Why choose the PTTP for your
small business funding needs?

Other firms claim to offer “similar” pension transfer services, but after just a few comparisons you will see some major differences.

Your primary concern should be to
make sure the firm you choose
has a qualified plan in place that covers
all of the bases required by law.

The small business funding plan will need to be in full compliance with all pertinent IRS code sections, ERISA law, and Department of Labor letter rulings.

Here are 12 critical differences
in our plan versus others:

1. ESTABLISHED PLAN vs. NEW INDIVIDUAL PLAN: With our trust plan, your new company would be a co-sponsor of an existing plan that has already been established and has received a favorable Letter of Determination from the IRS. Other firms would have to create a new, separate, individual plan just for you, and then apply to the IRS for a determination letter. This would be an added expense that would be billed to you.
   
   Background: With an individual plan, there are potential “prohibitive transactions” to be concerned about. The IRS has the right to disqualify any individual plan. On the other hand, The Pension Transfer Trust Plan is a “multiple-employer” plan. This is the type of plan often adopted by large, non-profit associations. Because of this, the plan insulates each sponsor from the possibility of having a prohibited transaction and provides a much- needed degree of separation between the co-sponsor and the plan assets. (There is strength in numbers). Secondly, with an individual 401k plan, to avoid the risk of becoming “top heavy”, the owners would have to make mandatory contributions for every employee.
   
   (Also, if a firm sells you an individual plan, after delivering it, you will be on your own. None of our clients want to be in the pension management business. With our multiple- employer plan, we are the principal plan sponsor. This provides us with a vested interest in making sure the plan is always in compliance every year.)
    
   
2. ONE SET FEE vs. ADDED UNKNOWN COSTS:  All of our services are included in one fixed fee. No hidden costs or extra charges are added later. Other firms price their services on an “a la carte” basis and do not include several components required by law. They would have to be added later at your expense. Make sure the fee you are quoted includes:
   • Payment to an appraiser for a fair market value appraisal of your stock.
   • Monthly cost to retain an independent trustee.
   • The cost for a Letter of Determination from the IRS?
   • A $700 user fee imposed by the IRS?
   • The state filing fee for your corporate charter.
   • The cost to prepare one or more stock subscription agreements.
   • The cost to prepare plan adoption agreements and corporate resolutions.
   • Access to a fulltime pension specialist team (ERISA attorney, plan sponsor, fiduciaries, trustee, CPA plan auditors) available to advise you in the future.
   
   
3. HIRE A TRUSTEE: With other plans, you would have to find and pay for an independent trustee. The PTTP already has a qualified (CPA) trustee in place.
   
   With The PTTP plan, although you would be a co-sponsor you will not have to be your plan’s trustee, which greatly reducing the chances of a breach in fiduciary responsibilities. Our experienced pension administrators monitor the integrity of the plan on a full-time basis to protect the interest of each client.
   
   (Most employers are hard-pressed to find enough hours in the week to manage their businesses, let alone stay on top of the legal and financial requirements of a retirement plan. Any failure can leave small businesses in a potentially dangerous and untenable legal position.)
   
   
4. With other plans, you would have to conduct non-discrimination testing to see if the plan would be deemed “top heavy”. The employer may be forced to make unexpected minimum contributions.
   
   Because of our plan’s “safe harbor” feature, this is not an issue. Employee deferrals do not have to be tested.
   
   
5. Our trust plan offers a number of optional features, other plans do not.
   
   The PTTP has 5 options available to each co-sponsor for added flexibility required as your company grows. Several options do not require matching employer contributions.
    
   
6. With an individually-designed plan, who can you find that will take on the administration and fiduciary responsibilities to maintain it? If the plan design firm is willing to perform these professional services, make sure the annual maintenance costs include:
   a) Annual costs for an independent plan trustee. b) Annual costs for a third party administrator.
   c) Annual expense to prepare Form 5500 with specific attachments.
   d) Preparation of amendments to bring plan into compliance every year.
   e) The cost for a required annual CPA plan audit.
   f) The cost for an ERISA attorney if the plan has any problem with the IRS?
    
   
7. With an individual plan, would you need to make mandatory or matching employer contributions in behalf of your employees?

   With the PTTP, matching employer contributions are optional.

8. With an individual plan, you will not have control over how much income you can take out of your business.
   
   With the PTTP, you choose the amount of income and bonuses to pay yourself. With other plans, you cannot set your own pay.
    
   
9. With an individual plan, there is a maximum amount of stock in your business you can own.
   
   With the PTTP, you determine how much stock to sell to your trust plan, no maximum or minimums. You can own the controlling stock (51% or more) in your business. With other plans, you would not be allowed to own more 50% of the business.
   
   
10. With an individual plan, you can only tax-defer $15,000 in profits from your business each year on a tax-deferred basis.
    
    With the PTTP, a plan participant can contribute as much as $42,000-$46,000 a year.
    
    
11. Most other firms will not give you the names of just 5 or 10 satisfied clients. We can provide hundreds. (Click here to request the references.)

The 12th Critical Difference:

Here is a perfect example of why we are not sure if other firms are actually covering all of the bases they should be to be in compliance with IRS code sections that apply and the Department of Labor letter rulings.

12.  If you use another firm, make sure their fee includes the cost for an appraisal of the stock in your new company!

A “fair market value” appraisal of the stock in your new business is required by law to confirm your new trust received its money’s worth when it purchased stock.

The law states that if a "party-in-interest" or "disqualified person" is buying or selling stock to or from a plan, in order to qualify for the exemption from prohibited transactions, the plan must receive “adequate consideration”.

DOL Prop.Regs. 2510.3-.18 provides that, in the case of non-publicly traded stock,“adequate consideration” means fair market value, as determined by a fiduciary who either is independent or relies on the report of an independent appraiser. Because an independent fiduciary is seldom hired or involved, satisfaction of the Department of Labor proposed regulation requirement typically relies on an independent appraiser.

Some believe that because this regulation is only proposed, it is not binding and therefore use of an independent appraiser is not mandatory. However, many practitioners (and perhaps the DOL as well), follow this guidance and therefore see the use of an independent appraiser as mandatory (or at least highly advisable) when seeking to use the prohibited transaction exemption.

Our firm includes the cost for a FMV appraisal in our fee. We disclose the need for this appraisal and we pay for the services of an independent appraiser in your behalf.

Other firms with similar transfer services don’t mention the necessity for this appraisal, do not have independent appraisers to contact, and do not include the appraisal cost in the fee they charge. (The cost for a FMV appraisal can range from $1,500 to $5,000 or more.)

Click Here to Contact Us with any questions you may have regarding this important
small business funding solution.