Client Case Studies

Case Facts and Circumstances

• Married business owner couple - 54 and 55
• Owned a successful business after years of piling dollars back into business
• Making significant income, but sending >40% to IRS annually, making retirement and any additional savings unrealistic
  

Client’s Desires

• Pay significantly less taxes
• Retire early at 60-62 without seeing lifestyle decrease (requiring significant savings to catch up)
• Prioritize the benefit for their employees and themselves, and not the IRS

Strategic Action Plan

• Initiate a Safe Harbor 401k plan with profit sharing designed to allow maximum contributions
• On top of the 401k, add a new Cash Balance Pension Plan designed to maximize significant contributions above those possible in a properly designed 401k
• Husband and wife were able to erase $580,000/yr off their income which significantly lowered their IRS tax bill by over $250,000
• Of the $580,000 annually, over $536,000 went to the owners, and the employees received the rest.

Client Resolution and Outcome

• Owners were able to retire early because of the additional $2.5M able to be saved in a tax-advantaged manner over a 5 year period
• Employees benefited greatly and saw their retirement accounts get a significant boost. Employee morale and productivity both increased
• The owners were able to sell the business to an ideal buyer who would keep all employees, rather than the most aggressive bidder who may have wanted to close the plant
• IRS no longer is sending Christmas cards thanking them for their generous tax donations!!

Case facts and Circumstances

• Married couple: Male: 64, Female: 61
• Aspiring for Early Retirement
• Possessed sufficient retirement and non-qualified assets to sustain their lifestyle.

Client Concerns and Hurdles

• Due to the high cost of healthcare, they felt unable to retire and believed they had to wait until reaching Medicare age.

Strategic Action Plan

• Assess healthcare marketplace and evaluate all options available to them
  • COBRA (staying on employers' health insurance, but paying entire premium)
  • Private marketplace
  • Healthcare.Gov ACA Marketplace
    • Income-based subsidies available
• Keep taxable income low by:
  • Postpone claiming Social Security
  • Start leveraging income from non-qualified assets to maintain a low taxable income while ensuring real spendable income remains at desired levels
  • Sign up for a Healthcare.Gov ACA-Qualified policy

*By maintaining their taxable income under $67,000, their monthly healthcare premiums decreased significantly from $1,700 to just $300.*

• Once eligible for Medicare, switch to utilizing social security benefits and drawing from taxable assets
  

Client Resolution and Outcome

• The couple retired several years earlier than they had anticipated.
• They successfully maintained their spending and lifestyle habits.
• They now have the chance to enjoy more quality time with their children and grandchildren.
• Their pickleball skills have seen a significant improvement! ^(wink)