Retirement Plan Benefit Planning Matrix

Retirement Plan Asset Protection Taxation Penalties Prudent Man Rules Plan Loans Estate Inclusion Planning Intensity Legislation – Code Section
IRA, Roth IRA No under California statute. Yes under Federal law up to $1,000,000 (indexed for inflation). Contributions Deductible. Growth Tax-Deferred. Distributions Taxable. Yes. 10% pre-59 1/2, 50% post-70 1/2. Yes. Self-dealings apply. No Yes. IRD Asset = Both Income & Estate Taxable. Low
Qualified Plans: 401Ks, Profit-Sharing Plans, Defined Benefit Plans, Cash Balance Plans. Yes, plan assets are fully protected under ERISA while in the Plan. Once distributed, protection is forfeited. Contributions Deductible. Growth Tax-Deferred. Distributions Taxable. Yes. 10% pre-59 1/2, 50% post-70 1/2. Yes. Self-dealings apply. Only up to $50,000. Yes. IRD Asset = Both Income & Estate Taxable. High
Non-Qualified Deferred Compensation (409A Plans) No. Plan assets must be subject to business creditors. Contributions Tax-Deferred to Executive, Non-Deductible to Corp. Growth Taxable. Distributions Taxable to Executive, Deductible to Corp upon payment. Yes. Yes. Self-dealings apply. No Yes. IRD Asset = Both Income & Estate Taxable. High
Life Insurance No. Only up to $12,860 on both cash values and death benefit proceeds. Premiums Non-Deductible. Tax Deferred Growth. Loans not Taxable. Distributions taxable above basis. Note: WL dividends reduce basis. No. No Yes Yes, unless owned by ILIT. Low
Private Retirement TrustSM 100% of PRTsm Plan assets are fully Exempt from both creditor (lawsuit) and bankruptcy judgments. Tax-neutral. Non-Deductiible on contributions, income taxed as earned, no additional tax on Plan Distributions. No. No Yes Yes. Unless PRTsm Split-Dollar Arrangement Elected. Medium CCP 704.115

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