Presenter: Brad Wexler, QPA, QKA, QPFC610.251.0670www.tycorbenefit.com

November 15, 2012

BEYOND THE 401(k)THE CASH

BALANCE PLANA guide to helping your clients

-Accelerate Retirement Savings

-Reduce Their Tax Obligations

AGENDA

• 2012 Cash Balance Research Report Highlights• What’s Driving Growth?• Taking Advantage of Growth Trends• What’s Ahead? Impact of Election, IRS

Regulations and Beyond

CASH BALANCE OVERVIEW

• Best of Both Worlds• 401(k)• FLEXIBILITY• PORTABILITY• SIMPLICITY• Defined Benefit- High Contribution Limits• Hybrid

CASH BALANCE ACCOUNTS

• Participants Have Accounts• Accounts Grow By Employer

Contribution & Interest Crediting Rate (ICR)• Accounts Are Portable

CB GROWTH EXCEEDED PROJECTIONS!!!

• 2010- CASH BALANCE PLAN GROWTH RATE UP 21% (11% IN 2009) *

• 2010- 401(k) PLANS DOWN 1% *

*data analysis using: IRS Form 5500 filings, 2001-2010, DOL data

DECLINE OF TRADITIONAL Defined Benefit CONTINUES

• Interest Rate Risk Issues• Volatile Costs• Difficult For Participants To Understand• Uneven Contributions To Employees• Portability Issues• Funding Issues

GROWTH DRIVER FOR CBPP#1-PPA 2006

• Official IRS Approved• Added Clarity AND Simplified Administration

GROWTH DRIVER FOR CBPP#2- RETIREMENT SAVINGS CRISIS

• Longevity Challenges Traditional Models• Decline of Traditional Income Sources

(Social Security, Pensions)• Market Losses and Volatility• Rapidly Rising Retiree Healthcare Costs

IMPACT OF LONGEVITY

• 1950-Retirement Lasted About 3.5 Years• Retirees Today Need To Fund 20-30 Years of

Retirement• Cash Balance Advantage- Age-Weighted Limits,

Double or Triple Pre-Tax Retirement Savings

FASTEST WAY TO “CATCH UP”

2012 Combined Contributions Limits(salary > $250k)

AGE 401(k) Profit Sharing Cash Balance Total * Tax Savings

60-65 $55,500 $242.451 $297,951 $119,180

55-59 $55,500 $175,672 $231,172 $92,469

50-54 $55,500 $127,386 $182,886 $73,154

45-49 $50,000 $92,447 $142,447 $56,979

40-44 $50,000 $64,922 $114,922 $45,969

35-39 $50,000 $46,838 $96,838 $38,735

30-34 $50,000 $33,834 $83,834 $33,534

*assuming 40% state/federal taxes

GROWTH DRIVER FOR CBPP#3- TAX ANXIETY

• HIGHER THE TAXES… More Valuable The Contribution

GROWTH DRIVER FOR CBPP#4-

AWARENESS

• No Longer a WELL Kept Secret

• Dominating the News

SUMMARY: A PERFECT STORM

• Retirements Savings Gap• Legislative Changes• Public Awareness, Media Coverage• Tax Climate

CASH BALANCE AND SMALL BUSINESS

• 84% have less than 100 employees• Cost efficiency and tax efficiency

• Ideal for owners who have sunk most assets into their business and are behind on retirement• Asset protection (in the case of lawsuit or

bankruptcy)• Attracting and retaining key employees• Succession planning for family businesses

Who is an Ideal Candidate?• Business owners with income greater than $250,000

and consistent profits

• Boomers who need to squeeze 20 years of retirement into the next 10 yrs

• Businesses with a new comparability plan

• Professional services firms, including medical groups, CPAs, law firms and financial services

• Successful family businesses and closely held businesses

WHAT’S AHEAD?

• November Election Impact of Outcome• Deficit Reduction Proposals• New Cash Balance Regulations• Health Care Reform• Economy And Market Volatility

ELECTION ISSUES AND CONCERNS

• Tax-deferred Retirement Plans Under Scrutiny• Deficit Reduction Proposals- Capping

Combined 401(k) & Profit Sharing Contributions at $20K or 20% of Income

• Raising Age Of Social Security Eligibility• Push For “Lifetime Income” Options and

Guaranteed Retirement Income

GOOD NEWS FOR CASH BALANCE PLANS

• Lower 401(k) limit would increase demand for cash balance plans

• Congressional focus on weaknesses of the 401(k) system draws attention to the role of cash balance plans

• Annuity options and the “safe money” aspect of cash balance plans =

Greater Political Interest

HEALTHCARE REFORM AND PHYSICIAN SAVINGS

• Uncertainty over impact on physician income• Tax and income concerns= greater push for tax-deferred

retirement savings• Medical groups still adopting cash balance

plans at much higher rates than all other business

NEW CASH BALANCE RULES

• Net positive for cash balance plan sponsors• Greater flexibility and simplicity• Clarification of “Market Rate of Return”• IRS currently waiting for response to industry

input, but all signs indicate strong IRS support of cash balance plans

IMPACT ON CASH BALANCE GROWTH

• IRS thumbs up for cash balance plans• More ICR options• Some funding issues minimized• Higher awareness of cash balance plans• Continued strong cash balance growth driven

by political/economic currents, tax climate, IRS rules

HOW CAN TYCOR HELP?

• Learn more…• Call us at 610.251.0670• Can set up by 12/31/12 and make effective retro to 1/1/12• Free Cash Balance Design- See Flyer• Ask for a 2nd Opinion

QUESTIONS

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www.tycorbenefit.com

Disclaimer

• To ensure compliance with requirements imposed by the IRS under Circular 230, we inform you that any U.S. Federal tax advice contained in this communication, unless otherwise specifically stated, was not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing, or recommending to another party any matters addressed herein.

• Securities offered through NFP Securities, Inc. (NFPSI) member FINRA/SIPC. NFPSI is not affiliated with Tycor Asset Management, Inc. Investment Advisory Services offered through NFPSI or Tycor Asset Management, Inc. NFP Securities does not offer tax or legal advice.