Table of Contents

• COMMITTEE REPORTS
  • MEMBERSHIP REPORT
  • SOCIAL REPORT
  • SPEAKER COORDINATOR REPORT
  • TREASURER REPORT
• LEADS
• NOTABLE MENTIONS
• BUSINESS SPOTLIGHT
• MAIN SPEAKER

Committee Reports

Membership Report
(Click here to go to the Membership page)

No report.

Social Report
(Click here to go to the Social Event page)

No report.

Speaker Coordinator Report
(Click here to go to the Speaker Schedule)

Main Speaker

• 09/15/06     TBD
• 09/22/06     Special Program
• 09/29/06     Bob Becker

Spotlight Speaker

• 09/15/06     Phyllis Prater
• 09/22/06     Special Program
• 09/29/06     Roger Carpenter

Treasurer Report

4th quarter dues invoices were emailed to members on September 1st.  If you did not get yours please contact Melissa Matthews (melissa@mabe-online.org).

Leads Report

20-31, 14-24, 11-24, 11-40, 15-26, 15-24, 54-53, 38-26, 28-34, 28-17, 28-10, 18-13, 17-13, 21-31, 12-18, 52-13, 52-50, 52-42, 49-17

This week's leads focus...

• Sandro Menasci
• Keith Miller
• Gary Nelson

Notable Mentions

We met at a new location today.  The America's Cheese Cake Cafe.  It was a very nice venue and they let us play with their microphone.  On a personal note...I liked the coffee.

Business Spotlight

Nick Mawrenko asked members to think about things that should be done annually.  

• A physical with your doctor

• Financials

• Your marriage

• Employee reviews

• Business plan

• Your will

• Power of attorney

People don't do necessarily perform these annual reviews.  But it is highly recommended that they do.  Greg Stewart would even suggests that it is better to do 6-month reviews on certain items.

As part of the discussion, Mark Dreher suggested that, if possible, owners should  hand out paychecks to employees.  Do this to avoid fraud and to give yourself the opportunity to thank employees.  Chuck Hultstrand agreed.  He had a recent court case involving a fraudulent situation where a trusted employee was accused of payroll fraud. 

Gus Dekavallas
AnDek Financial/MetLife®

Don of MetLife® introduced Gus Dekavallas, today's main speaker.  He has worked with Gus for six years.  Gus heads their business and corporate marketing.  He is also the in-house expert on 401K's.  Don is particularly impressed with with the fact that Gus gets more business done over a bottle of scotch  and round of golf than anyone he knows.

The following information was taken from the slide presentation that Gus did on the Roth IRA Look-Alike Plan.  This is a very popular plan.   It allows business owners to control their own destinies.  You get institutional pricing so most of the money is working for you.  There are no surrender charges - That's huge!

Roth IRA Look-Alike Plan
Tax-Efficient Retirement Savings for the Successful Business Owner

Presented by:
Gus Dekavallas
Financial Planner
Financial Services Representative

Discussion Overview
Who is a candidate for the plan?
What are the issues?
Why won't most common retirement plans work?
How does the Roth IRA Look-Alike plan solve the problem?

Who Is A Candidate?
Business owners
• S Corporations
• C Corporations
• Sole Proprietorships
• Partnerships
• LLCs
Professionals
• Physicians
• Attorneys
High net worth

What Are the Issues?
As a business owner or professional with a lot of income you...
• Pay a lot of income tax
• Want to save more for retirement

Retirement Plan Problems:
Why 401(k)s Won't Work
Common employer-sponsored plan
If you're highly compensated, full advantage is probably not enough
Limits!
401 (k) Limits in 2006:
$15,000 annual deferral limit
$5,000 "catch-up" deferral limit
• 50+ years old
$100,000 Highly Compensated Employee (HCE) threshold
Discrimination testing
• Average Deferral Percentage (ADP) and Average Contribution Percentage (ACP)
You're generally limited to $15,000 annual pre-tax deferral
Contributions frequently returned so plan will meet ADP discrimination testing
401 (k) doesn't allow enough opportunity for pre-tax retirement saving

Why Deferred Comp Won't Work
Common alternative to provide HCEs with future income beyond 401 (k) limits
Not available for owners of S corporations as a shareholder
May not be best strategy for C corporation owners
S corporation owner is personally taxed on company's income
In deferred comp plan company retains deferred funds
Deferring to company doesn't change owner's tax bill: income still subject to personal income tax (i.e. no deferral)
C corporation owner is not personally taxed on company's income and can defer income to company
Company realizes deferral as profit and pays corporate income tax
Additional concern: deferred income isn't secure and is generally subject to creditors

Why Defined Benefit Won't Work
Old-fashioned retirement plan: defined benefit pension
Not tax-efficient to use as your personal retirement savings plan
Must meet ERISA rules to qualify for tax-deductible contributions and tax-deferred growth
Have to contribute for employees
Have to pay administration fees
Fiduciary responsibilities as plan sponsor
As much as 40% of money you contribute to plan is allocated to
• Employee contributions
• Administrative fees
That 40% is roughly equivalent to tax on same amount of income

Why Roth IRA Won't Work
Roth IRA designed for middle-income savers
Contribution limit in 2006:
• $4,000 annual contribution (with $1,000 catch-up)
Eligibility in 2006:
• Singles earning < $11 0,000
• Couples earning < $160,000

What's Left? After-Tax Savings
Municipal bonds
• Tax-free earnings
• Low rate of return
Equities
• Excellent opportunity for growth
• Earnings fully taxable
Variable annuities
• Do offer tax-free growth
• Portion of retirement income is taxable

Roth IRA Look-Alike Will Work!
Roth IRA Look-Alike plan can help you
• Increase retirement savings
• Decrease income taxes
Benefits:
• No contribution cap
• No income limit
• No age requirement for distributions
Roth IRA Look-Alike uses institutionally priced, specialty life insurance product
You can:
• Invest with after-tax dollars
• Choose from a wide range of investments
• Earn tax-deferred growth
• Receive tax-free retirement income
• Provide income tax-free death benefit

How Roth IRA Look-Alike Works
Your company buys variable universal life policy covering your life
You own policy
Your company pays premium with direct payments to insurance company
Premium amount is
• Taxable income to you
• Deductible business expense to company
You select investments among policy's separate accounts
Earnings on investments grow tax-deferred
You receive tax-free* retirement income from cash values

EEA (Enterprise Executive Advantage) Product
Flexible premium variable universal life
Designed for executive benefits market
$100,000 minimum annual contribution ($20,000 min. also available through another carrier)
High early cash surrender values No surrender charges
More than 45 investment choices from respected investment managers
Favorable loan rates
Strength of MetLife

Example
Dr. Jones
• Family practitioner
• Age 47
• Earns $1 million annually
• Nonsmoker, good health
• Owner, closely held S corporation that operates a medical clinic
• Has maximized contributions to company 401 (k)

Dr. Jones' goals:
• Save enough to meet retirement goals
• Save on tax-deferred basis
• Reduce income tax burden after retirement

Dr. Jones' Roth IRA Look-Alike Plan
• Company purchases EEA Variable Universal Life policy
• Policy is structured to ensure future policy distributions aren't taxable

Dr. Jones' Roth IRA Look-Alike Plan:
• $150,000 annual contribution for 7 years
• 8% gross (7.69% net) rate of return on separate account investments
• $207,300 annual distribution at age 66
• 20-year, tax-free retirement income using withdrawals up to basis and then loans
• Approximate contributions: $1,050,000
• Approximate distributions: $4,880,000

Thank you

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