500 Plan Sponsor’s Tax Savings $41,800 Net After Tax Cost of Plan $62,700 Deposit For Owners $100,000 Net Gain $37,300+ TRUE! Hypothetical example for illustrative purposes only – not representative of any particular investment For Agent Use Only Not For Use With The Public

  15. TYPES OF RETIREMENT PLANS Defined Benefit • Retirement benefit is known • Contributions* depend on actuarial determination • Conventional • Select • Fully Insured** • Cash Balance • Defined Contribution • Contributions are flexible • Retirement benefit is unknown • Benefit depends on the amount of contributions made and any growth of plan investments • Profit Sharing • Money Purchase • 401(k) • Target Benefit IRA • SEP • Simple IRA * Contributions will be subject to an actuarial determination of the plan which cannot be predicted due to their volatility.** ”Fully Insured” means the plan is funded with insurance and annuity products backed by the claims-paying ability of the issuing insurer. For Financial Professional Use Only- Not For Use With Public

  16. SAMPLE CASE: SESAME SLEET PLOWING For Agent Use Only Not For Use With The Public

  17. SBO’S CAN GET THE “LION’S SHARE” OF THEIR QUALIFIED PLAN CONTRIBUTIONS For Agent Use Only Not For Use With The Public

  18. CONTRIBUTE A LITTLE FOR ELIGIBLE EMPLOYEES INSTEAD OF GIVING AWAY A LOT TO UNCLE SAM The information is hypothetical and is provided for informational purposes only. Your results likely will differ. For Agent Use Only Not For Use With The Public

  19. Any successful business is a prospect. Any business entity can establish a qualified plan: Sole Proprietor Partnership LLC Professional Corporation S-Corporation WHO IS A PROSPECT FOR A QUALIFIED PLAN? For Agent Use Only Not For Use With The Public

  20. A qualified plan prospect typically has fewer than 10 employees, and wants: Significant current tax deductions Annual tax savings that can substantially outweigh contribution to employees Life insurance paid with pre tax premiums To save for retirement To accumulate up to $2.2M in 10 years Protection from Creditors BUSINESS OWNERS LIKE QUALIFIED PLANS For Agent Use Only Not For Use With The Public

  21. Ask the employer: How much do you want to contribute? Which employees do you want to include? Which employees do you want to favor? …within the law we can design a plan that comes closest to your idea of “perfect” IN A PERFECT WORLD… For Agent Use Only Not For Use With The Public

  22. ALLIANCE BENEFIT GROUP-PENTEGRA From initial prospecting to closing the sale and Administering the plan. Training, custom plan proposals, prospecting and marketing materials are free. We are only a phone call away! Lori J. Carpenter Advisor Relationship Manager (800) 255-8678 Direct: 704.716.8596 lcarpenter@abgcarolinas.com Mary Read CPC, QPA National Director of Qualified Plans Marketing 802-477-2018 mread@abgpentegra.com • Outstanding Personal Service • Industry Experts • No Commission Splits • No Hidden Fees For Financial Professional Use Only – Not For Use With Public

  23. CIRCULAR 230 DISCLOSURES • The above information is not intended or written to be used, and it cannot be used, by any person for the purposes of avoiding any penalty that may be imposed by the Internal Revenue Service. • In the event the advice is also considered to be a “marketed opinion” within the meaning of the IRS guidance, then as required by the IRS, please be further advised of the following:The above advice was written to support the promotion or marketing of the transactions or matters addressed by the written advice and, based on the particular circumstances, you should seek advice from an independent tax advisor. For Financial Professional Use Only- Not For Use With Public

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