Fully Insured Pension Plan 2015

Copyright 2015, The Ohio National Life Insurance Company

Fully Insured Pension Fully Insured Pension Plan for Business Plan for Business OwnersOwners

Maximum Tax Deductions with Guaranteed Retirement Income

Presented by:Nick ChaplainThe Ohio National Life Insurance CompanyOhio National Life Assurance CorporationOhio National Equities, Inc.Member FINRA

2 Copyright 2015, The Ohio National Life Insurance Company

The Ohio National Life Insurance Company and Ohio National Life Assurance Corporation issue a variety of life insurance and annuity products. Product availability varies by state. Guarantees are based upon the claims-paying ability of the issuer.


Why Business Owners Need Qualified Retirement Plans For maximizing tax benefits For solving liquidity problems that

occur at retirement or death

For sheltering assets from legal liability and creditors

For avoiding taxes on excess accumulated earnings


Questions To Consider Is your retirement account

underfunded? Do you need to reduce your taxable

income significantly? Would you like to provide substantial

survivor benefits to your beneficiaries? Have stock market declines hurt

your retirement “nest egg”?


Qualified Retirement Plans Provide retirement, disability and/or

death benefits Must meet specific Internal Revenue

Code requirements Qualify for tax-favored treatment Cannot discriminate


Qualified Retirement Plans Two main tax advantages for an

employer’s contributions 1. Taxable income is REDUCED by the

amount contributed2. Retirement savings in the owner’s

account grows TAX DEFERRED


Qualified Retirement PlansTwo Types of Qualified Plans

Defined Contribution Defined Benefit


Qualified Retirement Plans Defined contribution:

25% of compensation limit for tax-deductible CONTRIBUTIONS

Defined benefit:$210,000 per year maximum

BENEFIT *

*Under current law – dollar amount indexed and may increase each year


Defined Contribution Plans Retirement benefit

Participant receives account balance at normal retirement date

Annual contributionUsually % of current salary

Limit on each participant’s annual contributionLesser of $53,000* or 100% of salary

*Under current law – dollar amount indexed and may increase each year


25Age

65Age

$400,000

40 yrs

Contribution = $10,000/yr

55Age

65Age

$100,000

10 yrs


How Defined Contribution Plans Work


Defined Benefit Plans Pension benefit

Set by plan formula Annual contribution

Amount needed each year to provide pension at normal retirement date

Limit on each participant’s annual contributionNo dollar limit on annual contribution


25Age

65Age

$1,000,000

40 yrs


55Age

65Age

$1,000,000

10 yrs


How Defined Benefit Plans Work


How a Fully Insured Pension Plan Works

Business makes tax-deductiblecontributions to the fully

insured pension plan

Fully insured pension plan purchases annuities and insurance policies

Retirement distributionsmade or benefits rolled to

another qualified plan


How Does a Fully Insured Pension Plan Differ? Plan funding

Whole life insurance and fixed annuities orFixed annuities alone

Guaranteed benefits No market risk


End Result Larger current tax

deductions Guaranteed

retirement benefits


What’s the Bottom Line? For each dollar you contribute to the

fully insured pension plan, the government funds 30 to 40 cents of your retirement through the available tax deduction (depending on applicable tax bracket)


Traditional Defined Benefit Planvs. Fully Insured Defined Benefit Plan

Traditional Plan Fully Insured Plan

Limited early contributions

Larger contributions in early years

May become over/underfunded Always fully funded

Quarterly contribution deadlines

Funding extended to tax filing deadline


Life Insurance in a Fully Insured Pension Plan Provides estate liquidity Tax-deductible premiums Insures retirement benefit against

premature death


Life Insurance in a Fully Insured Pension Plan No reduction in the retirement benefit Lower net cost since purchased with pre-tax dollars Increases the contribution and maximizes tax deduction Provides a source of income for loved ones Economic benefit cost reported to the employee annually to preserve tax-free status of death benefit Life insurance can be continued after retirement


*Without regard to the economic benefit cost and tax deduction**Assumes 40% combined federal and state tax bracket

Life Insurance in a Fully Insured Pension PlanCost Effective Life Insurance Cost of $10,000 Premium

In Retirement Plan = $10,000 Using pre-tax dollars*

Outside Retirement Plan = $16,667 $10,000 premium and $6,667** in income

taxes


Frequently Asked Questions Do I have to include everyone? Will my contribution level remain

constant? Who can benefit from a fully insured

pension plan?


Do I Have to Include Everyone? May exclude

Part-time employees Less than 1000 hours per year

Employees less than 21-years oldEmployees with less than one year of

service


Do I Have to Include Everyone? Vesting

Employee usually must stay a minimum number of years with company to receive full benefits

Vested employee cannot lose benefits, even if the employee leaves the job before retiring


Will My Contribution Level Remain Constant? Following year’s contributions

reduced byInterest in excess of guaranteed rateDividends


Will My Contribution Level Remain Constant?

Fully Insured Defined Benefit Pension Plan

Traditional Defined Benefit Plan


Who Can Benefit From a Fully Insured Pension Plan?Based on three factors

Income

Age

Number of years UNTIL retirement


Who Can Benefit From a Fully Insured Pension Plan? Business owners who

Are age 50 or older and within 10-15 years of retirement

Have few non-owner employeesDesire to contribute as much as possible

to their retirement on a tax-advantaged basis

Prefer conservative investments over more speculative ones


Establishing a Plan Established in writing before the end of

the fiscal or calendar year for which a tax deduction is desired

Annual IRS Form 5500 must be filed

TODAY!


Supercharge Your RetirementFully Insured Pension Plans Are ideal for SELECT businesses Provide large tax deductions Can include a cost effective death

benefit if needed


Conclusion

For the business owner who would like to maximize tax deductions

and secure guaranteed retirement income, the Fully Insured Defined Benefit Pension

Plan may be the answer!

Fully Insured Defined Fully Insured Defined Benefit Pension PlanBenefit Pension Planfor Business Ownersfor Business Owners

Maximum Tax Deductions with Guaranteed Retirement Income

Fully Insured Pension Plan 2015

Small Business & Entrepreneurship

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