On December 17, 2010, TRUIRJCA was passed which allowed for the extension of the tax cuts under EGTTRA which was passed in 2001. In addition, payroll taxes on employees was reduced 2% and the Federal Estate Tax was reinstated for Estates over 5 million dollars. Pension plans remain viable as a tax and retirement planning tool for people who need to save more for retirement.
Profit sharing plans allow you to deduct up to $49,000 per year free of Social Security, Medicare and Federal income taxes. In contrast, pension plans allow you to deduct up to $300,000 per year, depending on your age and compensation. An Enrolled Actuary must determine the exact amount. Enrolled actuaries are the only professionals who can certify pension plans. CPAs, and even attorneys, cannot sign a schedule SB or MB for submission to the IRS. The world of enrolled actuaries is very small, with 4,600 total in the U.S. (according to Google) compared to 1,168,000 attorneys, and approximately 550,000 CPAs.
Our company employs enrolled actuaries to provide the highest level of expertise and professionalism in plan design and administration. We are located about 90 miles north of Seattle, and with the internet, we currently operate in 49 states. Our administration affiliate is bonded up to $3 million by Fireman’s Fund. All assets are in the custody of major financial institutions. This allows us the maximum independence in plan design. If you qualify, your plan may be further guaranteed by the Pension Benefit Guarantee Corporation.
A plan must be established by the end of the year, you will then have until the due date of your tax return (including extensions) to fund the plan-here are some examples:
Nick Paleveda, MBA, J.D., LL.M
National Pension Partners