A Lesson in Qualified Retirement Plans

Transcription

1 A Lesson in Qualified Retirement Plans Since salary alone is often not enough to attract and retain valued employees, how can your business use a qualified retirement plan to enhance its employee benefits package? Prepared for: Our Clients Table of Contents Page Brought to you by: Ask Yourself... 2 The Facts Are 2 What Is a Qualified Retirement Plan? 3 Qualified Retirement Plan Tax Advantages 4 The Power of Tax Qualified Retirement Plans 5 Who Can Establish a Qualified Retirement Plan? 6 Types of Qualified Retirement Plans 6 Defined Benefit Plans 7 Defined Contribution Plans 8 Profit Sharing Plans 9 401(k) Plans 10 The Roth 401(k) Option 11 Simplified Employee Pensions 12 SIMPLE Retirement Plans 13 Qualified Retirement Plan Provisions 14 Qualified Retirement Plan Comparison Employee Census 17 Important Information 18 Peter von Halle, CLU, ChFC von Halle Brokerage Group 48 Notch Road Little Falls, NJ Office: (973) pvh@vonhalle.com Registered Representative offering securities through Cadaret, Grant & Co, Inc., Member FINRA/SIPC January 01, 2013

2 Ask Yourself Do your employees make a substantial contribution to the success of your business? Do you know the financial impact on your business of a high employee turnover rate? Have you ever lost employees to a competitor? Do you offer a retirement plan to your employees? Do your competitors offer a retirement plan to their employees? Are you aware of the tax benefits of a qualified retirement plan? Are you taking personal advantage of a qualified retirement plan to help satisfy your retirement income needs? "Take away my factories, my plants; take away my railroads, my ships, my transportation; take away my money; strip me of all of these, but leave me my men and in two or three years, I will have them all again." -- Andrew Carnegie Since salary alone is often not enough to attract and retain valued employees, how can your business use a qualified retirement plan to enhance its employee benefits package? The Facts Are Employees are frequently the glue that hold a business together. A good employee benefit program that includes retirement benefits can make it easier to recruit, hire and retain productive employees. When a quality employee terminates employment, it can result in a reduction in profits, increased competition, replacement costs and a loss of confidence among customers and creditors. A qualified retirement plan provides significant tax advantages to you, your business and your employees. Small business owners cannot rely on others to assist in achieving their retirement income goals. For many business owners, the question isn't if they should implement a qualified retirement plan instead the question is what kind of retirement plan is right for their business. Qualified Retirement Plans for Our Clients Page 2 of 18

3 What Is a Qualified Retirement Plan? A qualified retirement plan is a program implemented and maintained by an employer or individual for the primary purpose of providing retirement benefits and which meets specific rules spelled out in the Internal Revenue Code. For an employer-sponsored qualified retirement plan, these rules include: The plan must be established by the employer for the exclusive benefit of the employees and their beneficiaries, the plan must be in writing and it must be communicated to all company employees. Plan assets cannot be used for purposes other than the exclusive benefit of the employees or their beneficiaries until the plan is terminated and all obligations to employees and their beneficiaries have been satisfied. Plan contributions or benefits cannot exceed specified amounts. The plan benefits and/or contributions cannot discriminate in favor of highly-compensated employees. The plan must meet certain eligibility, coverage, vesting and/or minimum funding standards. The plan must provide for distributions that meet specified distribution requirements. The plan must prohibit the assignment or alienation of plan benefits. Death benefits may be included in the plan, but only to the extent that they are "incidental," as defined by law. Question: Answer: Why do employers comply with these requirements and establish qualified retirement plans? To take advantage of the tax advantages offered by qualified retirement plans. Qualified Retirement Plans for Our Clients Page 3 of 18

