Plans

Big 401(k) Benefits

Whether you’re a one person shop, or a growing business, find out how Crown Benefits can design a 401(k) plan that makes it simple for you to lower your taxes now and help you save more money for tomorrow.

Less Taxing, more saving

In the simplest tax scenario, you can contribute the 2012 maximum of $17,000, and protect $4,125 from taxes this year. For a business with 15 or fewer employees, this tax savings more than covers the cost of a Crown 401k plan by 2.5 times or more.

Give Me A Tax Break

• $500 tax credit if it’s your first 401(k) plan and you have employees
• Matching, profit sharing and admin fees are deductible for your business
• Contribute up to $17,000 tax-deferred in 2012 plus any matching you receive
• You can choose to contribute after-tax dollars into a Roth 401(k) – no income limits – which will not be taxed again when withdrawn after age 59½ And remember, it’s always wise to check with your tax advisor.

401(k)s stack up big versus traditional IRAs.

Check out the advantages of a 401(k) over an IRA. Over three times the contribution limit, over five times the 50+ catch-up limit, and no Roth income limit. It’s virtually no contest.

* Starting at $105,000, the amount you are allowed to contribute begins to decrease, hitting $0 at $120,000.

Finally, a 401(k) a business can afford.

Start Today – Free Proposal

To find out which retirement plan is right for you or your client, contact us.

In one easy step, Crown will run an illustration at no cost or obligation.

Call Today (800) 269-1447

Owner-Only Defined Benefit Plan

Our most popular plan for building retirement savings quickly.

The Crown Owner-only Defined Benefit Plan is an ideal program for the business owner who would like company contributions in excess of $49,000 (or 25% of compensation, if less) to an IRS-approved retirement program.

How it Works

Employer contributes an actuarially determined amount sufficient to pay each participant a fixed or defined benefit at his or her retirement. Methods of defining the benefit include but are not limited to:

• Level percentage formula: Example – The benefit is equal to 100% of compensation, reduced by 1/15 for each year of participant less then 15 years.
• Step rate service weighted for prior service formula: Example – The benefit is equal to 8% of compensation for the first 10 years of service plus 5.2% of compensation for all other years, not to exceed a total of 30 years.
• Plan participation formula: Example – The benefit is 5% of compensation per year of participant with a maximum of 20 years.

Combine DB with 401(k): Combining a 401(k) Plan with a DB Plan allows additional contributions:

• Salary deferrals up to $17,000 ($22,500 if age 50 or older).
• An optional Profit Sharing contribution of up to 6% of compensation or $14,700.

Examples

Compare an Owner-only Defined Benefit Plan combined with a 401(k) Profit Sharing Plan to a stand-alone Owner-only 401(k) Plan.

The table illustrates hypothetical first year contributions for an employee retiring at age 62 with at least 5 years of plan participation. The benefit is 10% of compensation per year of plan participation which provides the IRS maximum annual benefit per year.

WHO SHOULD CONSIDER
THIS PLAN?

Professionals with no employees
or an owner and spouse, such as:

physicians, dentists, architects, real-estate brokers, attorneys, engineers, entertainers, consultants.

Owner should be age 40 or older.

Plan requires stable business income and contribution levels for at least 5 years.

ADVANTAGES

• High annual contributions.
• Accelerated savings: Higher accumulations for retirement may be achieved in 10 years or less.
• Plan investments are directed by the owner.
• Investments are only limited to what is allowable by the IRS. Crown does not restrict investments.

QUICK TEST

• Is business limited to owner or owner and spouse?
• Is owner age 40 or older?
• Is business income stable?

Single (k) Profit Sharing Plan

• Owner-only Business • Owner & Spouse-Only Business

The Crown Single(k) Plan offers an excellent combination of investment flexibility and low administration costs for small businesses with no employees other than one owner or an owner and spouse.

In many cases, a Single(k) can provide higher contributions than those available under a SEP, SIMPLE-IRA, or Profit Sharing Plan.

How It Works

If owner and spouse are earning less then $196,000 per year, a Single(k) will allow higher contributions yearly. The addition of the Deferral Source of contributions at 100% of pay may allow the owner to achieve the maximum contribution.

If the owner is age 50 or over, an additional $5,500 can be contributed even if the owner is making $200,000, increasing the maximum from $50,000 to $55,500.

2012 Limits

Examples

Examples assume business is incorporated, compensation is W-2 wages, and
owner is not age 50 or older*.

* Owners age 50 or older have additional catch-up contributions: $2,500 to a SIMPLE or $5,500 to a 401(k).

WHO SHOULD CONSIDER THIS PLAN?

Professionals with no employees or an owner and spouse, such as: physicians, dentists, attorneys, engineers, entertainers, consultants, Architects, real estate brokers.

