He went out to grab a bite to eat, Now he's preparing for a sweet retirement.
When housing prices in Southern California were plummeting in 1990, Lloyd and his marketing director went to lunch and found themselves discussing the idea of leaving their parent company to launch a new business of their own. Fifteen years later, this meal has turned into a very profitable venture for the four shareholders involved.
After 15 years running his own business, Lloyd decided he wanted to retire on Cinco de Mayo in 2009. With only four more years to go, Lloyd needed to catch-up on his retirement savings plan aggressively.
Kravitz added Cash Balance Plan to the Profit-sharing plan currently in place. This action allowed key stockholders to contribute higher maximums to their qualified plan.
With these new limits, Shareholders are able to contribute 75% to 150% more to their savings plans. (e.g. $141,000/year for a 55 year old.) This will make their retirement years much more comfortable than they had previously imagined.
Retirement Plan Illustration
Year Ending December 21, 2007
|
|
Age |
Compensation
(IRS Testing) |
401(k) |
Profit
Sharing |
Cash
Balance |
Total
Contribution |
| Partner 1 |
62 |
$225,000 |
$20,500 |
$29,500 |
$135,000 |
$185,000 |
| Partner 2 |
52 |
$225,000 |
$20,500 |
$29,500 |
$40,000 |
$90,000 |
| Partner 3 |
47 |
$225,000 |
$15,500 |
$29,500 |
$35,000 |
$80,000 |
| Partner 4 |
39 |
$225,000 |
$15,500 |
$29,500 |
$25,000 |
$70,000 |
|
|
| Subtotals |
$900,000 |
$72,000 |
$118,000 |
$235,000 |
$425,000 |
| 8 Associates |
$720,000 |
n/a* |
$36,000 |
$0 |
$36,000 |
34 Other
Employees |
$1,360,000 |
n/a* |
$95,200 |
$12,000 |
$107,200 |
| Total |
$2,980,000 |
$72,000 |
$249,200 |
$247,000 |
$568,200 |
|
|
Percent to Shareholders: 75%
*This exhibit shows only the cost to the company Staff employees and associates pay for their own 401(k) contributions.
|
