Pre-Tax investing to double your ROI in any investment of your choice

Imagine your current investments in your brokerage accounts, IRA, 401k etc. You will quickly realize that all dollars invested in the “qualified plans” in addition to generating a ROI offer you an income tax reduction benefit; BUT you are limited by the amount of money you can stuff into those pre-tax strategies.

On the other hand your brokerage account assets although are from post-tax investing, you can plug away every dollar unlimited into those accounts.

At Sabur PWM our specialized knowledge of the IRC allows us to introduce you to the best of both worlds, where you can invest on Pre-Tax basis millions of dollars while simultaneously reducing or even eliminating your income or capital gains tax liabilities.

• Get invested on Pre-tax bases
• Grow tax deferred
• Only 40% of the distribution is taxable

PRIVATE 401(k) plan offers MILLIONS in PRE-TAX Investment wealth

IMPORTANT for BUSINESS OWNERS:

The Secure Act is a great opportunity, for business owners and professional advisors to IMMEDIATELY reduce their INCOME tax liability, increase their retirement assets and even increase cash flow - basically, all at the same time.

OPPORTUNITY IS YOURS - IF YOU TAKE IT.

• THANKS TO THE SECURE ACT: 2021 tax deductible qualified plan contributions are still available to those clients on a 2021 tax extension.
• ADDITIONALLY, 2022 tax estimates are also immediately reduced whether it's a 2021 or 2022 start date - which immediately boosts cash flow.
  Our actuarial/admin team is better than ever, we now have multiple enrolled actuaries, plus, a fully trained, experienced administrative staff led of Enrolled Agents (EA) and CPA's.
• We are and always will be a FEE BASED Qualified Plan (QP) design and comprehensive Private Wealth Management firm.
• The IRC Sec. 401(h) benefit is an incidental pension benefit that provides tax free post-retirement benefits to plan participants of the pension.
• 401(h) enjoys all 3 tax benefits:

  1. tax deductibility
  2. tax sheltered earnings
  3. and TAX-FREE payouts.

Our TPA (Third party administrator) has been in business and providing these benefits since the mid-1980s. We were not the 1st - it's been good law since 1962.

Our TPA has written and teaches the CPA 2-hour CE Credits Course recognized by NASBA and we will offer it for our clients CPA if their firm decides to work with us to offer these advanced strategies to their entire client base.

We do not charge any fees for our CE Course time or information. The CE credits are awarded thru the AICPA approved accreditation source which typically charges a minimal fee in the $50 to $75 range per course per individual "student".

Looking forward to hearing from you. We guarantee you will not be disappointed as to what we can do.

Any self employed person on a 2021 tax extension can still make a tax deductible 2021 qualified plan contribution.

We are amazed everyday that so many tax preparers, financial advisors and even CPAs are not aware of this.

There‘s also an immediate boost in cash flow.

Whether a 2021 or 2022 plan adoption, 2022 quarterly estimates are immediately reduced.

That‘s a double tax benefit and savings for 2021 qualified plans. For 2022 QPs, the reduction in quarterlies happens now when the qualified plan is adopted, modified etc. even though the actual 2022 plan contributions don‘t have to be made until the 2022 tax return due date.

Increase your cash flow now!

The Pension Protection Act of 2006 (PPA)materially changed the landscape of qualified plan design. It is unquestionably the best piece of retirement planning legislation for business owners in decades from a contributory, regulatory and fiduciary perspective.

The Private 401(k) Plan™ Designcombines the most current qualified plan law under PPA 2006, with customized plan documentation; advanced, conservative, actuarial methods and the comprehensive benefits of multiple plan forms. Contributions and corresponding tax deductions for owners, professionals and other highly compensated participants can average between three to twenty times the stand alone PS 401(k) limit of $58,000 to $64,500 for 2021. Just as importantly the percentage of the plan contribution for owners can often exceed 90%+ of the total.

In light of the recent LaRue decision by the Supreme Court, fiduciary issues cannot be over emphasized. The Private 401(k) add-on plan contributions (defined benefits) are fiduciary friendly. The LaRue decision was only 401(k) directed. In a litigious environment what more needs to be said.

Private 401(k) Plan™annual plan contributions for key employees (company owners) routinely reach $250,000 to $500,000+, and under the right set of facts and circumstances can exceed $1 million. Due to current interest rates (30 year treasuries in the 3% range) plans using guaranteed interest and annuity rates (412(e)(3) plans), no longer have much, if any, contribution advantage.