4 Qualified Retirement Plan Tax Advantages In order to encourage saving for retirement, qualified retirement plans offer a variety of tax advantages to businesses and their employees. The most significant tax breaks offered by all qualified retirement plans are: Contributions by an employer to a qualified retirement plan are immediately tax deductible as a business expense, up to specified maximum amounts. Employer contributions are not taxed to the employee until actually distributed. Investment earnings and gains on qualified retirement plan contributions grow on a taxdeferred basis, meaning that they are not taxed until distributed from the plan. Depending on the type of qualified retirement plan used, other tax incentives may also be available: Certain types of qualified retirement plans allow employees to defer a portion of their compensation, which the employer then contributes to the qualified retirement plan. Unless the Roth 401(k) option is selected, these elective employee deferrals are not included in the employee's taxable income, meaning that they are made with before-tax dollars (see page 11 for information on the Roth 401(k) option). Qualified retirement plan distributions may qualify for special tax treatment. Depending on the type of qualified retirement plan, employees age 50 and over may be able to make additional "catch-up" contributions. Low- and moderate-income employees who make contributions to certain qualified retirement plans may be eligible for a tax credit. Small employers may be able to claim a tax credit for part of the costs in establishing certain types of qualified retirement plans. Qualified Retirement Plans for Our Clients Page 4 of 18

5 The Power of Tax Qualified Retirement Plans The primary qualified retirement plan tax advantages - before-tax contributions and taxdeferred growth - provide the opportunity to accumulate substantially more money for retirement, when compared to saving with after-tax contributions, the earnings on which are taxed each year. The chart below illustrates hypothetical results over 20 years for each $1,000 contributed to a qualified retirement plan, compared to investing the $750 remaining after taxes are paid in a plan whose earnings are taxed, assuming a 25% income tax bracket. 20 Year Results for Each $1,000 Contributed (1) Qualified Retirement Plan (2) : $1,000 annual before-tax contribution 8% hypothetical before-tax annual rate of return After-Tax Plan (25% tax bracket): $750 annual after-tax contribution 6% hypothetical after-tax annual rate of return 20 Years $29,245 $49, years $18,504 $29, Years $15,645 $10,479 5 Years $6,336 $4,481 $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 (1) This is a hypothetical illustration only and is not indicative of any particular investment or performance. It does not reflect the fees and expenses associated with any particular investment, which would reduce the performance shown in this hypothetical illustration if they were included. (1) Qualified Retirement Plan: If the $49,423 value is taken as a lump sum at the end of the 20th year, the principal amount remaining after payment of income tax is $37,067 at a 25% rate (assumes no penalty tax is assessed), compared to $29,245 available in the after-tax plan. Qualified Retirement Plans for Our Clients Page 5 of 18

6 Who Can Establish a Qualified Retirement Plan? Any business, whether a sole proprietorship, a partnership or a corporation, can set up a qualified retirement plan for the benefit of its employees, including owner-employees. Types of Qualified Retirement Plans There are two broad categories of qualified retirement plans: 1. Pension Plans A pension plan is a plan established and maintained by an employer primarily to provide systematically for the payment of definitely determinable benefits to its employees over a period of years, usually for life, after retirement. The requirement to provide definitely determinable benefits can be met by providing either: A specified retirement benefit (defined benefit plan); or A specified annual contribution (defined contribution plan). 1. Profit Sharing Plans In contrast, a profit sharing plan provides for flexibility of contributions. Profit sharing plans are designed to share company profits with employees. There need not be a definite, predetermined formula, however, that specifies the amount of profits to be shared. Instead, contributions to a profit sharing plan may be determined annually on an arbitrary basis. Qualified Retirement Plans Pension Plans Defined Benefit Plans Defined Contribution Plans Profit Sharing Plans Qualified Retirement Plans for Our Clients Page 6 of 18

7 Defined Benefit Plans: An Overview Description: A defined benefit plan promises that a specific benefit will be paid at retirement. The promised retirement benefit can be either a flat dollar amount that is provided to all employees or, more commonly, a benefit that is determined according to a formula. The annual employer contributions required to provide the promised retirement benefits are then actuarially determined. Benefit Formulas: Flat Dollar Amount: All plan participants receive the same flat dollar amount at retirement (e.g., $300 per month for life). Flat Percentage: Each plan participant receives a fixed percentage of compensation as a retirement benefit (e.g., 20% of average compensation for the three consecutive highest paid years; someone with average compensation of $75,000 would then receive a $15,000 annual pension benefit). Unit Benefit: Each plan participant receives a flat dollar amount or a percentage of compensation for each completed year of service (e.g., a $25 per month benefit for each completed year of service would pay a $500 monthly pension benefit to someone with 20 years of service; alternatively 2% of monthly compensation for each completed year of service would result in a $2,000 monthly pension benefit for someone making $5,000 per month who had 20 years of service). Advantages: If the business has older, higher paid employees, including owner-employees, a defined benefit plan makes it possible to shelter large amounts of current business income and provide meaningful retirement benefits to older employees, who are fewer years away from retirement. Disadvantages: Administration of a defined benefit plan can be complex, requiring periodic actuarial review in order to determine how much the employer must contribute to provide the promised retirement benefits. The employer assumes the risk of investment performance. If plan investments perform below assumed rates of return, the employer may have to increase contributions in order to provide the promised retirement benefits. Qualified Retirement Plans for Our Clients Page 7 of 18

