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Hicks Pension Group : Advisors : Sample Allocations
Sample Allocations


NAME
SEX
AGE
RET AGE
WAGES
PLAN 1
20%
SALARY
PROPORTION
Contribution
PLAN 2
AGE
WEIGHTED
Contribution
PLAN 3
CLASS
(Class 001-20%;
Class 002-5%)
Contribution
PLAN 4
DEFINED
BENEFIT
Contribution
PLAN 5
412(i)
DEFINED
BENEFIT
Contribution
Mr. Owner
M
58
65
$225,000
$50,000
$50,000
$50,000
$149,000
$250,000
Mrs. Owner
F
50
65
$30,000
$26,500
$24,200
$26,500
$11,000
$19,000
Subtotal for Principals:
$76,500
$74,200
$76,500
$160,000
$269,000
Employee 1
M
46
65
$50,000
$10,000
$4,700
$2,500
$13,000
$20,000
Employee 2
F
42
65
$35,000
$7,000
$2,450
$1,750
$6,700
$10,000
Employee 3
M
37
65
$30,000
$6,000
$1,460
$1,500
$4,000
$5,500
Employee 4
F
31
65
$28,000
$5,600
$ 840
$1,400
$2,500
$3,400
Employee 5
M
26
65
$28,000
$5,600
$ 840
$1,400
$1,800
$2,400
Subtotal for non-Principals:
$34,200
$10,290
$8,550
$28,000
$41,300

DB / DC COMBINATIONS
  1. Stack a 401(k) on top of a DB
Current regulations allow participants to make 401(k) contributions in addition to receiving pension benefits in a Defined Benefit Pension Plan. PPA 2006 allows Employer to make a 6% ER contribution to a DC as well – effective 2006.
Example: Participant Age 55, $225,000 Wages
401(k) Stack
Maximum DB to Participant $185,000
Maximum 401(k) $ 15,500
Catch Up 401(k) $ 5,000
=======
TOTAL $205,500
401(k) Plus 6% Enhanced Stack
Maximum DB to Participant $185,000
Maximum 401(k) $ 15,500
Catch Up 401(k) $ 5,000
6% ER Contribution to DC Plan $ 13,500
=======
TOTAL $219,000
* Note: 6% may be any form of ER contribution – including Safe Harbor.
  1. Cover HCE’s in DB, Minimal Pension to NHCE’s, All NHCE’s in DC
Current regulations allow certain employees to be “carved out” and covered by a DB plan with a maximum benefit formula, while providing the minimum required benefit in the DB to all other employees, and making up for any shortfall in the DC plan. Typical plan design would be to cover the Key Employees in the DB plan, providing minimal benefits for all others, and catch them up in the DC plan.
Example:
Wages
DB Contribution
ER DC Contribution
401(K)
TOTAL
Key
225,000
185,000
0.0
20,500
205,500
EE 1
35,000
1,000
2,625
3,625
EE 2
45,000
1,500
3,375
4,875
(12,500)
(16,000)

Savings like these enable a contractor to actually lower their bid while significantly increasing profits.
* Workers Compensation is part of payroll in most states

DB / DC COMBINATIONSStack a 401(k) on top of a DB
Current regulations allow participants to make 401(k) contributions in addition to receiving pension benefits in a Defined Benefit Pension Plan. PPA 2006 allows Employer to make a 6% ER contribution to a DC as well – effective 2006.
Example: Participant Age 55, $225,000 Wages
401(k) Stack
Maximum DB to Participant $185,000
Maximum 401(k) $ 15,500
Catch Up 401(k) $ 5,000
=======
TOTAL $205,500
401(k) Plus 6% Enhanced Stack
Maximum DB to Participant $185,000
Maximum 401(k) $ 15,500
Catch Up 401(k) $ 5,000
6% ER Contribution to DC Plan $ 13,500
=======
TOTAL $219,000
* Note: 6% may be any form of ER contribution – including Safe Harbor.
  1. Cover HCE’s in DB, Minimal Pension to NHCE’s, All NHCE’s in DC
Current regulations allow certain employees to be “carved out” and covered by a DB plan with a maximum benefit formula, while providing the minimum required benefit in the DB to all other employees, and making up for any shortfall in the DC plan. Typical plan design would be to cover the Key Employees in the DB plan, providing minimal benefits for all others, and catch them up in the DC plan.
Example:
Wages
DB Contribution
ER DC Contribution
401(K)
TOTAL
Key
225,000
185,000
0.0
20,500
205,500
EE 1
35,000
1,000
2,625
3,625
EE 2
45,000
1,500
3,375
4,875
(12,500)
(16,000)

Savings like these enable a contractor to actually lower their bid while significantly increasing profits.
* Workers Compensation is part of payroll in most states
Total Wages: $426,000
TOTAL CONTRIBUTION FOR EMPLOYEES
$110,700
$84,490
$85,050
$188,000
$310,300
Percent to Principals
67.18%
86.18%
89.12%
85.11%
86.69%
Percent to all others
32.82%
13.19%
10.88%
14.89%
13.31%
CONTRIBUTION AS A PERCENT OF
TOTAL WAGES
25.35%
18.98%
19.11%
45.74%
75.50%

  
 
   
 
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