1. Presentation for CPAs
Copyright 2017 Dedicated Defined Benefit Services, LLC.
OnePersonPlus is a registered trademark of Dedicated Defined Benefit Services, LLC.

2. Defined Benefit Plans – in the News
Inexpensive retirement plans for small-business owners
“The old-fashioned pension plan may be the best plan for ensuring a comfortable retirement and for attracting job applicants to your firm.” USA Today, February 2017
How Entrepreneurs Can Get Big Tax Breaks For Retirement Savings
“A 52-year-old entrepreneur netting $300,000 could use a one-person defined-benefit pension plan combined with a solo 401(k) to shelter a total of $169,800 from current income taxes…” Forbes, March 2013
Turn Self-Employment Income Into A Pension By Dec. 31 To Beat The Fiscal Cliff
“If you’re self-employed, have had a good year, and want to sock away a lot for retirement, take a lead from a tax pro who advises high net worth clients, and set up a defined benefit plan by year-end.” Forbes Online, December 2012
Defined benefit plans are making headlines – in the Forbes, Financial Advisor Magazine, Kiplinger’s Retirement Report, and SmartMoney among others.
If you haven’t considered a defined benefit plan as a solution for your small business or self-employed clients, until recently you might have been right. However, over the past several years, there have been important changes in the tax laws that make a defined benefit plan attractive for the right small business owner. Today, we’ll be talking about who these business owners are and how DB plans can work for them.
A Pension Plan for the Self-Employed
“Solo pension plans are a great option for entrepreneurs, doctors, and real estate agents who want to slash their taxes and turbo charge retirement savings.” Kiplinger’s Retirement Report, August 2011
Copyright 2017 Dedicated Defined Benefit Services, LLC.

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Today’s Presenter
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Affiliation with CE sponsor (DBBS)
Expertise
Connection to audience
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Copyright 2017 Dedicated Defined Benefit Services, LLC.

4. Agenda Return of the Small Business DB Plan Ideal Clients
Defined Benefit Plans At a Glance
Regulatory Changes
Market Opportunity
Compared to Other Retirement Plans
The OnePersonPlus® Program from Dedicated DB
Ideal Clients
Meeting the Needs of Your Clients
Presenting to your client
Fees
Key Dates
Opening a DB Plan
Follow through
Here’s our agenda for today.
We’ll talk about:
Small business defined benefit plans and the renewed opportunity for these plans in the micro-market
We’ll briefly compare DBs to other types of retirement plans
We’ll also talk about a few technical aspects of DB plans by looking at typical clients and how a DB plan works for them. Our main objective is to help you identify the types of clients who are suitable for DB plans and how big a tax savings they might expect.
I’ll also run through the process of opening a plan and how I can make it easy for you and your clients.
Copyright 2017 Dedicated Defined Benefit Services, LLC.

5. Defined Benefit Plans at a Glance
Qualified retirement plans
Retirement age is typically 62 or older
Contributions are ax deductible
Highest available contributions and tax deductions of any qualified retirement plan
A defined benefit plan (DB) is a qualified retirement plan, defined in the same area of the code that defines profit sharing plans and 401(k)s.
Retirement age is flexible. It can be set as low as age 62. A client age 70 may open a plan with a retirement age of 75. Since life expectancy is a critical element in calculating the future benefit, opening a defined benefit plan becomes a less attractive option for a business owner older than 75.
The maximum benefit can be payable as early as age 62 for someone with 10 years of participation in the plan.
Contributions made to a DB plan are tax deductible. Income taxes are tax deferred like contributions made to a SEP or a profit sharing plan.
One question we get often is whether this is really legal. Yes, absolutely. The median contribution last year was over $130,000 for new plans administered by Dedicated DB. In certain cases, plan contributions for a family business may exceed $400,000 annually.
Copyright 2017 Dedicated Defined Benefit Services, LLC.

6. DB Plans are Goal-oriented
Goal or “benefit” represents the amount of retirement wealth the plan will provide annually at retirement age
Benefit is established when plans are opened
Based on age, income, and years until retirement
Capped at $215,000 per year (for 2017)*
Employer commits to achieving the goal through regular, annual contributions large enough to meet the goal
Plan can be amended to change the goal
DB plans are goal-oriented.
Defined benefit plans are designed to provide a set benefit or annual income each year in retirement
When plans are opened a goal for the retirement benefit is established.
There is a maximum benefit that a client can aim for based upon age, income and years to retirement. If the maximum benefit is too high, the plan can be designed for a lower benefit amount.
There is also a cap imposed by the IRS of a maximum annual benefit of $215,000 in 2017
The business owner commits to reaching the goal by making regular, annual contributions. Each year the contribution amount will be determined by the actuary. Gains and losses will affect the amount of the contribution.. Therefore, it’s important to avoid wild swings in the investment portfolio. If the client earns a higher rate than targeted, he’ll contribute less the next year and get a lower tax deduction. Clients will be happier with the program if contributions stay within a predictable range.
To change the goal, the plan must be amended. It’s important to know if your client’s situation changes. If necessary, the client can amend the plan formula. He or she also can terminate the plan before retirement if necessary.
Copyright 2017 Dedicated Defined Benefit Services, LLC.