8 Defined Contribution Plans: An Overview Description: In a defined contribution plan, the employer makes a stated annual contribution to the plan, which is then allocated to plan participants' accounts and invested on their behalf. When a plan participant retires, the amount of his or her retirement benefit is based on the value of the participant's account at retirement. Types of Defined Contribution Plans: Money Purchase Pension Plans: Employer contributions are required and are generally based on a fixed percentage of employee compensation, such as 10% of compensation. Savings or Thrift Plans: Mandatory employee contributions, which the employer then matches to a stated degree, are usually required in a savings or thrift plan. For example, the employer may match, dollar for dollar, employee contributions up to 3% of compensation. Since mandatory employee contributions in a savings or thrift plan are not tax deductible, these plans are less popular than 401(k) plans, which provide for before-tax employee contributions. Target Benefit Plans: While classified as a defined contribution plan, a target benefit plan is a hybrid plan. As in a defined benefit plan, annual employer contributions are based on the amount needed to provide a "target" retirement benefit using an assumed interest rate, which produces larger contributions for older employees. The plan then operates like a money purchase pension plan, with the employer making the required annual contribution and the employee receiving a retirement benefit determined by the value of his or her account at retirement. Advantages: Defined contribution plans tend to be easier to set up, administer and explain to employees. The employee assumes the risk of investment performance. The employer's only obligation is to make the contributions required by the plan. Disadvantages: Since defined contribution plans tend to favor younger employees, who have a longer time period in which their retirement accounts can grow, it may not be possible with a defined contribution plan to provide a substantial retirement benefit to older owner-employees or key employees who have fewer years until retirement. Qualified Retirement Plans for Our Clients Page 8 of 18

9 Profit Sharing Plans: An Overview Description: Profit sharing plans are not required to have a "definitely determinable benefit" or contribution. As a result, contributions to a profit sharing plan can vary from year to year, at the discretion of the employer. While the employer is not required to make contributions to the plan each year, there must be recurring and substantial contributions in order for the plan to retain its qualified retirement plan status. While the amount of the annual contribution to a profit sharing plan can vary from year to year, once a contribution is made to the plan, it must be allocated to the accounts of plan participants in a uniform, non-discriminatory manner, where it is invested on their behalf. When a plan participant retires, the amount of his or her retirement benefit is then based on the value of the participant's account at retirement. Profit Sharing Plan Contributions: The profit sharing plan document specifies how contributions to the plan will be determined. There is considerable flexibility available in this regard. For example, annual contributions can be based on a specified percentage of net profits, or can be equal to the amount by which profits exceed a specified dollar amount, or can be equal to an amount determined by the board of directors each year. Advantages: Contributions are based on business profitability or left to the discretion of the board of directors. The employee assumes the risk of investment performance. Employees who have an opportunity to share in company profits may be better motivated employees. Disadvantages: Since profit sharing plans tend to favor younger employees, who have a longer time period in which their retirement accounts can grow, it may not be possible with a profit sharing plan to provide a substantial retirement benefit to older owner-employees or key employees who have fewer years until retirement. Qualified Retirement Plans for Our Clients Page 9 of 18

