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Qualified plans/412(i) plans

Course Objective


            This course was created to teach advisors (CPAs, EAs, accountants, attorneys, financial planners and insurance advisors) about Qualified Retirement Plans.  Retirement planning is a topic that many advisors think they know well, but could use more information in order to give the best advice possible to high-income clients.  As a general statement, most medium to small business owners would like to defer as much money as possible while contributing the smallest amount for the employees. 


While many advisors simply tell their clients to “max out” a 401(k)/Profit Sharing Plan, there are several variations to 401(k)/Profit Sharing Plans that can be more discriminatory in favor of the highly-compensated owner/employees.   In addition to 401(k)/Profit Sharing Plans, due to recent tax law changes, Defined Benefit Plans and 412(i) Defined Benefit Plans have once again become viable retirement vehicles for many business owners. 


This material will cover all the viable “qualified” retirement plans available to clients and illustrate to advisors why one plan is better than another (depending on the type of client looking for benefits).  The material will also discuss some of the problems with the plans in the marketplace and how to avoid the pitfalls when implementing discriminatory plans for clients.


Qualified Retirement Plans


1) Introduction




2) Individual Retirement Account (IRA); Simplified Employee Pension (SEP-IRA); Savings Incentive Match Plan for Employees IRA (SIMPLE-IRA)


3) The Solo 401(k)


4) 401(k) Plans

            a) “Next Level” 401(k) Plans

b) Salary Deferrals

c) The Problem

            d) Key Issues for Consideration

            e) Who is “Highly Compensated?”

            f) “Top Heavy” Concern

            g) New “Safe Harbors”

h) Safe Harbor “Match”

i) Safe Harbor “Non-Elective”

            j) How to Use These Safe Harbors


5) Money Purchase Plans


6) Profit Sharing Plans

            a) Contributions

b) Three “Next Level” Tools to Consider

            c) Integrated Profit Sharing Plans

d) Age-Weighting

e) New Comparability

            f) Nondiscrimination Testing


7) Defined Benefit Plans

a) The Problem

            b) The Solution

c) A defined benefit plan works in reverse

d) Who Should Consider This Plan?

e) How Do These Plans Work?

f) Plan Design

g) Making a Commitment

h) Survivor Benefits

i) Envelope Funding vs. Split Funding


8)  “Carve-Out” Defined Benefit Plans

            a) Example

            b) “Carve-Out” Planning


9) 412(i) Defined Benefit Plans

            a) Overview

            b) Requirements

c) Advantages

            d) Disadvantages

e) Client Profile

g) Plan Design

h) How They Work

i) Investments and Gains

            j) Benefits

            k) Top-Heavy Benefit

            l) Retirement Benefits

            m) Lump Sum Distribution

n) The “GATT Concern”

            o) New Law

p) Taking a Lump Sum from a 412(i) Plan

            q) Benefits Taxation

            r) Retirement Benefits

s) Life Insurance Taxation

            t) Recent IRS Guidance.


10) Survivor Benefits

            a) Life Insurance Limits

b) Recent IRS Guidance

c) Case Study

d) Recent IRS Guidance

e) 412(i) Survivor Benefit Alternatives

f) “PS 58” Cost

g) Recent IRS Action

h) Life Insurance–Beyond Retirement


11) Administration

            a) Annual Service

            b) Conversions

            c) Over-Funded Plans

            d) Under-Funded Plans

e) Plan Funding


12) Compliance

a) Life Insurance Contracts

b) Related Employers

c) Parent-Subsidiary Controlled Group

d) Brother-Sister Controlled Group

            e) Combined Group

f) Affiliated Service Group


13) 412(i) Abuses

a) Rev. Proc. 2004-16

            b) Rev. Ruling 2004-20

            c) Rev. Ruling 2004-21

            d) Abusive Tax Shelter?


14) Summary on Qualified Retirement Plans



© 2017 The Wealth Preservation Institute • St. Joseph , MI • (269) 216-9978