1. Defined Benefit Plans for Medical Professionals
A Tax Strategy for Individuals with Self-Employment Income,
Sole Practitioners and Small Business Owners
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.
Over the past several years, there have been important changes in the tax laws that make a defined benefit plan attractive for the right medical professional. Today, we’ll be talking about who opens DB plans and how DB plans can work for you.
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.

3. Replace with your photo
Today’s Presenter
Advisor Name & photo
Affiliation
Expertise
Connection to audience
Replace with your photo
Let me tell you a little bit about me and then about my company.
My name is ________________________
Provide your info and background if the business owner does not know you
Copyright 2017 Dedicated Defined Benefit Services, LLC.

4. Agenda The Personal Pension Plan Ideal Financial Situation
Defined Benefit Plans At a Glance
Compared to Other Retirement Plans
The OnePersonPlus® Program from Dedicated DB
Ideal Financial Situation
Meeting Your Needs
Eligible Compensation
Key Dates
Fees
Opening a DB Plan
Follow through
Here’s our agenda for today.
We’ll talk about:
What a defined benefit plan is and how it compares to other types of retirement plans
We’ll look at typical clients and how a DB plan works for them based on their age, income and financial situation. Our main objective is to help you determine the suitability of a defined benefit plan for you and how big a tax savings you might expect.
I’ll also run through the process of opening a plan and how I can make it easy for you.
Copyright 2017 Dedicated Defined Benefit Services, LLC.

5. Defined Benefit Plans at a Glance
Qualified retirement plan approved by the IRS
Contributions are tax deductible
Highest available contributions and tax deductions of any qualified retirement plan
Contributions are based on:
Your age
Income
Years to retirement
A Defined Benefit plan – which you might think of as a Pension -- is a qualified retirement plan approved under the IRS tax code. Money contributed to the plan is deductible against earned income, similar to a SEP, 401(k) or IRA.
Most small business owners and self-employed people open defined benefit plans to get as large a deduction as possible. The defined benefit plan provides the highest available contributions and tax deductions. The highest contribution that you can make will be calculated for you based on your income, age, and years to retirement. Dedicated Defined Benefits Services works with you to design a plan that meets your objectives.
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. Comparison of Retirement Plans
Defined Benefit (DB) Plans May Allow Business Owners 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 –a physician 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.

7. Defined Benefit 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
Retirement age is typically set at age 62 or older
Plan can be amended to change the goal
DB plans are goal-oriented.
Defined benefit plans allow you to set a goal – the “benefit” -- or the percent of annual income you want to receive in retirement
And the plan design establishes how much you need to contribute each year to achieve that goal or benefit.
When plans are opened a goal for the retirement benefit is established.
There is a maximum benefit that a business owner can aim for based upon age, income and years to retirement. If the maximum allowed 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
You commit 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 you earn a higher rate than targeted, you will contribute less the next year and get a lower tax deduction.
Retirement age is flexible. It can be set as low as age 62. A business owner age 70 may open a plan with a retirement age of 75. Since years to retirement and life expectancy are critical factors in calculating the future benefit, opening a defined benefit plan is a less attractive option for a business owner younger than 38 or older than 75.
To change the goal, the plan must be amended. It’s important to know if your situation changes. If necessary, you can amend the plan formula or terminate the plan before retirement if necessary.
Copyright 2017 Dedicated Defined Benefit Services, LLC.

8. OnePersonPlus from Dedicated DB A Great Tax Strategy for Business Owners Age 40+
Typical Plan Sponsors
Small business owner, age 40+
Owner only, Owner + spouse or family business
Expect to contribute 5 successive years
New Plans
Avg. annual contributions: $130,000+*
Avg. term: 8+ years
Integrates with a solo 401(k)
Dedicated DB’s Service
Prototype plan documents eliminates cost of actuary, tax attorney
Easy to open, efficient to administer – 2-page adoption agreement, online proposal, forms, pre-filled annual census
Set up fee and annual administration fee
No administration fees based on the size of your account
You and Your Financial Advisor Select the Investments
* 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.
Typical Profile
The first screening, to identify whether or not a DB plan is right for you, is to answer these questions:
Is the person 40 years or older?
Is the business an owner-only business or family business with no employees?
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.
Sometimes, people who don’t fit the typical profile, open plans. Dedicated DB can develop a custom proposal based on a business owner’s unique situation. We can look at your particular situation and see if it makes sense for you. If you have employees you may want to consider a cash balance plan.
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, these are Dedicated DB’s own plan documents – designed and written by them. They’ve made sure that this does a few things for you:
The documents are pre-approved by the IRS, so the IRS doesn’t have to look at them again.
Secondly, their 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 experts who make the plan design and administration easy and efficient.
Copyright 2017 Dedicated Defined Benefit Services, LLC.

