Learn About PTW

Introduction

The private pension system, which includes traditional defined benefit, 401(k) plans, etc., has succeeded in large part because it enables individuals to fund future benefits with tax deductible dollars. This feature is particularly valuable to highly compensated professionals such as physicians, engineers, attorneys, CPA’s, and other successful business owners.

However, two elements of the current system have irritated many professional firms.

First, the principals/owners of a firm are limited as to how much they can contribute to their plan due to IRS restrictions such as discrimination, tax deduction limits, and coverage tests.

Primary Benefits

The first primary benefit is larger tax deductible contributions. Principal Participants (e.g., physicians, engineers, CPAs, etc.) can create a retirement benefit that is far greater than conventional retirement plan structures permit. For example, a 60 year old professional may be able to make a tax deductible contribution of over $200,000 to his or her account. For example, that’s $150,000 greater than a conventional profit sharing/401(k) plan.

Another primary benefit is significant tax savings. If the cost of funding rank-and-file employee accounts is $50,000, and the Principal is able to fund $150,000 for him or herself, a $200,000 tax deduction exists. At a 35% marginal tax rate, the tax savings to the Principal Participant (professional/business owner) would be $70,000 – which is $20,000 greater than the costs of funding employee accounts.

Secondary Benefits

This program is independently sponsored, so one plan document per plan is maintained for a large group of independent entities. Otherwise, each professional/business owner would have to sponsor and maintain his or her own plan document, which comes with the frustration of regular amendments, updates, possible filings with IRS, etc. The plan documents utilized by this program utilize pre-approved IRS language.

The plan is maintained and administered by a globally respected actuarial firm under the direction of Matthew D. Hutcheson, LLC., the principal named fiduciary and trustee. Plan assets are held by custodian, TD Ameritrade.

Principal Participant’s will have significant investment flexibility and opportunity to use its own investment manager...

Cost and Ease of Use

The program is easy to adopt. The adoption agreement is just two pages long.

Each individual professional/business owner that chooses to utilize this program will pay a one-time entry and adoption fee to Matthew D. Hutcheson, LLC of $1,950. That fee covers all of the initial actuarial, fiduciary, plan adoption, implementation, coordination, and programming costs associated with joining the plan. Therefore, if there are three partners in a firm, the one-time adoption fee would be $1,950 x 3 = $5,850. That fee should be tax deductible, but verify with your tax adviser.

Ongoing operational and management fees and costs are separate and distinct from the one-time setup fee. The very reasonable fees are quoted upon verification of program feasibility.