Our Philosophy & Process
Retirement & Profit Sharing Plans
Stop for and moment and think about what you want to do when you retire. How much will you need to do all the things you’ve planned and still have enough security for day-to-day living or for unexpected illness? How much money will you need a year?
Now consider the effect of inflation on that figure. Years and years of inflation have already undermined the best laid plans for many people, perhaps members of your own family. Instead of being comfortable and free from financial worries, many are just barely able to get by. And some don’t.
This could happen to you, and to your employees, if you are an owner or manager of a business.
Whether an owner, manager, professional or employee, we all share the same basic problems. It’s merely a question of degree, of how much we need, of expectations.
Today everyone recognizes some basic truths about pensions:
- Social security, by itself, is not a viable retirement income solution.
- Inflation has the potential to decimate the future buying power of many pensions designed today which anticipate some increase but are based on the economy of the past.
- Pensions are individual as well as corporate problems. More and more employees recognize the importance of these benefits and are more concerned, indeed directly involved, with their pension rights.
- There has already been much-needed legislation, and there will be more, to guarantee that participants will receive their pensions – that abuses and manipulation of funds will be stopped.
These changes and trends pose questions for the company with a plan in place, for the company considering one, for the owner-employer, for the self-employed professional.
How much can you really afford? How will a pension plan affect cash flow? Will your plan qualify under new federal requirements? Should you start a basic pension plan and save profit-sharing to siphon off excess profits later? How many employees will be eligible? What is your competition doing? Self-insured or insured? Who will manage it? Pooled or separate funds? What are the tax advantages now and later? How do you meet IRS, SEC and Department of Labor requirements? How do you communicate benefits to your employees to improve morale and loyalty? How much servicing will the plan require and who will perform it? How do you monitor performance? If you have a corporate plan of HR-10 in place, are you taking advantage of new laws increasing contribution limits?
Clearly, the increasing legal and technical complexity of pension and profit sharing plans is not for amateurs. It’s a job for professionals. For a company which specializes in setting up these programs for all sizes of corporations as well as for professionals and the self-employed. For a company that works with tax and legal counsel on a daily basis, knows the ropes, and has a proven track record.
LYTLE Associates is that kind of company.
We have the know-how. And we have a different way of looking at pension, profit-sharing and employee stock (ESOP) plans. We take a tough business-like approach because we don’t want you, or your employees, to work a lifetime only to see your retirement security fall far short of expectations.
We begin by asking tough questions. Why and for whose benefit, of course. We need to have a profile of earnings. Allocations of funds for a long-term program must be carefully identified and minimized. A pension plan can’t be based on “what’s left over at the end of the year” but a profit sharing plan can. Capital requirements must be influenced by cash flow and investment opportunities.
What are your competitors doing? We need to know a lot about the people this program will benefit, their life-styles, needs, expectations. Your employee turnover rate. Growth and/or acquisition plans. In-house capability for servicing the plan.
We have to do our homework for there are no easy answers, no pat formulas for pension and profit-sharing plans. Only when we have a clear picture can we custom design a plan that will satisfy your needs, and provide the very best program you can get with the dollars available and, at the same time, give you the benefit of our long experience as employee benefit and insurance consultants.
While spelling out ground rules for employee rights and correction of abuses, the Employee Retirement Income Security Act of 1974 (ERISA) provides attractive tax advantages for individual participation. The Individual Retirement Account (IRA) makes is possible for the employer to deduct pension contributions as salary yet the contribution is tax sheltered for the employee. This unique tax sheltering provision continues to open up many possibilities for companies, the self-employed and other employees who have never been able to afford a pension and/or profit sharing plan before. Since the account remains in the employee’s name, it goes with the employee if he leaves the company. And, most importantly, the employee has a sense of control over his own future.
For some situations, a plan based on percentage of income is best. For others, we will recommend a program blended with social security so combined benefits will provide the purchasing power you desire.
Once the plan is in place, continuity is critical to employee goodwill and morale. How well your fund performs, your method of funding and the reasonableness of your initial planning and assumptions will be just as important as how well you service and communicate with your employees.
LYTLE provides the professional expertise to design and install all kinds of plans and then service them.
We provide the objectivity you need in deciding if you should have a plan, what kind to have, who to include, how to administer, and who to pick to administer the plan.
We provide that all important continuity of service, the follow-through you must have if your program is to satisfy your long-range goal. We review plans annually, we recommend actuarial services, update programs when necessary. We provide the information, reporting systems and measurements of investment performances. And we make sure your employees understand their benefits.
In short, we provide the professionalism you need to get through what many consider to be a minefield of complex financing, legal, tax and management problems in setting up and administering a pension and/or profit-sharing program.
At LYTLE we know, from developing and consulting on hundreds of these programs for companies and professionals, that pension plans do not have to be difficult, frustrating or confusing.
It takes candor, objectivity, expertise in a highly-specialized field, service and follow- through. A hard-headed business approach that’s different from what you get from and insurance company and bank pension department.
We’d like to show you LYTLE’s way of looking at pension and profit sharing plans.