CCA Small Business Group, the Chicago-based provider of retirement plans and services for sole proprietors and small businesses, recently launched a new version of its MyMax individual defined benefit plan called OurMax.
The OurMax Retirement Plan combines the benefits of large deferrals under a DB plan with the advantages of a 401(k) plan. Although the use of DB plans among large companies is dwindling fast, “DB plans are more popular than ever among small employers,” says Jeffrey Berends, executive VP of CCA Small Business Group. “Properly designed, a DB plan can provide substantial annual deferrals, and be flexible and manageable–just what today’s baby boomer generation needs to meet their retirement planning objectives during their last five or 10 years of peak earnings.” For investment advisors, DB plans “are a great tool to capture additional assets under management,” he adds. “With an average annual contribution in excess of $100,000 per business owner, DB plans are an ideal way to build $1 to $2 million IRA rollovers that will likely stay with advisors for the long haul.”
Companies that are attracted to OurMax generally either already have a 401(k) or other DC plan in place, want to boost deferrals to meet employees’ retirement goals, have a relatively stable income source, or have owners with separate retirement goals. For instance, OurMax can provide extra deferrals for owners or employees who are already getting the maximum allowable allocations between their 401(k) deferrals and profit sharing plan contributions, which CCA says is $42,000 per individual for 2005. OurMax also offers various contribution levels for different types of employees so that they can meet their individual savings needs.
OurMax can accommodate small businesses up to 100 plus owners and 200 plus employees. Plus, as with MyMax, advisors can set the plans up directly with clients without relinquishing any control. All fees schedules can be viewed at the OurMax website, www.ourmaxstrategies.com.
OurMax is a cash-balance plan, and the compromise bill on pension reform that’s currently being mulled by Congress would seek to legitimize cash-balance plans. Berends says that depending on how the final rules are structured, “the OurMax design would comply with our understanding of any prospective rules that would be put in place for cash-balance plans.” He adds: “OurMax would be untouched by the specifics of the cash-balance regs.”
Vanguard added five new funds to its Target Retirement Funds lineup, bringing the total number of such funds at Vanguard to 11; the funds have attracted more than $10 billion since their 2003 introduction. Vanguard is also changing the funds’ asset allocation models to increase their exposure to equities. For instance, Target Retirement 2035 Fund will change its equity allocation to 90% from 75%.
Jackson National Life Insurance Company (JNL) launched a new educational initiative for advisors in April called “Choose Your Direction,” which helps advisors develop customized retirement income and wealth transfer plans for clients. JNL has also added a consumer education section to its Web site–www.jnl.com–to help consumers determine how much money they’ll need for retirement.
The FDIC raised the deposit insurance coverage on certain retirement accounts at a bank or savings institution to $250,000 from $100,000 effective April 1.–Melanie Waddell