Any business, whether a C Corporation, S Corporation, partnership, sole proprietorship, self-employed can establish a Money Purchase Pension Plan. You set the eligibility requirements at the time the Money Purchase Plan is established.
Money Purchase Pension Plans offer tax deductible contribution, tax deferred growth and taxable distributions.
If desired, the employer can restrict individuals with less than 2 year service, union members, non US citizens, part-time workers etc., from being eligible for the Money Purchase Plan.
A Money Purchase Pension Plan has a definite contribution formula in which the employer promises to contribute a definite amount each year on behalf of each participant.
All contributions plus earnings are allocated to individual accounts, which determine the individuals benefit at retirement.
Contributions to each participant cannot exceed the lesser of 25% of compensation or $42,000.
Employer must meet minimum funding requirements. Percent contribution chosen by employer when plan is adopted must be met annually.
Loans are permitted if allowed by the terms of the Money Purchase Pension Plan.
IRS approved prototype Money Purchase Pension Plans are available.
A vesting schedule is used.
A Money Purchase Pension Plan can be integrated with Social Security.
Reallocation of forfeitures can be provided in the plan.
A Money Purchase Pension Plan has full ERISA requirements and an annual IRS 5500 series of filings.
As of January 1, 2001, Money Purchase Pension Plans can be coupled with Defined Benefit Plans.
All Mutual Funds, Variable Annuities and Variable Life Insurance policies are offered by prospectus ONLY. For complete information including charges and expenses obtain a prospectus, and read it carefully before you invest.
Mutual Fund, Variable Annuity and Variable Life prospectuses are available directly from the issuing companies when product information is requested, and in some cases, they can be downloaded directly from the issuing company's internet website.
The tax deferral characteristic associated with variable annuities is not needed when used in an account that is by definition tax deferred (retirement accounts) and according to some sources variable annuities generally have higher fees and internal expenses than mutual funds.
Systematic and dollar cost averaging within Mutual Funds, Variable Annuities and Variable Life insurance policies does not assure a profit and does not protect against loss in declining markets. It involves continuous investment in securities regardless of fluctuating prices and the investor should consider his or her financial ability to continue purchases through periods of low price levels.
Investing in stocks, bonds, mutual funds and variable annuities does not guarantee a profit. All of these investments can lose money.
Stocks, bonds, mutual funds and variable annuities are not FDIC insured.
