Does a DB plan make sense here?

[Spencer]

I work with DC plans so I need advice on whether a DB plan could be an option for client. Owner with $700,000+ in comp for 2012. Age 57 and it is a sole prop. Only other employee is his son, age 32. Owner wants to put away as much as possible. Concerns are that compensation may be not be anywhere near this in years to come. Would he be locked in contributions for several years? how long would IRS expect him to keep plan?

Any thoughts?

Thanks!

[Andy the Actuary]

Recommend your client engage a pension actuary (at a fee) to assist with the analysis.

[david rigby]

In addition to Andy's advice, the answer to your title question is (probably) YES.

[SoCalActuary]

I work with DC plans so I need advice on whether a DB plan could be an option for client. Owner with $700,000+ in comp for 2012. Age 57 and it is a sole prop. Only other employee is his son, age 32. Owner wants to put away as much as possible. Concerns are that compensation may be not be anywhere near this in years to come. Would he be locked in contributions for several years? how long would IRS expect him to keep plan?

Any thoughts?

Thanks!

Good to see that you are considering your client's best interest here, and not simply using the tools you already have.

"To a hammer, every problem is a nail."

This fact pattern can result in pension contributions up to 4 times the level of the DC plan limit, if the fact pattern is favorable. But my fellow actuaries will tell you to get competent advice and refer it to the right person.

[Mark Whitelaw]

Is his need a current tax deduction or a tax-free future value? Is he and / or his son healthy? If future value, healthy HCE Class individuals have been able to access greater lifelong value since 2002 outside a tax-qualified benefit plan on a direct, participant defined contribution capacity basis. Think of it as an uncapped Roth complement third-party sponsored and administered plan for healthy HCE Class individuals with access to institutional asset pricing you can't get in a tax qualified plan or retail personal financial planning.

[Mr. T]

What you talk'n 'bout fool! Dat sounds like an insurance salesman talk and Hannibal know I don't like no insurance salemen.

[Spencer]

Is his need a current tax deduction or a tax-free future value?

current tax deduction.

Thanks for all the input. Does the DB plan have to be in place/signed prior to year end for 2012?

[Andy the Actuary]

Once again, you need a professional because you are talking about plan and trust.

[SoCalActuary]

Is his need a current tax deduction or a tax-free future value?

current tax deduction.

Thanks for all the input. Does the DB plan have to be in place/signed prior to year end for 2012?

Only if benefits of the plan are going to be used. No plan - no deduction for 2012.

[Mark Whitelaw]

I agree with you Mr. T. ... and No. Retail "insurance" and HCE Class access to institutional IRC 7702 based investing are apples and shampoo different products and markets.

[Mr. T]

You agree wit me? I don't even know what you talk'n bout...

Retail "insurance" and HCE Class access to institutional IRC 7702 based investing are apples and shampoo different products and markets

If future value, healthy HCE Class individuals have been able to access greater lifelong value since 2002 outside a tax-qualified benefit plan on a direct, participant defined contribution capacity basis

an uncapped Roth complement third-party sponsored and administered plan for healthy HCE Class individuals with access to institutional asset pricing you can't get in a tax qualified plan or retail personal financial planning.

What does this all this gibber jabber mean?

[Andy the Actuary]

I think I can sum up all of the comments: You can't practice billiards on a ping-pong table and hope to become competent at Scrabble.

[ESOP Guy]

I think I can sum up all of the comments: You can't practice billiards on a ping-pong table and hope to become competent at Scrabble.

Where is that "like" button again!

[frizzyguy]

I think I can sum up all of the comments: You can't practice billiards on a ping-pong table and hope to become competent at Scrabble.

Where is that "like" button again!

I do like this one a lot but my favorite comment on this board is definitely "To a hammer, every problem is a nail".

[Andy the Actuary]

Is is amusing to learn from IMDB.com and other sources that Mr. T (Lawrence Tureaud) stands but 5'10" which is a wee shorter than this imposing persona suggests. Perhaps he was misnamed and should have been called "Mr. t" ?