Case Study 1An Overfunded Retirement Plan

challenge

Like many wealthy individuals, this hedge fund manager wound up with an overfunded plan and no way to recover the money in it without a heavy excise tax. His problems stemmed from the fact that he was seduced by retirement plan tax deductions, so he put away more than he should have, and his portfolio overperformed which led to further overfunding.

solution

Fortunately, in this case, the solution included incorporating family members into the plan. This included the hedge fund manager’s son who was a veterinarian and his daughter, who owned a small preschool. In addition to his children, his grandchildren were included as were some of the hedge manager’s son’s and daughter’s employees. By using family members to create a control group it allowed for the redistribution of the plan. Therefore, this solution not only got the money out of the plan, but it also served as a retirement benefit for the veterinary practice’s and preschool’s employees, and, as an estate planning tool for his grandchildren.

results

For a modest employee cost, not only was this gentleman able to recover the excess funds in his plan, he was able to pass the wealth along to family members and to allow other businesses to attract and retain valuable staff, and avoid the excise tax on the overfunded plan.

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My goal was to implement a retirement plan that, at first, seemed very complicated. Ron and his team helped me understand and implement the plan in a timely manner. All of the individuals that work at the company are very knowledgeable and responsive. I highly recommend CPD.

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Mitchell Wolk
Owner, Mitchell Wolk

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