Retirement Planning Checklist

A Social Security

A1.1 Need 40 quarters

A1.2 Early retirement, age 62. Normal retirment, age 65 (age 67 if born after 1960). Late retirement, age 70.

A1.3 Disability:
— Is insured; — Cannot perform gainful work.
— Greater or equal to 20 quarter of coverage
— Special insured status is required if one is disabled before age 31.

A1.4 Survivors of deceased insured worker.
— Widow(er) who cares for at least one child under age 16 or disabled before age 22;
— Widow(er) or surviving divorced widow(er), age 60 or older
— Widow(er) who is disabled, age 50 to 60;
— Child’s benefit: Under age 18; Over age 18 and disabled fore age 22; Under age 19 and a FT student;
— Parent’s who is age 62 or older who was dependent on deceased worker for support;
— Lump sum death benefit of $255.

A1.5 Family limitations

A2 Computation

A3 Working after retirement. “The limit” for 2011 is $14,160
A3.1 Benefits are not affected if older than normal retirement age
A3.2 During the year that you reach full retirement, earnings over the limit will be reduced by 33.3%.
A3.3 If under the normal retirement age:
A3.3.1 You can earn up to “The limit” and your benefits will not be reduced.
A3.3.2 If you are collecting social security, earnings over the limit will be reduced by 50%.

A4 Taxation of Social Security benefits
4.1 If you file as an individual and income between $25k-34k, 50% of social security benefit is taxable.
4.2 If you file as an individual and income in excess of 34k, 85% of social security benefit is taxable.
4.3 If you are married and income between $32k-44k, 50% of social security benefit is taxable.
4.4 If you are married and income in excess of 44k, 85% of social security benefit is taxable.

B Retirement Plans
B1 Vesting schedule
B1.1 Three-year vesting (Cliff): 100% after 3 years
B1.2 Two to six year vesting
YrsSvr Vested%
2 20%
3 40%
4 60%
5 80%
6 100%

B1.3 SIMPLE and SEP provide immediate 100% vesting

B2 Qualified retirement plans: Defined benefit and defined contribution
B2.1 Money purchase
B2.1.1 Employer make contributions based on contribution formula and are allocated based on income;
B2.1.2 Subject to minimum funding standard, independent of profit;
B2.1.3 Maximum of 10% of company stocks;
B2.1.4 More favorable for younger workers.

B2.2 Profit sharing
B2.2.1 Employer contributions must be “substantial and recurring.”
B2.2.2 Profits are not required in order to make contributions.
B2.2.3
B2.2.4 More favorable for younger workers.

B2.3 Age-weighted. Use age and compensation in allocating contributions.

B2.4 §401(K)
B2.4.1 Cannot stand alone. Must be combined w/ profit sharing, stock bonus, Pre-ERISA
B2.4.2 Types: Traditional 401(k). simple 401(k)
B2.4.3 Types of contributions: Cash or deferred arrangement (CODA). Salary reduction.

B2.5 Employee stock ownership plan (ESOP)
B2.5.1 Must invest primarily in employer stock.

B2.6 Stock bonus plan

B2.7 Thrift or savings plan
B2.7.1 Contributions are after-tax. Earnings are tax deferred.

B2.8 Target benefit

B2.9 Defined benefit plan

B2.10 Cash balance plan

B3 Nonqualified plans
§457 or Government plan

B4 Integration with Social Security/ disparity limits
B5 Tax considerations
C Nonqualified plans

D Qualified plan rules and options

E Small business

Terms and Definitions
– Primary insurance ammount (PIA) is the normal retirement age of 65