Owner wants deductible contributions in excess of that available under a SEP, SIMPLE, Profit Sharing or Money Purchase Plan.

Owner wants highest contribution

ADVANTAGES

• Higher annual contributions then a SEP, SIMPLE, Profit Sharing or Money Purchase Plan.
• Flexible annual contributions.
• Investments are only limited to what is allowable by the IRS. Crown does not restrict investments.
• After-tax Roth salary deferrals are available. Compensation limits do not apply to Roth deferrals in a 401(k) Plan.

Cross Tested Profit Sharing Plan

Flexible plan that allows employer contributions to be higher and contributions for rank-and-file employees to be at a minimum.

How it works

• Tiered Contributions: Owners and other favored employees receive significantly higher percentage of company contributions.
• Increase Benefit to Owners: Annual contributions for owners can be as high as $50,000.
• Low Employee Costs: Annual contributions for other employees can be as low as 5% of eligible employees’ compensation.
• Flexible Contributions: Annual contributions are decided yearly. You can contribute the maximum (25% of compensation) or nothing
  at all.

Example: Traditional Profit Sharing Plan vs. Cross Tested Profit Sharing Plan

Results: The Cross Tested Plan saves $24,167 in contributions and at the same time 93% of the contribution is going to the owners.

WHO SHOULD CONSIDER THIS PLAN?

Small or medium-size businesses who want a retirement plan that will maximize contributions to owners while minimizing contributions to other employees.

ADVANTAGES

• Allows owners to receive the majority of the plan contributions.
• Provides a benefit package for Highly Compensated Employees.
• Minimizes company contributions to non-owner employees.

Start Today – Free Proposal

To find out if a Cross Tested 401(k) is right for you or your client, contact us. In one easy step, Crown will run a contribution illustration at no cost or obligation. Call Today (800) 269-1447.

Cross Tested 401(k) Plan

- Optional Safe Harbor 3% NEC

Flexible plan that allows the employer contribution to be higher for owners and minimum contributions for the rank and file employees.

How it works

• Tiered Contributions: Owners and other favored employees receive significantly higher percentage of company contributions.
• Increase Benefit to Owners: Annual contributions for owners can be as high as $50,000 (or $55,500 if owner age 50 or older).
• Low Employee Costs: Annual contributions for other employees can be as low as 5% of other eligible employees’ compensation.
• Safe Harbor Cross Tested 401(k): Combine a Safe Harbor 3% NEC with the Cross Tested Allocation Method can maximize contributions to owners
  without increasing company contributions.

Example: Traditional 401(k) vs. Cross Tested Safe Harbor 401(k)

Assumptions & Results: In both examples below, the owners receive the maximum contribution (sources: $22,500 Deferral, 3% Safe Harbor, Profit Sharing). The Cross
Tested 401(k) Plan reduces the company contribution by $24,167.

WHO SHOULD CONSIDER THIS PLAN?

Small or medium-size businesses who want a retirement plan that will maximize contributions to owners while minimizing contributions to other employees.

ADVANTAGES

• Allows owners to defer the maximum.
• Provides a benefit package for Highly Compensated Employees.
• Avoids ADP Testing which eliminates refunds to owners and other highly compensated employees
• Minimizes company contributions to non-owner employees.
• Roth deferrals available

Deferral Limits:

• $17,000 – For those under age 50.
• $22,500 – With catch-up contributions for those age 50

Other Limits:

• $50,000 – Allocation limit for those under age 50.
• $55,500 – Allocation limit for those over age 50.

QUICK TEST

• Are the owners older than most of the employees?
• Does the owner have a higher income than the majority of employees?

Start Today – Free Proposal

To find out if a Cross Tested 401(k) is right for you or your client, contact us. In one easy step, Crown will run a contribution illustration at no cost or obligation.
Call Today (800) 269-1447.

Cash Balance DB + 401(k)

Turbo charge your 401(k) by adding a Cash Balance Pension.
Annual contributions for owners can exceed $200,000 each.

How it works

A Cash Balance plan is a defined benefit plan that specifies both the contribution to be credited to each participant and the investment earnings to be credited based on those contributions. Each participant has an account that resembles those in a 401(k) or profit sharing plan. Those accounts are maintained by the plan actuary who generates annual participant statements.

Participant accounts grow annually in two ways:

• The company contribution – a percentage of pay or a flat dollar amount – is determined by a formula specified in the plan document, and;
• An annual interest credit. The rate of return is guaranteed and is independent of the plan’s investment performance. That rate changes each year but usually is equal to the yield on 30-year Treasury bonds which have hovered around 5% in recent years.

