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With a small and growing manufacturing business, two owners, ages 46 and 48, realized they weren’t contributing as much as they wanted toward their retirement efforts. The partners wanted to find a way to contribute significantly more than their Profit Sharing Plan (“PS”).
PlanPerfect immediately noticed two issues facing this company which held the partners back from maximizing their retirement contributions.
1. The current Profit Sharing Plan (“PS”) formula was giving an equal percentage to all eligible employees.
2. The owners were considering adding on a Defined Benefit Pension Plan (“DB”) but weren’t sure if this would work given the owners’ ages.
This hybrid retirement plan design—a combination of a Defined Benefit Pension and Profit Sharing Plan—substantially increased the amount allocated to the owners when compared to their original stand-alone Profit Sharing Plan. PlanPerfect increased the owners’ tax-deductible contribution to their small manufacturing company and increased their allocation from 24% to over 90% so the owners could better save for their futures.