The Bank Professional Services Division enables productive credit-worthy business owners and doctors to accumulate $1 million more retirement savings by normal retirement age through a specialized employer cash management account and related loan program. The Bank Professional Services Division is also a revenue enhancement program for banks that generates revenues and profits from deposits and loans from the desirable market segment of productive business owners and private practice doctors.
The Professional Services Division depository and loan programs include an Employer Cash Management Account that provides a budgeting and surplus earnings allocation structure for productive business owners and doctors who have $30,000, or more, of annual, pre-tax surplus business earnings and control over their business/employer.
Pension Accelerator Loan Program
The Pension Accelerator Loan Program is a $250,000 credit line that enables productive business owners and doctors to accumulate $1,000,000 more retirement savings by age 65 than they would accumulate without the credit line. The Pension Accelerator Loan Program enables a borrower to increase his/her annual contributions of tax-free earnings to special design “guaranteed outcome” defined benefit pension plans by $90,000, or more, a year for five years. At the end of 5 years, the borrower would have approximately $500,000 accumulated in his/her pension plan account that would grow to $1,000,000, or more, by age 65.
Pension Accelerator Loan Summary
- A $250,000 Pension Accelerator Credit Line is obtained by a productive, credit worthy business owner. The credit line is interest only for 5 years, and then amortized over 5 years.
- $50,000 is withdrawn each year by the borrower to fund life-style costs
- The $50,000 loan proceeds funding lifestyle costs reduces the business owner’s need for compensation from the employer by approximately $90,000, each year, assuming a 40% combined federal and state income tax bracket.
- A defined benefit pension plan sponsored by the employer receives the annual contributions of $90,000 of surplus, pre-tax earnings that would not have been available without the funds borrowed from the credit line.
- The $90,000 of additional, annual pension contributions are allocated to the guaranteed principal, guaranteed life income pension annuities and whole life insurance. The contributions grow at a projected annual rate of 6%.
- At the end of the fifth year in this example, approximately $538,000 would be accumulated in the pension plan trust account. These funds would not have existed without the Pension Accelerator Loan Program. The $538,000 continues to grow, tax-deferred, at 6%. At the end of the 10th year approximately $720,000 is accumulated in the pension plan trust account. At the end of the 20th year approximately $1,290,000 is accumulated in the pension plan trust account.
- The $250,000 loan could be amortized over 5 or 10 years. At a 7% interest cost the monthly payments are $4950 for the 5-year monthly amortization, and the 10-year monthly amortization is $2903. ($59,400 to $34,836 in annual payments).
- Without the loan the client would not have the $1,290,000 that is accumulated in the pension plan by the end of the 20th year. Retirement plan savings continue to grow until the funds are distributed during retirement to the plan participant.
Without the Bank Professional Services Division “$1 million partner” these retirement savings would not exist.
Since the Great Recession economic conditions have been destructive to business owners’ accumulation of retirement savings. The Pension Accelerator Loan Program provides productive business owners and doctors the opportunity to maximize retirement plan accumulations without assuming unnecessary risk.
Employer Cash Management Account
The Employer Cash Management Account accumulates an employer’s pre-tax surplus business earnings on a monthly basis for allocation to compensation, to income and asset protection programs, and to separate qualified retirement plan bank trust accounts for defined contribution profit sharing plans and defined benefit pension plans.
Pre-tax surplus business earnings accumulated in the business or practice operating account are deposited, monthly, by the office manager to the Employer Cash Management Bank Account.
Allocations are made from the Employer Cash Management Account to fund salary that is equal to the business owner/doctors’ lifestyle costs plus taxes; to fund medical, disability, and long-term care insurance; to fund catastrophic loss and guaranteed life income programs; and to fund guaranteed-outcome defined benefit pension plans and supplemental defined contribution profit sharing plans by allocating funds to the pension plan and supplemental profit sharing plan trust accounts.
Funds allocated to the pension plan and profit-sharing plan trust accounts are then allocated to fund plan completion whole life insurance, guaranteed life income annuities, and other investments.