10 401(k) Plans: An Overview Description: A 401(k) plan is a type of profit sharing plan that allows employees to choose between receiving current compensation (and being taxed on it) or deferring compensation to a 401(k) plan (and deferring tax on it) through a "cash or deferred arrangement" (CODA). Employers frequently make a matching contribution equal to some percentage of the employee's elective salary deferral. A 401(k) plan can also provide for profit sharing contributions made by the employer and allocated to the accounts of all plan participants in a uniform, non-discriminatory manner. Plan participants are usually able to allocate their 401(k) contributions among the various investment alternatives available in the plan. The amount of a participant's retirement benefit is then based on the value of the participant's account at retirement. 401(k) Plan Contributions: Contributions to a 401(k) plan typically arise from one or more of these sources: Salary reduction: The employee agrees to a reduction in salary (an elective salary deferral), which the employer then contributes to the plan on the employee's behalf. The employee is able to exclude the salary reduction amount from current income. Matching employer contribution: The employer agrees to match a percentage of the employee's elective salary deferral. The match is typically a percentage match (e.g., 50%) for each dollar deferred by the employee, up to a specified maximum. Profit sharing contribution: The employer makes a profit sharing contribution, which each employee can take in cash, defer to the 401(k) plan or some combination of the two. Advantages: Both employers and employees can make retirement plan contributions on a pre-tax basis. The employee directs how his/her 401(k) account is invested and assumes the risk of investment performance. Disadvantages: 401(k) plans are somewhat more involved to administer than some other types of qualified retirement plans. 401(k) plans tend to be more advantageous for younger employees with more time until retirement. Qualified Retirement Plans for Our Clients Page 10 of 18

11 The Roth 401(k) Option Pay Now or Pay Later? With the availability of a Roth 401(k) plan option, if the 401(k) plan permits, employees can now choose to contribute all or a portion of their 401(k) plan elective salary deferrals to a Roth 401(k) account. The Roth 401(k) option is similar to a Roth IRA, in that contributions are made with after-tax dollars since Roth contributions are not excluded from current income. The Roth 401(k) account grows tax free, and here's the Roth tax advantage qualified distributions from a Roth 401(k) account are received completely free of federal income tax. A qualified distribution is one that is made more than five years after the Roth 401(k) account is established and the plan participant is at least age 59-1/2, or is deceased or disabled, or the funds are being used to purchase a first home ($10,000 lifetime limit). In addition, if the plan permits, plan participants may roll over all or part of the eligible portion of their regular 401(k) account to a Roth 401(k) account inside of the plan. While qualified distributions from a Roth 401(k) account will be received free of income tax in the future, federal income tax must be paid on the amount that is rolled over to the Roth 401(k) account in the year the rollover takes place. In order to avoid unforeseen and/or negative tax consequences, a professional tax adviser should be consulted before transferring funds from a regular 401(k) account to a Roth 401(k) account. If the 401(k) plan offers a Roth option, employees have the choice of: Paying taxes later by contributing pre-tax dollars to a regular 401(k) account, where the money will grow on a tax-deferred basis until distributed, at which time the contributions and earnings will be taxed in the employee's then-current income tax bracket in the year they are distributed; or Paying taxes now by contributing money that has already been taxed to a Roth 401(k) account, or converting all or part of the eligible portion of a regular 401(k) account to a Roth 401(k) account, where the funds grow tax free and are distributed free of income tax so long as the qualified distribution requirements are met; or Splitting their elective salary deferrals between a regular 401(k) account and a Roth 401(k) account, getting tax benefits today in the form of pre-tax contributions to the regular 401(k) account and in the future in the form of tax-free distributions from the Roth 401(k) account. Qualified Retirement Plans for Our Clients Page 11 of 18

12 Simplified Employee Pension Plans (SEPs): An Overview Description: A SEP consists of employer-funded individual retirement accounts (IRAs) provided for each participating employee. The employer makes contributions to these "SEP-IRAs" on a discretionary basis. The plan has fewer IRS reporting and disclosure requirements and tends to be easier to administer than other types of qualified retirement plans. SEP Contributions: Each eligible employee must have his or her own IRA, into which the employer can make contributions up to specified limits. While the employer is not obligated to make a SEP contribution each year, employer contributions to a SEP cannot discriminate in favor of highly compensated employees. Contributions to a SEP are deductible by the employer and excluded from the employee's current income. In effect, a SEP consists of an "employer-provided IRA" for each participating employee that has higher contribution limits than traditional IRAs that individuals establish for themselves. Advantages: SEPs have minimal administrative and reporting requirements. The employer has flexibility as to whether to contribute to the SEP each year and has until its tax-filing deadline to make SEP contributions. The employee directs how his/her IRA is invested and assumes the risk of investment performance. Disadvantages: Virtually all employees must be covered by a SEP. Since SEP contributions are made to an IRA owned by the employee, full vesting is immediate. SEPs tend to be more advantageous for younger employees with more time until retirement. Qualified Retirement Plans for Our Clients Page 12 of 18

