Savings Plan For One^SM

With the passage of EGTRRA (Economic Growth and Tax Relief Reconciliation Act) in 2001, it now makes sense for "owner-only" businesses to institute a 401(k) Profit Sharing Plan. Prior to this, owner-only businesses were at a disadvantage because while a traditional pension plan was too complicated and expensive to implement and maintain, other alternatives such as SEP and SIMPLE IRAs did not offer high enough contribution limits. With California Pensions’ Savings Plan For One^SM, no matter what your business structure, it is possible for owner-only businesses to contribute up to $44,000 toward your retirement savings.

How much can I contribute to this Plan?

Contributions can come from two sources -- salary deferral of $13,000 or 100% of compensation, and a profit sharing contribution of up to 25% of compensation. Combining both sources, you can contribute up to $41,000. Additionally, if you are at least 50 years of age, you can make additional catch-up contribution of $3,000 for 2004.

The difference in contribution limits for various plans can be quite significant. Maximum funding limits for 2004 under various plans are as follows:

You may also be eligible for our Defined Benefit For One^SM or Combination Plans For One^SM products, allowing contributions in excess of the limits described above. Please contact our office for further information about these services.

Another great benefit to consider is that if you currently have other forms of retirement accounts such as an IRA, 403(b), SEP-IRA and/or other qualified retirement accounts, you can consolidate them all under your Savings Plan For One^SM.

Current law allows plan sponsors to invest in a wide variety of assets. Stocks, bonds, CD’s, mutual funds, etc. are all common in retirement plans. If you are utilizing the services of our strategic partner for corporate trustee services, you are also able to invest in real estate and deeds of trust. Unusual assets such as art work, gemstones, coins, antiques, etc. are generally prohibited as a matter of law.

There is a $100 one time setup fee and $200 annual administrative fee. Other fees may apply based upon specific services which may be required, or if you choose to utilize corporate trustee services. (Please see the Client Service Agreement in the downloadable brochure for more details.)

Is there an annual compliance requirement?

Unlike a conventional 401(k) Profit Sharing plan, you need not file a form 5500 nor is the plan subject to annual discrimination testing. However, once the plan assets exceed $100,000, or if you hire full time employees, your plan must be converted to a regular 401(k) Profit Sharing plan that requires more extensive administration and recordkeeping in order to be in compliance with government regulations. California Pensions can help you with this transition.

California Pensions makes sure that minimal work is required for our clients to open an account. Following is the very simple process involved:

If you elect to use the services of our strategic partner* as your corporate trustee, you can still utilize the services of your current financial advisor or broker. Please contact California Pensions’ Trust Operations Department for additional details as there are specific operating conditions for the accounts. You will receive quarterly statements of your account detailing assets, transactions and fees. California Pensions can provide duplicate statements to brokers, CPA’s, or other interested parties if you so desire. The services of a corporate trustee relieves you of the duty to provide California Pensions with annual trust reconciliation forms and schedules which are needed for annual calculations as well as annual government filings.