7. Recent Legislation Favors Small DB Plans
2000 – Repeal of IRC Section 415(e) gave highly compensated individuals the opportunity to open and fully fund a DB even if they had accumulated millions in defined contribution plans
2001 – EGTRRA lowered retirement age from 65 to 62 and increased retirement benefit from $140,000 in 2000 to $215,000 in 2017 (cost of living increased
2006 – Pension Protection Act increases flexibility
Integrate with a single person 401(k)
Increase contribution in early “windfall” years
While the press is full of stories about the demise of defined benefit plans, the opposite is true for the very small business defined benefit plan.
Over the decade, Congress has past several major pieces of legislation that have had a big and positive impact on small business defined benefit plans.
Prior to 2000, IRC Section 415(e) limited the maximum annual amount highly compensated individuals could receive at retirement in an annual benefit – tying together an individual’s DB and DC benefits. By repealing this section of the code, even someone who has accumulated millions in a 401(k) or other DC plan can now start a DB with a clean slate and accumulate as much as $2.6 MM, depending on age, income and years to retirement.
The passage of the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) in 2001 also helped. It lowered the retirement age from 65 to 62 and increased the annual benefit at retirement which was $140,000 in 2000 and is now up to $215,000. That means that if your client has the income, they can make higher contributions (equals higher deductions) and accumulate enough in a DB plan to fund this benefit. In practice, 99% of these small business owners roll this money into an IRA upon plan termination where it continues to grow tax deferred until withdrawn.
In 2006 the Pension Protection Act, some parts of which are still awaiting technical interpretations, has added greater flexibility. The plan sponsor can add a DC plan to a DB so that contributions are optional each year. In addition, the PPA proposes a minimum and maximum contribution calculation so that contributions can be as much as 50% higher in early, “windfall” years and then lower in later years. This section is still awaiting final technical corrections from the IRS.
Copyright 2017 Dedicated Defined Benefit Services, LLC.

8. A Growing Market: High Income, Self-employed Clients Age 40+
From a pool of 15 million + self-employed* (incorporated or not)
50% of self-employed are 45+
27% are professionals (management, business, finance)
Approximately 1 million self-employed earn $100,000+*
By 2020: US population age 50 – 75 projected to increase 50%
From 61 million in 2000 to 93 million 2020
*Sources: Re: Population: Self-Employment in the United States: An Update Monthly Labor Review, July Income figures derived from 2000 US census data.
The plan sponsor market for Defined Benefit plans is expanding.
The population is aging with more than 41% of US adults now over 50 (according to AARP)
The US government estimates that 15 Million people are self-employed and here they are including corporations as well as sole props and partnerships.
Of them, 50% are age 45 or higher
And approximately 1 million of them earn over $100k.
These trends are continuing, In addition, older workers who are “retiring” from corporations -- many of them in their 50’s -- are continuing to work. But in their new careers, they can open small business retirement plans – these plans are unknown to these individuals and many of them will appreciate learning about . They may be consulting back to the companies or government agencies they left and earning large fees – all of which would qualify for a DB plan. Or they may be opening the business of their dreams and have other income so that their earnings can be used to fund a plan.
Copyright 2017 Dedicated Defined Benefit Services, LLC.

9. Assumes 5-7% funding rate for Defined Benefit Plans
Retirement Plans for the “Micro-Market” Closing a Gap in Product Offerings
Defined Benefit (DB) Plans May Allow Clients to Contribute Significantly More Earned Income Than Other Retirement Plans
How do contributions for a DB compare to other retirement plans?
Because the IRS code does not specify the maximum contribution for a DB plan, this slide allows us to compare the maximum contribution for a specific age and income amount --someone age 52 earning $270,000.
Read slide…
Hypothetical Example: Maximum annual contribution limits in 2017 for a business owner age 52, earning $270,000 W-2 income annually, retiring in 10 years
Assumes 5-7% funding rate for Defined Benefit Plans
Copyright 2017 Dedicated Defined Benefit Services, LLC.