13 SIMPLE Retirement Plans: An Overview Description: A Savings Incentive Match Plan for Employees, or SIMPLE, retirement plan can be set up by employers with 100 or fewer employees for the purpose of enabling employees to defer a portion of their salary on a before-tax basis to a retirement plan. Employers must also make matching contributions up to specified limits. Types of SIMPLE Plans: SIMPLE IRA Plan: Employees may make elective salary deferrals up to a specified maximum amount to an IRA owned by the employee. The employer is generally required to match an employee's elective salary deferral up to an amount not exceeding 3% of the employee's compensation. Instead of matching contributions, the employer can make a nonelective contribution of 2% of compensation on behalf of each eligible employee with at least $5,000 in compensation. SIMPLE 401(k) Plan: A SIMPLE 401(k) plan operates much the same as a regular 401(k) plan. By complying with specific contribution and vesting requirements, however, an employer that adopts a SIMPLE 401(k) plan does not have to comply with certain 401(k) plan nondiscrimination and top-heavy rules. Advantages: SIMPLE plans have minimal administrative and reporting requirements. Owner-employees and other highly-paid employees are not restricted as to the amount they can contribute to a SIMPLE plan, as they may be in a 401(k) plan due to low participation in the 401(k) plan by lower-paid employees. The employee directs how his/her contributions are invested and assumes the risk of investment performance. Disadvantages: Virtually all employees are eligible to participate in a SIMPLE plan. All SIMPLE plan contributions, including those made by the employer, vest fully and immediately to the employee. SIMPLE plans tend to be more advantageous for younger employees with more time until retirement. Qualified Retirement Plans for Our Clients Page 13 of 18

14 Qualified Retirement Plan Provisions Eligibility Requirements: A qualified retirement plan must generally include employees who are age 21 or older and who have met a minimum service requirement, such as one year of service. Minimum Coverage Requirements: Since qualified retirement plans cannot discriminate in favor of highly compensated employees (those making $115,000 or more in 2013), a plan must generally meet one of the coverage tests required by the Internal Revenue Code. The purpose of the coverage tests is to ensure that a certain percentage of non-highly compensated employees are covered by the qualified plan. In addition, special requirements are imposed on "top-heavy" plans those in which more than 60% of the benefits or account balances have accrued to key employees. Permitted Disparity: There is one exception to the general requirement that qualified retirement plans cannot discriminate in favor of highly compensated employees: permitted disparity. Since most employers pay Social Security tax for their employees and since Social Security benefits replace a larger percentage of the income of lower-paid employees, permitted disparity (also known as Social Security integration) allows most qualified plans to take this disparity into account and provide a somewhat higher benefit or contribution percentage to higher-paid employees than to lower-paid employees. The end result is intended to be an essentially uniform percentage of compensation provided to all employees at retirement, when both Social Security and qualified plan benefits are taken into account. Vesting Requirements: Vesting refers to an employee's right to receive the retirement benefit or account benefit being accrued in the plan. Any employee contributions made to a qualified plan must be immediately 100% vested. Many types of qualified plans allow use of a vesting schedule, under which the percentage of the benefit or account balance attributable to employer contributions can be vested based on an employee's years of service. Distribution Requirements: Certain qualified retirement plans can allow for loans and/or withdrawals from the plan, as authorized by the plan document. In addition, a plan may need to meet minimum distribution requirements and survivor benefit requirements. Qualified Retirement Plans for Our Clients Page 14 of 18

15 Qualified Retirement Plan Comparison Type of Plan Employee Eligibility to Participate Contribution Requirements 2013 Maximum Annual Contributions Defined Benefit Plan All employees at least age 21 who worked at least 1,000 hours in the previous year must generally be eligible to participate. Mandatory employer contributions, based on benefit formula specified in plan. Actuarially determined contribution required to provide a benefit not to exceed the lesser of 100% of a participant's compensation or $205,000. Money Purchase Pension Plan All employees at least age 21 who worked at least 1,000 hours in the previous year must generally be eligible to participate. Mandatory employer contributions, based on contribution formula specified in plan. Employee contributions may be allowed by plan. Employer contribution cannot exceed 25% of total eligible compensation; per participant contributions cannot exceed the lesser of 25% of compensation or $51, Profit Sharing Plan All employees at least age 21 who worked at least 1,000 hours in the previous year must generally be eligible to participate. Discretionary employer contributions allocated by formula specified in plan. Employee contributions may be allowed by plan. Employer contribution cannot exceed 25% of total eligible compensation; per participant allocations cannot exceed the lesser of 25% of compensation or $51, (k) Plan All employees at least age 21 who worked at least 1,000 hours in the previous year must generally be eligible to participate. Discretionary employee elective salary deferrals; discretionary employer contributions that may include matching contributions, as specified in plan. Employee: Up to $17,500 elective salary deferral ($23,000 if age 50 or older). Employer: Up to 25% of compensation; when combined with elective salary deferral, cannot exceed the lesser of 100% of income or $51, Qualified Retirement Plans for Our Clients Page 15 of 18

