asset management assocates
Private Portfolio Management

We cater to:
  • Individual and Joint Accounts
  • Pension and 401k Rollovers
  • IRA's, SEP and SIMPLE IRA's, 403b's
  • Profit Sharing and Small Business Pensions
  • Private Foundations

CoolSee link below for more info.

The following is a list of basic plans available for a small business or a self employed individual. (updated for  2008):  

Regular IRA: Allows for deductions of 100% of earned income up to $5,0500 or $6,500 (2014) if over age 50.

SEP IRA: Allows for a contribution of 25% of income up to an overall maximum of $52,000. You must contribute for eligible employees . You also could have some restrictions and a “vesting” schedule for employees.  There should be no cost to set up this plan and it could be set up right up until April 15th or the date of your extension

SIMPLE IRA: This is usually a payroll deduction program where the employee must make a small contribution. The employee could contribute 100% of income up to $12,000 (2014) with a $2,500 catchup if over age 50. There should be no or very low administrative costs associated with the SIMPLE but they would require a small employer match - with a maximum of 1-3% of salary for each employee. Must be set up prior to October of the current tax year

401K: Allows for a higher contribution by the employee than the SIMPLE ($17,500 or $23,000 if over age 50).  This plan usually has administrative expenses associated for corporations with employees and is more complex to administer. This type of plan is best for a company with a larger number of employees. Must be set up by December of the current tax year.

Solo 401k: Designed for the sole practitioner with no employees. It allows 100% of contribution up to $17,500 plus 25% of compensation. Actually computes to approximately 18% for a self employed individual. Overall or combined maximum is $57,500.  It is good for a lower wage earner under $200,000.

Defined Benefit Plan: The high earning individual with no employees could sock away well over $100,000 per year and reduce his/her taxes significantly by opening a defined benefit plan. You will need an actuary to design and administer the plan and there is a cost to this ($2,000 - $3,000) but well worth it if you could commit to high contributions for a number of years. The ideal candidate is a business owner in his/her mid to late 50’s or older who is making significant income and needs to reduce taxes and save for retirement. 

Roth Account: The Roth account is not tax deductible. The benefit is that you will never pay taxes on the money when it is withdrawn in retirement if it is held in the account for at least five years and you are over 59 1/2. Roth accounts are now being combined with a 401k and it becomes a Roth 401k. It is like a 401k but the contributions are not tax deductible.  These programs are relatively new and companies have limited experience with them.

Non Deductible IRA:  If your income exceeds the maximum for a ROTH contribution- Phase out for ROTH in 2014 is $114,000 to $129,000 for individuals and $181-191,000 for married then you still can contribute to a non deductable IRA.  You do not get the write off of the contribution but there is a tax savings on the income earned.  This can be an advantage however all of the growth will ultimately be taxed as income where in a regular brokerage account some of that growth will be taxed at the lower capital gains rate so this situation should be considered.

Hybrid Plans: The above is a list of the most common plans used. There are a number of ways to design a retirement plan based on your own personal situation for the small business person.  It is very important to consult with a qualified tax professional or actuary to help you evaluate and design the program that best fits your needs. We can help you with this!

Tax Savings

Keep in mind that the tax savings on these plans are in instant return. Federal income taxes, state income taxes, and sometimes city taxes generates at least a 30% return on investment for most participants.

  • IRS Penalty Fees: Usually there are no fees to the IRS to set up these plans, but there may be an IRS filing requirement. On all plans there is a 10% penalty fee to the IRS if you redeem a retirement plan prior to age 59 ½, with the exception of a Roth IRA where contributions could be withdrawn without taxes or penalties.
  • Administration fees: Retirement plans could be set up with virtually any kind of institution. Depending on the type of plan, the "institution" may charge a fee to set it up and administer it. Some payroll companies will also charge fees or steer you to a company they work with. These fees can be significant if you have a small plan. There are ways to set up plans with minimal fees.  
  • Investment fees:  These are also charged by the specific investment company. If you use a commission based mutual fund or a “loaded” fund like one with an A,B, or C share class, you are paying a commission on that investment. If you use a “no load”  fund there is no commission. Annuities, limited partnerships, etc. may have significant fees associated with them. Do not confuse the sales and redemption fees that investment firms may charge with the IRS premature withdrawal penalties!  The whole concept behind Asset Management Associates is to eliminate the high up front and redemption fees (sales fees) associated with the major wire houses.
Rollover Benefits

Virtually all pension plans can be rolled or transferred into an IRA after the person separates from the company or retires (except Roths). It is usually best to do this. The IRA account is designed for an individual and is much easier to deal with at retirement. It is also less restrictive for beneficiaries. The IRA can be received as an "inherited IRA" where in some cases, a pension plan can not. (This law was revised in 2007). Note: Inherited IRA's require that a mandatory distribution be taken each year without regard for the age of the beneficiary.

Cool Links for Retirement Plans

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