The Private 401(k) Plan™will give a client a 6% to 25% profit sharing contribution (with or without a safe harbor) in addition to a full elective 401k deferral plus a full Private 401(k) add-on in the form of either a cash balance, traditional or fully guaranteed pension benefit.

Since 2006, a Private 401(k) Plan™covered by the PBGC can utilize up to a 25% profit sharing plus a full elective k deferral in addition to the Private K add-on. PPA 2006 is quite simply business owner friendly pension legislation.

IRS Notice 2007-28: Clarification on Deduction Private 401(k) Plan™ Authoritywas effectively given in IRS Notice 2007-28: Clarification on Deduction Limits for Combination DB/DC Plans, the highlights of which are as follows:

Limits for Combination DB/DC Plans

The Pension Protection Act of 2006 (PPA)provided changes to the rules governing the deduction limits for certain qualified plan arrangements under IRC §404(a)(7) where the plan sponsor makes contributions to both a defined benefit and defined contribution for the same group of participants in a particular year.

Since the enactment of PPA,here has been considerable debate on the interpretation of these rules among pension practitioners and regulators and this has led to a number of issues. In response to this ongoing debate, the IRS released Notice 2007-28 (https://www.irs.gov/pub/irs-drop/n-07-28.pdf)

Prior to the enactment of PPA, IRC §404(a)(7)provided that in the event of contributions to a combination of 1 or more DC plans and one or more DB plans, the total amount deductible in a taxable year under such plans could not exceed the greater of:

25% of the compensation paid or accrued during the taxable year to the beneficiaries under such plans, or

The amount of contributions made to or under the DB plans to the extent that such contributions do not exceed the amount necessary to satisfy the minimum funding standard provided by IRC

§412 with respect to any such DB plan for the plan year that ends with or within such taxable year.

PPA §803 amended IRC §404(a)(7)to apply the combined plan limits only in the case of employer contributions to one or more DC plans to the extent that such contributions exceed 6% of the compensation otherwise paid or accrued during the taxable year to the beneficiaries under the plan. (Note: 25% of compensation for ERISA plans beginning in 2008.)

Pension practitioners assumed that with the “6% cushion” enacted by PPA, plan sponsors could fund DC matching and nonelective contributions up to 6% of aggregate compensation of the DC plan participants without triggering the IRC §404(a)(7) limit. If employer contributions to the DC plan exceeded 6%, it was generally assumed that only the DC contribution in excess of 6% would be counted toward the combined limit.

Some practitioners though were concerned that if the DC contributions exceeded the 6%, the IRS would interpret the law to include all DC contributions in the 25% limit, including those in excess of 6%. This would effectively mean that a DC contribution of “one penny more” would eliminate the ability to deduct not only the penny but the entire 6% which would have been otherwise deductible had the extra penny not been contributed.

Q&A-8clarifies that the “all or nothing, based on just one penny more” interpretation does not apply to situations where employer contributions to DC plans exceed 6% of the applicable compensation. The general rule of IRC §404(a)(7) for determining the maximum amount deductible remains the same, but the employer contributions to which the rule applies are equal to the employer contributions in excess of 6% of applicable participant's compensation in the DC plan.

The complete text of the notice can be found at www.irs.gov/pub/irs-drop/n-07-28.pdf See below.

Roth 401(k) A fully funded Roth 401(k) is also an option; Roth elections are not deductible but Roth 401(k) benefits are received free of income tax.

The Private 401(k) Plan™may also include an optional life insurance benefit if the plan sponsor determines a need and desires to include the benefit.This benefit can be filled by either a new purchase of life insurance benefits from an insurer or may include the purchase of existing policies from the insured(s)under a prohibited transaction exemption which allows an otherwise party in interest to sell (or purchase) a policy to (or from) the plan.

Life insurance benefits can be an attractive means of providing for business needs: funding buy-sell agreements, loan coverages, key person coverages.

Life insurance benefits can also provide material assets with respect to funding personal protection and/or estate liquidity needs as well as charitable giving intentions without the otherwise 50% of AGI limitation. Plan contributions and corresponding tax deductions can be utilized to establish contra-accounts i.e. tax/cash reserves that may be utilized by savvy employers to selectively enhance the future values of a comprehensive benefit package.

Under §1.401(a)(4)-4(d)(4), an optional form of benefit, ancillary benefit, or other right or featureis permitted to be aggregated with another optional form of benefit,ancillary benefit, or other right or feature if one of the two is, in all cases, of inherently equal or greater value than the other, and the optional form of benefit, ancillary benefit, or other right or feature that is of inherently equal or greater value separately satisfies the current availability requirement of §1.401(a)(4)-4(b) and the effective availability requirement of §1.401(a)(4)-4(c).

