Your 412(i) Source
How it Works
| How Do You Set Up A VIP 412(i) Plan? |
The total set up of a VIP 412(i) plan is easy. It will take less time
to
set up your VIP 412(i) plan through Phillips and Associates than it
would to open an IRA at your local bank. Total time should be less than
an hour of your time. However, many of our clients want to understand
the VIP 412(i) plan inside and out, including all of the laws. If you
want to understand it all, Phillips and Associates will spend as much
time as you want explaining whatever you want. Phillips is a team of
attorneys that draw extensively on the expertise of other attorneys and
CPAS. We can give you the chapter and verse about any part of your VIP
412(i) plan. Although it only takes you a little bit of time to
establish your VIP 412(i) plan, there are hours of behind the scenes
work that our attorneys and accounts have to do to put your VIP 412(i)
plan in place.
| The VIP 412(i) plan process includes: |
1. Establish your goals
Supply information to Phillips and Associates. The best thing to do is
call and spend a minute talking to one of the attorneys that help
design
the plans. We can answer your questions and get you started. Call and
ask us to fax you a VIP 412(i) plan design request. We do not charge
you
to explain the VIP 412(i) plan and answer all of your questions.
2. Plan design
CPAS working with Phillips and Associates will prepare a proposal of a
VIP 412(i) plan which will work for you. If they need more information
about your goals or specific information, they may want to call and ask
you questions or email them to you. So, don't forget to give us a good
telephone number where it is easy to reach you. Each plan is unique, so
a lot of calculations and design planning will go into making sure your
VIP 412(i) plan fits your needs and wants as closely as possible.
3. Make your decision
You need to make a decision after reviewing your VIP 412(i) plan
proposal. Do you want to go ahead and establish a VIP 412(i) plan? This
isn't a hard decision. The VIP 412(i) plan is the best you can get. It
will give you the maximum income tax deductions today, and the maximum
retirement benefits when you retire. Your funds are always protected by
U.S. laws in the hands of a major bank's trust department or in a top
insurance institution. Procrastinating your decision will only cost you
money today and in your retirement.
4. Insurance and investment choices
If you chose to use a life insurance component in your VIP 412(i) plan,
an application for the insurance will have to be filled out and
submitted. Phillips and Associates can overnight the application to you
and you can fill it out, or it is much easier if we take the
application
information over the telephone and then send you the completed
application for your signature. It only takes about 10 minutes to give
us the information necessary to fill out the application.
5. Fees
You will need to pay the set up fees to get our attorneys started on
creating your plan. The fees are far less than those required to
establish traditional defined benefit plans. Establishment of the plan
and the first year's administration, including the bank trustee's fee,
is $3,500 plus $35 per employee. The administration fee for future
years
is $1,500 plus $35 per employee for the third party administrator that
handles all of the employee census, fills out the 5500 tax forms,
issues
the tax implications for each employee, monitors the insurance and
other
investments in the plan, and does all of the other administrative
functions required to make your VIP 412(i) plan the best possible plan.
Your funds will be handled by the trust department of a major U.S.
bank.
The Trustee's fee is $500 per year. You will be happy to pay the fee,
because your retirement fund is held under the Employee Retirement
Income Security Act (ERISA) fiduciary laws. No promoter, broker,
administrator, or anyone else is going to abscond with your funds.
6. Adopt your VIP 412(i) plan
The paperwork will be prepared in about two weeks after you make your
decision and pay the fees for set up. Phillips and Associates will
overnight the plan documents to you and then walk you through them on
the telephone, or make arrangements to meet you personally. After you
have signed the documents, you will overnight them back to Phillips and
Associates in the envelope we provide.
7. Make the tax deductible to fund your retirement
Your contributions are made directly to the large bank acting as
trustee
for your account. Checks are made out to the bank trust department in
the name of your VIP 412(i) plan. Your money doesn't pass through any
other hands. The bank trust department will then place the funds with
the insurance company in the investment you want. The VIP 412(i) plan
is
unique, because you can basically use any of the annuities, or life
insurance products the selected insurance company offers. This includes
the "variable" products which let your participate in market growth or
loss. You could use the insurance company's "guaranteed" products which
historically have a lower return, but are guaranteed. Most people use a
mix of products, including life insurance. Although Phillips and
Associates does not "manage" your investment in any way, we will help
you identify your goals and suggest ways to reach those goals.