10. OnePersonPlus from Dedicated DB A Great Tax Strategy for Clients Age 40+
Prospects
Small business owner, age 40+
Owner or Owner + spouse or family member
Expect to Contribute 5 successive years
New Plans
Median contributions: $130,000+*
Avg. term: 8+ years
Prototype plan documents
Integrates with a solo 401(k)
Dedicated DB’s Service
Easy to open, efficient to administer
2-page adoption agreement, online proposal, forms, pre-filled annual census
Experienced administration
Advisors & CPAs at the center to the relationship
* Based on 2016 first year contributions to Dedicated Defined Benefit Services DB plans
Here are a few points to consider – both in a DB plan and with the servicing of it.
Prospects
The first screening, to identify whether or not you have a potential prospect, is to ask:
Is the person 40 years or older?
Is the business an owner-only business or family business with no employees other than family members?
Does the business owner have the cash flow to contribute for at least 5 years? Plans will be designed for a minimum of 5 years. A plan can be amended or terminated earlier if there is a good reason to do so.
If the answer to these questions is “yes,” “yes” and “yes,” then it’s worthwhile to continue the conversation.
The question that often comes up is: “Does this work for a corporation or for a sole proprietorship?”
The answer is that it works for any business entity: sole proprietorship, corporation, S-Corp or LLC. The program will do what it’s meant to do, which is reduce taxable income for the owner and provide a tax shelter.
DB Plan
In terms of the plan, I mentioned that the median contribution was over $130,000, for an average term of over 8 years.
As for the plan documents – at Dedicated DB, these are our plan documents. We’ve designed and written them ourselves. We’ve made sure that this does a few things for you:
The documents are pre-approved by the IRS, so the IRS does’’t have to look at them again.
Secondly, our DB plan integrates nicely with a single person 401 (k) program.
Dedicated DB’s Service
Dedicated DB specializes in these small business retirement plans. They are efficient, experts who make the plan design and administration easy for us and the client.
Copyright 2017 Dedicated Defined Benefit Services, LLC.

11. Dedicated Defined Benefit Services
The leading provider of marketing, sales support, and administration
services for small business defined benefit and cash balance plans
Offers an outstanding defined benefit solution to present to self-employed and small business clients
Creates a high-quality experience for financial and tax advisors and their clients – from pre-sale through administration
Minimizes demand for technical expertise from Advisors & CPAs by providing expert plan consulting and design
Advisor / CPA support
Expertise by phone:
Expertise online:
Dedicated Defined Benefit Services, or Dedicated DB, is the sponsor of today’s program and the provider of OnePersonPlus.
Dedicated DB strives to create a high quality experience for you and your clients, from pre-sale through plan administration. We partner with you to present the small business DB plan in a way that makes sense to you and your clients.
Their phone is staffed by technical specialists who can deal with special situations that your clients might present.
Copyright 2017 Dedicated Defined Benefit Services, LLC.

12. Owner-Only, Sole Proprietor
Dr. Charles, Age 52
Wants Maximum Tax Deduction
Annual earnings: $500,000
Maximum DB + 401(k) contribution for 2017: $227,000
Contribution to DB Plan: $186,800
Contribution to 401(k): $40,200
Annual tax savings: $86,200
Combined marginal tax rate of 38%
DB Accumulation at age 62: $2.60 Million
10 years, 5-7% rate of return
Annual DB Benefit: $215,000
This example shows maximum contributions for Dr. Charles
Dr. Charles can add a 401(k) to increase his total contribution. This provides flexibility – if in subsequent years Dr. Charles wants to reduce his total contribution, the 401(k) is optional
Read slide
Copyright 2017 Dedicated Defined Benefit Services, LLC.

13. The Impact of Age on Contribution: The Older, The Better
Doctor Charles
Age 52
10 Years to Retirement
Compensation: $500,000
DB Contribution: $186,800
Annual Benefit at Retirement: $215,000
Doctor Tim
Age 35
27 Years to Retirement
Compensation: $500,000
DB Contribution: $71,300
Annual Benefit at Retirement: $215,000
Age and years to retirement will have a big impact on the DB contribution as this example shows.
Here is Doctor Charles again, age 52. Doctor Tim has the same income but is only 35 years old. His annual DB contribution will be only $71,300 – over $100,000 less than Dr. Charles. He could do almost as well maximizing his contribution to a 401(k) ($54,000 in 2017).
Dr. Tim would be better off waiting to start a DB. He could open a DB and a 401(k) for a total contribution of about $105,500 –
We may be able to get larger DB contributions for Doctor Tim by accruing benefits over a shorter period, e.g. 10 years vs. 27 years.
Copyright 2017 Dedicated Defined Benefit Services, LLC.

14. Married Business Partners, No Employees
Paul, Age 60; Mary, Age 58
5 years from retirement
W-2 Income: $540,000 ($270,000 each)
Total annual DB contribution: $429,500
$209,700 towards Paul’s retirement
$219,800 towards Mary’s retirement
Annual combined income tax savings: $163,200*
Accumulation at retirement:
Paul: $1.21 Million
Mary: $1.27 Million
Another ideal client for a DB -- couple in business together
Read Slide!
* Assumes a 38% combined marginal tax rate
Copyright 2017 Dedicated Defined Benefit Services, LLC.

