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Retirement Planning

Trust or Will

Revocable living trusts and wills both allow you to name beneficiaries for your property. Beyond that, they are useful for different purposes. For example, most people use living trusts to avoid probate. But living trusts are more complicated to make, and you can’t use a living trust to name an executor or guardians for your children. You need a will to do those things. 

Name beneficiaries for property. The main function of both wills and trusts is to name beneficiaries for your property. In a will, you simply describe the property and list who should get it. Using a trust, you must do that and also “transfer” the property into the trust. (See “Transfer of property into the trust,” below.) 

Leave property to young children. Except for items of little value, children under 18 cannot legally own property. When you leave property to a minor, that property must be managed by an adult – at least until the child turns 18. 

When leaving property to a minor using a living trust, the trustee manages the property until the child reaches an age determined by you. Also, you should name an adult to manage the property. Or, use your will to set up a testamentary trust for young children or name a custodian under the Uniform Transfer to Minors Act. 

Most people need a will, but not everyone needs a living trust. Whether or not you need a living trust depends on your age, how wealthy you are, and whether you’re married. Even if you decide that you need a living trust, you should also make a will to name an executor, name guardians for minor children, and take care of any property that doesn’t end up in your trust. 

401(k) Profit Sharing

Custom Plan Design 

A customized plan design that provides meaningful benefits to the business owner(s) is essential to the ongoing success of a small business 401(k) plan. American National can provide a plan design that favors the key employees of the business by utilizing various design options, including: 

 Traditional allocations 

 Allocations integrated at the social security wage base 

 Tiered and multi-tiered new-comparability (cross-tested) formulas 

American National designs and supports all types of qualified plans. Key to making a 401(k) the plan of choice for a small business is providing a design that favors the owners and key employees of the sponsoring employer. Just one example of how a plan can be designed (or redesigned for businesses with an existing plan) is shown below. 

Why have small business owners adopted 401(k) plan from American National?    Because we offer:

  •  Custom plan designs that can favor the owner(s) and/or the key employees of the business 
  •  Complete documentation for establishing the plan 
  •  Total ongoing service for the life of the plan, provided by our internal pension administration department 
  • Administration services provide all government reports and quarterly participant statements 
  • Low administration fees 
  • Large variety of investment options1 
  • State of the art daily valuation system offering 24/7/365 internet access to account 
  • Internet access to all aspects of the plan for the employer 
  • Free and flexible investment transfers1 
  • No surrender charges for death, disability, retirement, participant loan or termination distributions 

Qualified Plans

Consider a Qualified Plan. It provides: 

  • Tax deductible contributions by the business 
  • Employer’s contributions that are not included in income by the participant 
  • Tax deferred growth 
  • Retirement income 
  • The opportunity to purchase life insurance with tax deductible dollars 
  • A variety of plan designs that can be molded to meet your business and personal needs 
  • A competitive benefit to help you attract and retain highly qualified employees 
  • Qualified Plan Choices 

 Defined Contribution: 

The business and/or the employee will make contributions to the plan. Your ultimate benefit will be based on total contributions and the performance of the assets held in the plan. There are many types of defined contribution plans – the amounts you can put into each are determined by the tax law and may vary from plan to plan. 

 Defined Benefit: 

As opposed to a defined contribution plan, most defined benefit plans start with an assumed benefit to be paid at retirement. The contributions going into the plan are designed to fund the assumed benefit over the assumed time frame. There are a number of defined benefit plan options. 

Non-Qualified Plans

What is a Non-Qualified Plan 

A non-qualified plan is a type of tax-deferred, employer-sponsored retirement plan that falls outside of employee retirement income security act guidelines. Non-qualified plans are designed to meet specialized retirement needs for key executives and other select employees. These plans are also exempt from the discriminatory and top-heavy testing that qualified plans are subject to. 

BREAKING DOWN Non-Qualified Plan 

There are four major types of non-qualified plans: deferred-compensation plans, executive bonus plans, group carve-out plans and split-dollar life insurance plans. The contributions made to these plans are usually nondeductible to the employer and taxable to the employee. However, they allow employees to defer taxes until retirement — when they are presumably in a lower tax bracket. Non-qualified plans are often used to provide specialized forms of compensation to key executives or employees in lieu of making them partners or part owners in the company or corporation. 

Deferred Compensation as a Non-Qualified Plan 

There are two types of deferred-compensation plans: true deferred-compensation plans and salary-continuation plans. Both plans are designed to provide executives with supplemental retirement income. The primary difference between the two is in the funding source. With a true deferred-compensation plan, the executive defers a portion of their income, which is often bonus income. With a salary-continuation plan, the employer funds the future retirement benefit on executive’s behalf. Both plans allow for the earnings to accumulate tax-deferred, while the IRS will tax the income received at retirement as ordinary income.