Masonry Magazine April 1961 Page. 9
ension Plan
(Continued from preceding page)
ase. Likewise, there is no personal
to pay on this money until it is
ually received-presumably after
owner retires and drops to a low-
tax bracket. The same applies to
interest this money earns over
years it is accumulating.
Now, if you've studied the accom-
aying chart, you're probably think-
"But this example shows only half
the money going into the owner's
sonal pension." That's true-al-
ugh in some cases this percentage
be considerably higher. Don't miss
facts, however, that the rest of the
ney ties right back to the first rea-
for having a pension plan-that
providing for key men. In effect,
s owner is able to more than double
extra income over the straight
hdrawal method and solve a touchy
sonnel problem at the same time.
ately, I've also detected a third
son why many mason contracting
as are installing pension plans for
nagement and white collar workers.
sis the rapid growth of pension
efits for hourly-paid union person-
There's a logical basis for sal-
ed people, right up to executive
els, to look at these union gains
considerable envy and wonder
hat's being done to take care of
o, as a result of one or more of
se factors, "looking into pension
1s" has become a major activity
the mason contracting business.
here's where the rub begins. Ask
executive who has undertaken the
of investigating pensions, and he
probably tell you that the more
Hooks, the more bewildered he be
mes. Most plans are so complicated,
so filled with technical terms, that
re is a natural reluctance to act.
seen enough of these "proposals"
insurance companies, banks and
er organizations to understand how
se owners feel. There are plenty I
t figure out and I'm supposed to
an "expert."
r perhaps a company may feel that
too small to have a pension plan-
er because this makes them ineli-
gible, or because they believe a plan
is too rich for their budget.
Well, I promised at the start to pass
along some pointers on how to keep
pension costs down. So let's dig into
a few specifics. First, I would like to
state flatly that almost any company
can afford to install a pension plan.
It's simply a matter of coordinating
your objectives with the amount of
money you are willing to spend. If
you can only afford a 20% plan, it's
certainly better than no plan, and you
can always increase it at some later
date if you wish.
But simply keeping the percentage
of benefits low is the easy way out.
There are others ways to reduce costs,
too. Perhaps these ideas won't win
me any popularity contests with pen-
sion salesmen, but they are certainly
vital points for anyone considering
pensions.
First and foremost, decide that it
is going to be your plan and not a
copy or variation of someone else's.
You'll be surprised at how many things
may be important to another company
are unimportant to you. Cut out the
"frills" and you cut your cost. One
of the amazing things about pension
plans is that the closer you can have
it tailored to your own objectives, the
less it is likely to cost.
Now, as I mentioned earlier, one
factor which determines your cost is
how much your plan promises in bene.
fits. Usually, this is expressed in a
percentage of salary. A typical figure
is 35%. But whatever percentage you
select, there's an easy way to reduce
its cost. Simply combine it with Social
Security.
For example, suppose you decide on
a 35% plan. Design it so that Social
Security provides the base for this
benefit, and your plan merely makes
up the difference. By doing this you
are also hedging against further in-
crease in Social Security benefits (and)
costs).
What other benefits should you in-
clude? This depends on how much you
want to give your people, and how
much you have to spend. One rather
common addition is a supplementary
death benefit. It adds very little to
your cost, but it does add. If you al-
ready have group life insurance, you
may want to pass it by.
The other major factor in deter-
mining your cost is who you let into
your plan. My suggestion here is that
(See plan below text next page)
PROBLEM:
The owner of a small close corporation, nge 15, desires to withdraw a sufficient
amount from his company's earnings during the next ten years to create a fund
with which to retire. He feels that he can safely withdraw as much as $30,000 a
year, before taxes.
ONLY TWO PLANS ARE AVAILABLE
# PLAN A
Withdraw as much as possible of the
$30,000 as additional income for each of
the next ten years.
# PLAN B
Create a qualified Pension Plan for his
staff with himself as a participant.
TAX RESULT
Fross the earnings of the corроrа
525 tax bracket
Left after taxes
In order to withdraw the 814,400
be declared as additional salary.
50% personal income tax bracket
Maximum amount possible to with
draw
Result at at end end of of 10 i years.
Maximum amount possible to accum
ulate in a Fund
Owner's total cash under Plan: B..
OWNER'S GAIN UNDER PLAN B.
Out of the total contribution of $30,000
to fund the Pension Plan, an amount of
$15,000 is deposited to the owners ac
count.
a) There is no tax on the $30,000 as it
is written off as a corporate deduction.
bi The money deposited each year is not
reported as taxable income for the
owner and other participants.
Result at end of 10 years.
Amount accumulated to owner's
credit in Fund
PLAN BYIELDS TWICE AS MUCH
"The same idea applies to companies and owners in lower tax bracket.
SURE KLEAN
# SURE KLEAN NO. 101
Dissolves lime and cal
cium deposits faster.
Absolutely safe to use.
Brings out natural color
of RED and other DARK
COLORED masonry. Does
not "yellow" or darken
mortar joints. Acts faster
than strongest solution
of muriatic acid.
# SURE KLEAN NO. 600
Sparkles light colored
masonry, stone and
glazed tile. Water-clear
detergent with "greater
wettability". speeds
up penetration and clean-
ing action prevents
streaking. Will not dis
color joints or burn ma
sonry. Cuts costs.
FREE!
Test samples and litera
ture on request. Prove
to yourself. SURE
KLEAN is Best!
Write Today!
The Process Solvent Co., Inc.
1040 Chelsea Trfwy
Kansas City
Kansas
SONRY APRIL, 1961