Tax Savings Made Easy
412e(3)
Advantage
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Predictable and secure source of retirement income for participants
Since the plan is fully funded with insurance contracts, the benefits are guaranteed and not subject to market volatility or other risks.
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Tax-deductible
contributions to a 412(e) plan are tax-deductible. In addition, contributions are based on actuarial calculations, which can help to ensure that contributions are sufficient to fully fund the plan and provide the promised benefits to plan participants.
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Less administrative and reporting requirements
The plan may allow plan sponsors to avoid certain administrative and reporting requirements that are associated with other types of retirement plans, such as defined contribution plans.
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Attractive for small business owners
The plan may be particularly attractive for small business owners who want to maximize their retirement savings and provide a secure source of retirement income, while also minimizing their tax liability and administrative burden.
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Requirement
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Actuarial Calculations
An actuarial calculation determines the amount needed to fund the promised retirement benefit for the plan participant. This calculation takes into the participant's information, among other factors.
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Guaranteed Retirement Benefits
The plan promises a guaranteed retirement benefit to the participant, which is insured by an insurance company. This means that the plan sponsor is not responsible for investment risk or funding shortfalls.
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Annual Contribution Limits
The annual contribution limits for a 412(e) plan are determined by the plan's funding target, which is the present value of all accrued benefits under the plan.
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Pension Benefit Guaranty Corporation (PBGC) Insurance
412(e) plans are required to be insured by the PBGC, which provides insurance protection to participants in the event of plan underfunding or insolvency.
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More requirement

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Vesting
Vesting is determined by the plan sponsor and can vary based on the plan's terms.
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Insurance Company
The insurance contracts must be issued by an insurance company licensed in the US.
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Benefits
Benefits under the plan must be nontransferable and nonforfeitable.
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Calculation of Benefits
Benefits must be calculated in accordance with a definite formula .
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Who
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Small business
A 412(e) plan is designed for small businesses, professional practices
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tax-advantaged
Any employer that has a need for a tax-advantaged retirement plan

The process

  • Initial inquiry
  • Proposal review
  • TransGlobal service agreement
  • Plan setup
  • Plan implementation
  • Plan investments
　　
Initial inquiry

STEP 1

 

 

Client or agent will complete the Pension Inquiry form or website application to provide information to TransGlobal. The information provided allows TransGlobal to generate a proposal with maximum contributions based on independent variables.

 

Start Inquiry 

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Proposal review

STEP 2

 

 

Agent and/or TransGlobal team member presents the proposal to the client to explain each contribution amount. The administration fee structure will also be reviewed here.

 

Start Inquiry 

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TransGlobal service agreement

STEP 3

 

 

Once the client understands the proposal and wishes to proceed to plan setup, the TransGlobal Service Agreement will need to be signed. This form details all direct fees charged to the client and explains TransGlobal's responsibilities as the plan administrator.

 

Start Inquiry 

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Plan setup

STEP 4

 

 

TransGlobal applied for plan documentation on behalf of the client's business. A new EIN number will need to be procured to identify the pension plan trust. The client will need to review and sign the completed SS-4 form provided by TransGlobal prior to submission.

 

Start Inquiry 

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Plan implementation

STEP 5

 

 

Once the plan documents are issued and received by TransGlobal, a TransGlobal team member will meet with the client to discuss the details and structure of the newly established pension trust. The client's signature will be required to approve the plan documents.

 

Start Inquiry 

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Plan investments

STEP 6

 

 

Finally, an account will need to be set up to receive the contributions for the pension plan. The type of account that will be opened may vary due to the client's profile. Due to the limitations of qualified plans, a TransGlobal team member may assist in recommending a suitable account.

 

Start Inquiry 

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Compare all plans for self-employed or small business owner
See the different between Solo 401k and Roth 401k to insure which plan is more work for you
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