15. Sole Proprietor, Side Income
Susan, Age 56 Professor
In addition to university salary, Susan has self-employment income from consulting and serving on 2 corporate boards
Annual self-employment earnings: $150,000*
DB contribution for 2017: $120,000
Annual tax savings: $45,600
Combined marginal tax rate of 38%
DB Accumulation at age 62: $866,800
6 years, 5-7% rate of return
* High 3-year average, after payment of self-employment taxes
A few situations that you might not think of right away
An employee who has significant side income from consulting, serving as independent director on a board, giving speeches, has patents, royalties, etc.
Another situation is a spouse who has a small business and the family doesn’t need that income to maintain lifestyle. If the spouse is 55+ might be able to contribute as much as 80% of earnings after paying self-employment taxes.
Read Slide!
Copyright 2017 Dedicated Defined Benefit Services, LLC.

16. Eligible Compensation for a Defined Benefit or Cash Balance Plan
Compensation Quick Reference Chart
Entity Type
Source of Income
Compensation for Plan
Corporation
W-2 Income
S-Corporation
W-2 + Schedule K-1
W-2 Income only
Sole Proprietorship
Schedule C (net profit)
Earned Income (calculate)*
Partnership
Schedule K-1 (net profit)
Limited Liability Company (LLC) — compensation for plan depends on how LLC is taxed. See above for partnership or corporation rules.
Employees, other than owners, are paid W-2 income for all entity types.
* Earned Income = net profit minus 1/2 self employment tax minus plan contribution. Deductions for sole proprietors and partners are limited to net profit minus 1/2 self-employment tax.
Copyright 2017 Dedicated Defined Benefit Services, LLC.

17. Working Together to Meet the Needs of Your Clients
Identify ideal clients for defined benefit plans
Typical Client Profiles
Continuing Ed Training
Reaching out to prospects
White papers
Client Brochures
Quick or custom proposals to show estimated contribution and tax savings
We have numerous sales support and marketing pieces available to help:
identify good prospects for a defined benefit plan
And to reach out to them with brochures, letters, feasibility estimates that show potential tax savings and maximum contribution.
I will work with you to present to the client if you want. Technical experts at Dedicated DB are available to answer your questions or the client’s questions and to run custom proposals – often in just an hour if we have a client meeting coming up
Copyright 2017 Dedicated Defined Benefit Services, LLC.

18. Key Dates
DB Plans must be opened by the end of your client’s fiscal year, for more businesses that will be December 31st.
Dedicated DB has a special Quick Adoption process for opening plans through year-end. Clients must sign Adoption Agreement by December 31st and send with a set-up fee to Dedicated DB.
The Investment Account will be opened once the Adoption Agreement is signed.
Account must be funded when taxes are filed but no later than eight and a half months after the end of the fiscal year.
These plans need to be opened by the end of the business’ fiscal year – that means December 31st for most clients.
It would be best to start discussions with the client now, try to get the plan designed and established before the year end rush if the client knows what their income for the year will be. If not, plans can be established (docs signed by client by ) and then adjusted between Jan. 1 and March 15th when the 2017 income is determined.
This might help you get these people to work with you on their taxes early so that the contribution amount can be determined.
They have until they file to fund the account or 8 and a half months after the end of their fiscal year at the latest.
Copyright 2017 Dedicated Defined Benefit Services, LLC.

19. Fees Defined Benefit Plan OR Defined Benefit & 401(k)
DB Plan Design and Documentation Preparation Fee: $1250 for one person plan
$250 per additional participant
DB Annual Administration Fee: $1950 for one person plan
(includes Form 5500, Schedule SB, and AFTAP filings)
$150 per additional participant OR
Defined Benefit & 401(k)
Plan Design and Documentation Preparation Fee: $1450 for one person plan
Annual Administration Fee: $2500 for one person plan
$300 per additional participant
Because these are prototype plans the fees are lower than a custom developed plan document.
This slide shows the fees for a standalone DB or a DB + 401(k) which only works for a a plan sponsor and spouse.
Copyright 2017 Dedicated Defined Benefit Services, LLC.

20. Establishing a Plan Contact me to Run a feasibility proposal
Introduce and Present Plan to client
Dedicated DB available on a conference call
Dedicated DB designs plan, calculates contribution number
Complete Plan Design Questionnaire with Client
Send signed Questionnaire to Dedicated DB
Include Plan Design and Documentation Preparation
Client signs Adoption Agreement
Client opens the investment account
I’m happy to work with you to identify qualified clients, introduce the program and run a quick feasibility proposal. I can be as involved as you like. This really is a terrific tax strategy for the right clients and I’m ready to help you deliver it to your clients.
ADVISOR: Insert your own contact information at this point
Provide sample brochures, client profile sheets
Copyright 2017 Dedicated Defined Benefit Services, LLC.