The 401(h) AccountAdd a post-retirement individual medical expense reimbursement account to your base pension, cash balance plan or traditional pension design underIRC §401(h)and increase your pension contribution up to 133 1/3%.

What is a medical expense account under Code Section 401(h)?A medical expense account under Code Section 401(h) is an account within a defined benefit pension plan for the payment of the sickness, accident, hospitalization, and medical expenses of retired employees and the spouses and dependents of retired employees. [Treas. Reg. §1.401-14(a)] The term retired for purposes of eligibility to receive medical benefits under Code Section 401(h) means that the employee is eligible to receive retirement benefits under the plan or is treated as retired by the employer by reason of the employee‘s permanent disability. An employee who must terminate employment with the employer as a condition of receiving retirement benefits is not considered retired. [Treas. Reg. §1.401-14(b)(1)].

Life insurance premiums may also be used to pre-fund cost of living adjustments (COLAs) in excess of the IRC §415(b)(1)(A) limits. Between 1995 and 2020 the IRC §415(b)(1)(A) limits have increased from $120,000 to $230,000 with increases of $5,000 to $20,000 in 16 of the last 20 years. In conjunction with a plan’s 50% cushion these life insurance premiums can provide a cost effective method of prefunding COLAs before they are announced.

LAW AND ANALYSIS

The principal authors of this revenue ruling areLarry Isaacs of Employee Plans, Tax Exempt and Government Entities Division, and Linda Marshall of the Office of the Division Counsel/Associate Chief Counsel, Tax Exempt and Government Entities.For further information regarding this revenue ruling, contact the Employee Plans taxpayer assistance telephone service between the hours of 8:00 a.m. and 6:30 p.m. Eastern Time, Monday through Friday, by calling (877) 829-5500 (a toll-free number). Mr. Isaacs may be reached at (202) 283-9710, and Ms. Marshall may be reached at (202) 622-6090 X 5 (not toll-free numbers).

Private 401k Plan™ Summary A properly designed Private 401k Plan™ then can include a fully funded and fully deductible cash balance, traditional or any other form of pension; a fully funded and fully deductible medical expense reimbursement account that may be redeemed free of income tax under IRC §105-6; a fully funded and fully deductible profit sharing plan and a fully funded and fully deductible 401k elective deferral.

Evolution of the Private 401(k) Plan™ Design

The one thing the benefits industry is not is static. The Private 401k Plan™ Design retains its basic combined plan features: a cross tested Profit Sharing 401k Plan and a Pension Plan, while at the same time refining the pension characteristics of the cash balance form of pension to a targeted plan using a concurrent offset. The final evolution of the plans Aggregated Benefits, as defined by the IRS's Isaacs and Marshall, to a benefit choice on an individual participant basis of either a stand-alone or combination post-retirement medical expense reimbursement or life insurance benefit.

Private 401(k) Plan™ *UPTO $10,000,000 can be made PRE-TAX using the Double Up.

The contribution maximum’s can be increased by a formula that will add an estimated 25% to 50% of the otherwise maximum contribution accelerating the maximum accumulation of funds in the shortest period of time.

Private 401K Plan™ Contributions can be doubled in the 1st tax year. See IRC §404(a)(6); plan year contributions subsequent to the Double-up will be approximately 60% of the Double-up.

Owners/professionalsseeking a higher contribution/tax deduction than the traditional 401k profit sharing maximum contributions limited to $57,000 to $63,500.

Highly profitable companies of all types and sizes.

Older ownerswho need to squeeze 20 years of retirement saving into 5 to 10 years.

Owners/partners looking for a way to fund a buy-sell or stock redemption agreement on a tax deductible basis.

Wealthy owners and professionals with charitable givingintentions stymied by the limitations on tax deductibility.

*Create a Private 401(k) Plan™, the Fiduciary Advisory Board (FAB) Overview of the Pension Protection Act of 2006 (PPA 2006) was originally prepared by David Link who served as Dean of Notre Dame Law for 26 years after a term of service with the IRS in Washington, DC.

Sabur PWM TPA is also a member of the Educational Advisory Board of the Wealth Preservation Institute (WPI) and is currently an advisor Qualified Plan Services, a national, independent, fee only, Qualified Plan Consulting, Enrolled (Pension) Actuarial and Third Party Administrative (TPA) firm.

At Sabur PWM, our fiduciary advisory services offers this service at NO COST to private companies whose 401k or Defined benefit plans thru:

* ADP

*PAYCHEX

*PAYCOR

*BANK OF AMERICA