Example
Results: Company contributions for owners total $353,050 while contributions to other employees total $33,000 (92% to owners). When combined with their deferrals, the owners set aside a total of $386,050.

WHO SHOULD CONSIDER THIS PLAN?

Partners or owners who desire to contribute more then $49,000 per year to their retirement account.

Companies already contributing 3-4% to employees or at least willing to do so.
Partners or owners over 40 years of age who desire to “catch-up” or accelerate their pension savings.

ADVANTAGES

• Larger tax-deductible contributions may be made compared to those permitted by defined contribution plans.
• Retirement savings may be accelerated for owners and targeted employees.
• Funding costs are more easily understood and planned by the plan sponsor.
• Plan design can favor owners and/or key employees to the extent they are older than staff.
• Tiered benefits levels are especially attractive for partnership and professional groups with varying levels of ownership and compensation among owners.
• May limit the number of employees covers as long as each participant is provided a meaningful benefit.

QUICK TEST

• Are you and other preferred participants at least 40 years of age?
• Is your income or profitability stable or predictable?
• Can you make a commitment to increased savings for the foreseeable future?

Start Today – Free Proposal

To find out if a Cash Balance plan is right for you or your client, contact us. In one easy step, Crown will run a contribution illustration at no cost or obligation.
Call Today (310) 665-0578.

Safe Harbor 401(k) Plan

Affordable plans that allow Highly Compensated Employees, including owners, to defer at the maximum rate and eliminate discrimination testing and top heavy requirements

How it works

The traditional 401(k) Plan is one of the fastest growing retirement plans. It supplies companies with a flexible, competitive, and cost-effective retirement plan.

Owners may find that their deferrals may be limited by the ADP Test, and if the plan is “Top Heavy”, a contribution is required for all participants in the plan. Safe Harbor Plans are designed to satisfy these requirements so that the owner of a business and other Highly Compensated Employees can take full advantage of plan deferrals.

In exchange for committing to one of the Safe Harbor provisions, the employer can avoid the ADP Test and, in many cases, required Top Heavy contributions. Contributions to the Safe Harbor Plan are always 100% vested. However, a vesting schedule may be used for other company contributions.

Safe Harbor Employer Contribution Options

• 4% Safe Harbor Match: Company makes matching contributions only to those employees who defer compensation under the plan. Contributions are capped at 4% of compensation. This is the preferred choice if a low deferral rate is expected among non-owner employees. This option is the Enhanced Employer Match. Additional Safe Harbor Match options include: Basic Match and a match capped at 6%.
• 3% Safe Harbor Non-Elective Contribution (“NEC”): The Safe Harbor NEC contribution is allocated to all employees even if they do not defer. This is a good option if all employees are expected to defer; or if there is the possibility that testing can be passed (final decision is made 30 days before the end of the plan year); or if a Cross Tested Profit Sharing contribution is to be made
• Cross Tested Safe Harbor 401(k) using 3% NEC: The 3% Safe Harbor NEC contribution is used to help pass the testing associated with the Cross Tested Profit Sharing allocation method. In this way, an owner may be able to receive up to the $50,000 contribution maximum ($55,500 if age 50 or older) for only a little more than the required Safe Harbor contribution.

WHO SHOULD CONSIDER THIS PLAN?

Small or medium-size businesses who want a retirement plan that will maximize contributions to owners while minimizing contributions to other employees.

ADVANTAGES

• Allows owners to defer the maximum.
• Plan is exempt from top heavy rules.
• Provides a benefit package for Highly Compensated Employees.
• Avoids ADP Testing which eliminates refunds to owners and other Highly Compensated Employees.
• Stabilizes company contributions to non-owner employees.
• Roth IRA deferrals available.
• Deferral Limits:
  • $17,000 – For those under age 50.
  • $22,500 – With catch-up contributions for those age 50 or older.

QUICK TEST

• Is your plan passing discrimination testing?
• Are you required to make a top heavy contribution?

Start Today – Free Proposal

To find out if a Safe Harbor 401(k) is right for you or your client, contact us. In one easy step, Crown will run a contribution illustration at no cost or obligation.
Call Today (800) 269-1447.

Notes:
For existing 401(k) Plans, a Safe Harbor notice must be distributed to employees at least 30 days before the beginning of the plan Year. Companies not currently sponsoring a 401(k) Plan can establish a Safe Harbor401(k) Plan at any time during the first three quarters (i.e. there must be at least 90 days left in the plan year). If no other employer contributions are allocated to employees, Safe Harbor Plans are deemed to pass the ADP/ACP Tests and Top Heavy requirements do not apply. However, other allocations under the Safe Harbor matching provisions (such as forfeitures) could trigger required Top Heavy contributions.