9. Sole Proprietor, Owner-only
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 Charles
Charles can add a 401(k) to increase his total contribution. This provides flexibility – if in subsequent years Charles wants to reduce his total contribution, the 401(k) is optional
Read slide
Copyright 2017 Dedicated Defined Benefit Services, LLC.

10. 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.
Copyright 2017 Dedicated Defined Benefit Services, LLC.

11. 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: $429,000
$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 business owner for a DB -- couple in business together
Read Slide!
* Assumes a 38% combined marginal tax rate
Copyright 2017 Dedicated Defined Benefit Services, LLC.

12. Employee with Side-Income, Sole Proprietor
Walter, Age 56, Professor
In addition to university salary, Walter 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
5 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
A surgeon employed by a hospital who also has significant side income from consulting, serving as independent director on a board, an expert witness, giving speeches, has patents, royalties, etc.
Another situation is a doctor’s spouse who has a small business and the family doesn‘t need that income to maintain lifestyle. If the spouse is 55+ he or she 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.

13. Owner-Only, W-2 Income Fluctuates
Kumar, Age 48, Radiologist
2017 W-2 earnings: $185,000
Maximum DB contribution for 2017: $110,300
+ 401(k) contribution for 2017: $29,100
Total deduction in 2017: $139,400
2017 tax savings: $52,900
Combined marginal tax rate of 38%
DB Accumulation at age 62: $2.24 Million
14 years, 5-7% rate of return
Annual DB Benefit: $185,000
In this example the independent doctor has fluctuating income. He can get a significantly higher contribution in good income years by establishing both a DB and a 401(k). If his income is lower another year, he makes no contribution to the 401(k).
Copyright 2017 Dedicated Defined Benefit Services, LLC.

14. Eligible Compensation for a DB 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)
How you have set up your business will determine what is considered income and how your plan is designed. Generally, you can contribute more if you are set up as a corporation.
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.

15. Key Dates
DB Plans must be opened by the end of your fiscal year, for most businesses that will be December 31st.
The Investment Account will be opened once the Adoption Agreement is signed. If you open the plan before year end, we recommend investing no more than 50% of the assets before you have your final year-end income statement.
The investment 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 business owners.
It would be best to get the plan designed and established before the year end rush if you know what your income for the year will be. If not, plans can be established (docs signed by business owner by ) and then adjusted between Jan. 1 and March 15th when the 2017 income is determined.
You can begin to make contributions as soon as the account is set up.
It’s important to work on your taxes early so that the contribution amount can be determined.
You have until you file, or 8 and a half months after the end of their fiscal year at the latest, to fund the account.
Copyright 2017 Dedicated Defined Benefit Services, LLC.

16. Fees Defined Benefit Plan OR Defined Benefit & 401(k)
Plan Design and Documentation Preparation Fee: $1250 for one person plan
$250 per additional participant
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.

17. Establishing a Plan We can run a feasibility proposal for you
Bring your accountant into the discussion early
Once the plan meets your objectives, we’ll complete a Plan Design Questionnaire
Send signed Questionnaire to Dedicated DB
With Plan Design and Documentation Preparation Fee
We’ll send you an Adoption Agreement to sign
You can begin to fund the investment account
I’m happy to work with you to run a quick feasibility proposal. This really is a terrific tax strategy for the right person and I’m ready to help you when you’re ready.
ADVISOR: Insert your own contact information at this point
Provide sample brochures, business owner profile sheets
Copyright 2017 Dedicated Defined Benefit Services, LLC.