16 Type of Plan Employee Eligibility to Participate Contribution Requirements 2013 Maximum Annual Contributions Simplified Employee Pension (SEP) All employees at least age 21 who worked for the employer in any 3 of the last 5 years must generally be eligible to participate. Discretionary employer contributions only. Employer contribution cannot exceed the lesser of 25% of employee's compensation or $51, SIMPLE Retirement Plan Any employee who has earned at least $5,000 from the employer in any prior 2 years and is reasonably expected to earn at least $5,000 in the current year must be eligible to participate. Discretionary employee elective salary deferrals that are either matched by the employer up to a specified percentage or the employer makes a contribution equal to 2% of each employee's compensation. Employee: Up to $12,000 elective salary deferral ($14,500 if age 50 or older). Employer: Match 100% of employee contribution up to 3% of compensation or contribute 2% of each eligible employee's compensation 1. 1 Only the first $255,000 of compensation can be used in applying these limits in Type of Plan Vesting Withdrawals and Loans Defined Benefit Plan Money Purchase Pension Plan Profit Sharing Plan 401(k) Plan Simplified Employee Pension (SEP) SIMPLE Retirement Plan Right to benefits may be vested over time. Employer contributions may vest over time. Employer contributions may vest over time. Employee salary deferrals are 100% vested. Employer contributions may vest over time. Employer contributions are 100% immediately vested. All contributions are 100% immediately vested. As permitted by plan; may be subject to tax penalty. As permitted by plan; may be subject to tax penalty. As permitted by plan; may be subject to tax penalty. As permitted by plan; may be subject to tax penalty. Withdrawals permitted anytime, subject to income tax and possible tax penalty. Withdrawals permitted anytime, subject to income tax and possible tax penalty. Qualified Retirement Plans for Our Clients Page 16 of 18

17 Employee Census Name Sex Smoker? (Y or N) Date of Birth Date of Hire Annual Compensation Home Zip Code Key Employee? (Y or N) 1 M F Y N / / / / $ Y N 2 M F Y N / / / / $ Y N 3 M F Y N / / / / $ Y N 4 M F Y N / / / / $ Y N 5 M F Y N / / / / $ Y N 6 M F Y N / / / / $ Y N 7 M F Y N / / / / $ Y N 8 M F Y N / / / / $ Y N 9 M F Y N / / / / $ Y N 10 M F Y N / / / / $ Y N 11 M F Y N / / / / $ Y N 12 M F Y N / / / / $ Y N 13 M F Y N / / / / $ Y N 14 M F Y N / / / / $ Y N 15 M F Y N / / / / $ Y N 16 M F Y N / / / / $ Y N 17 M F Y N / / / / $ Y N 18 M F Y N / / / / $ Y N 19 M F Y N / / / / $ Y N 20 M F Y N / / / / $ Y N Qualified Retirement Plans for Our Clients Page 17 of 18

18 Important Information The information, general principles and conclusions presented in this report are subject to local, state and federal laws and regulations, court cases and any revisions of same. While every care has been taken in the preparation of this report, neither VSA, L.P. nor The National Underwriter Company is engaged in providing legal, accounting, financial or other professional services. This report should not be used as a substitute for the professional advice of an attorney, accountant, or other qualified professional. U.S. Treasury Circular 230 may require us to advise you that "any tax information provided in this document is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer. The tax information was written to support the promotion or marketing of the transaction(s) or matter(s) addressed and you should seek advice based on your particular circumstances from an independent tax advisor." VSA, LP All rights reserved (VSA 1d1-03 ed ) Qualified Retirement Plans for Our Clients Page 18 of 18