Thursday, November 20, 2008   Welcome, Guest!

A $2,000,000 Jackpot Could Be Yours!

How would you like to be able to to accumulate $2,000,000 over a ten-year period of time? With the passage of the Economic Growth and Recovery Reconciliation Act of 2001 this goal is now possible.

Many people have forgotten how valuable a defined benefit plan can be to accumulate wealth and provide for retirement! There are so many people who have not accumulated enough money to retire and are faced with a situation of a limited number of years until retirement. How are they going to be able to accomplish their goals?

Here is an example of two partners who have excess income and want to maximize their contributions. This illustration is possible for accumulation under current law. If they still want to accumulate additional dollars, a 401(k) contribution for each individual could be added. Employee 401(k) contributions do not count against the corporate deduction limit. Therefore, each partner can have a deferral of $12,000 plus a $2,000 catch-up contribution.

Defined Benefit Plan

Illustration of potential benefits and contribution requirements - 2004

  Age Comp. Est. Lump Sum Value at Age 62 Defined Benefit Contr. 401(k) Contr. Total Contr.
Owner #1 53 $200,000 $2,000,000 $175,000 $14,000 $189,000
Owner #2 53 200,000 2,000,000 175,000 14,000 189,000
Employee #1 31 35,000 350,000 5,000 1,400 6,400
Employee #2 26 35,000 350,000 3,200 1,200 4,400
Total       $358,200 $30,600 $388,800

For additional information on this concept or other concepts please contact our office!