Issue link: http://palletcentral.uberflip.com/i/739842
palletcentral.com PalletCentral • September-October 2016 31 important to have knowledgeable professionals to better serve the client. Therefore, the business owner's CPA should be a part of the discussion along with a qualified pension actuary who designs and annually certifies each plan. One very powerful but little known part of the tax code is section 401(h). This tax code section allows for deductions to a tax deferred qualified plan where the money not only can grow tax-free but it can be removed tax-free from the plan for qualifying medical benefits. Every business that can afford to fund a qualified plan should have a 401(h) component. More than 93% of the industry is unfamiliar with section 401(h) which is unfortunate since it is the most tax favorable part of a qualified plan. Another important aspect of a qualified plan design is funding of the plan assets and minimizing asset erosion when markets do not cooperate. It is vital to understand a client's risk tolerance when it comes to investing the plan assets. Most clients have no idea how much risk they are taking with their plan assets. It is imperative to have in place a risk assessment program to help determine the true risk tolerance of clients and to help find suitable investments that match up with their risk profile. Investment options that offer low to medium draw-down risk strategies are most appropriate for plan assets. Unlike much of the industry that tries to generate relative rates of return, strategies that offer to manage risk first may be more appropriate. This is a paradigm shift for many retirement plans that have never viewed investments from a risk perspective. Ever y business that can afford to fund a qualified plan should have a 401(h) component. 2016 Estimated Maximum 401K Plan Design Contributions 401k Super 401k Profit 401k Yr. 1 Age Only Sharing Plan™ Double-up* 60-68 $24,000 $59,000 $375,000-$500,000+ $836,500 TO $1.15MM 55-59 $24,000 $59,000 $305,000-$375,000+ $682,000 TO $800,000 50-54 $24,000 $59,000 $260,000-$305,000+ $532,500 TO $670,000 45-49 $18,000 $53,000 $225,000-$260,000+ $418,500 TO $524,000 40-44 $18,000 $53,000 $165,000-$225,000+ $331,500 TO $412,500 *Double again with Spouse