8. Your plan will take very little of your time as it grows over the
years. The third party administrator will inventory your employees to
see if employees are gone or have become qualified to participate in
the
VIP 412(i) plan. You will be told what has to be contributed each year
in order to meet the plan requirements. Assuming reasonable growth in
the funds, your contributions should decrease each year. This is good
news because your VIP 412(i) plan could become "self funding" at some
point in the future. The bad news is, you lose your income tax
deductions. But, the plan works well, because you fund it heavy in the
first years while your income is highest and then the funding tapers
off
as your approach retirement and "cutback."
A VIP 412(i) plan has many advantages over other types of retirement plans, including traditional defined benefit plans. These advantages include:
*Simplicity
*The largest possible income tax deductions - up to $350,000 per year.
*Large deductions reduce your income tax bleeding.
*The IRS is effectively paying for half of your retirement fund.
*A wide variety of investment options - The method allowing you to use a wide range of investment options is actually protected under U.S. patent laws as a "business process."
*Your retirement amount is defined and the amount is guaranteed by an AA rated insurance carrier.
*Ongoing costs of administrating your plan are much less than any other type of defined benefit plan.
*You can pick your retirement age, and your retirement amount will be guaranteed at that age.
*Your retirement fund is nearly 100% protected from creditors and your liabilities.
*You can already have a large 401(k), SEP, or other defined contribution retirement plan and implement a VIP 412(i) plan with maximum finding.
*Much more of your VIP 412(i) plan will go to your heirs without the estate tax and income in respect of decedent tax losses that devastate other retirement plans.
*All VIP 412(i) plan assets grow tax deferred.
*You can make large life insurance premiums tax deductible.
*There aren't any actuarial certification requirements like there are in other defined benefit plans.
*There is no possibility of over funding or under funding your VIP 412(i) plan like there is in other types of defined benefit plans.
*Sole proprietor, partnerships, C or S corporations, LLCs, or any other type of business entity, even family limited partnerships, can establish a VIP 412(i) plan.
| Who should use a VIP 412(i) plan? |
The ideal profile of a person who needs a VIP 412(i) plan is someone who owns a small business or is a professional that shows a steady profit. If you are paying too much in income taxes and you are making more money than you need to live on, then you need to investigate a VIP 412(i) plan. If you want to save as much as possible for your retirement and want the maximum possible amount of your retirement to pass on to your family after your death, a VIP 412(i) plan is for you. Businesses or professionals with a limited number of qualifying employees are best suited for the plans. (Not all employees qualify to participate in the VIP 412(i) plan. See below.)
All 412(i) plans are considered "fully insured" or "guaranteed contracts" because they have to use insurance company products to fund the plans and the insurance company, by law, has to guarantee the retirement fund amount. The insurance products already incorporate actuarial data, funding studies, and the other things that you would normally have to supply to the government if you had a traditional defined benefit plan rather than a VIP 412(i) plan. This makes 412(i) plans very simple and less expensive to operate.
Your advisor will tell you that only "whole life" or guaranteed insurance products can be used. Historically, these product have yielded a much lower return than other products which are tied to the stock market or fluctuating returns. In a down market year, they look good, but over the long haul, they have not been a good investment. The VIP 412(i) plan is truly unique because it allows you to invest in a full range of insurance products, including all of the annuity products and death benefit/cash value life insurance products. Some of the products have proven to be excellent investments. Any advisor that offers you a 412(i) plan using "variable" type insurance products will have to be licensed under the U.S. patent that protects the concept of using such products in a 412(i) plan. Phillips and Associates is one of the limited number of groups that has access to the patented business application. We have also had the insurance companies we work with create special products that fit your VIP 412(i) plan perfectly.
The VIP 412(i) plan is the best retirement plan you can have for big tax deductions and great investment options. There is no qualified plan which will give you a bigger deduction. There is no qualified plan which will give you the big deductions and give you a broad range of investment choices. Putting those two concepts together is actually a patentable concept. You will have to contact us to get your plan, because your local advisor just doesn't have the understanding or the right to supply you with a full VIP 412(i) plan. The IRS doesn't even have 412 (i) plans on its radar screen. They are as milk toast for the IRS as IRAs. The plan funds are guaranteed by one of the best financial institutions in the world. The funds have to be guaranteed by law. There is no other retirement plan that offers the safety and security that VIP 412(i) offers. Call 800-806-1998 to establish your plan today. The plans must be established by the end of the calendar year in which you want to get your deductions. Do it today!
