Comprehensive Tax Strategies & Specialty Plans
Compare specialized retirement plan features, their funding commitments, and the questions to review with your tax and plan advisors.
A framework for your decision
Retirement benefit
Who participates & how
Funding obligation
Contributions, fees & access
Specialist review
Evaluate both together
Retirement benefit
Compare the benefit promised and who must participate.
Funding obligation
Understand premiums, contributions, fees, and access restrictions.
Specialist review
Confirm the rules and suitability with your tax and plan advisors.
412(e)(3) Fully Insured Plans
Understand the insurance contracts and the commitment behind the benefit.
What is a 412(e)(3) Plan?
A 412(e)(3) defined benefit plan uses qualifying annuity contracts, or a combination of annuity and life insurance contracts. It must meet specific requirements to qualify for its funding exemption; other qualified-plan rules still apply.
Understand the Contract Terms
Review required premiums, guaranteed benefits, expenses, and insurer obligations. Ask for a comparison with other plan designs before making a commitment.
Funding and Deductibility
The proposed benefit and contract terms affect funding. Deductibility has limits; a premium payment does not by itself establish the deduction you can claim.
Contract Guarantees
Benefits depend on the contracts and premiums being paid. A guarantee does not remove every risk or make the plan suitable for every business.
401(h) Retiree Medical Funding
A specialized account for eligible retiree medical benefits.
What is a 401(h) Account?
A 401(h) account is a separate account established within a qualified pension plan (like a Defined Benefit Plan or Money Purchase Plan) specifically designated for the funding of sickness, accident, hospitalization, and medical expenses for retired employees, their spouses, and dependents.
Employer deductions are subject to applicable limits and plan requirements.
Earnings accumulating inside the account are completely tax-deferred.
Eligible medical benefits may receive favorable tax treatment; account use is restricted.
Is a 401(h) Right For You?
Medical benefits must remain subordinate to retirement benefits, and the account is maintained separately. Review contribution limits, eligible benefits, and administration with a qualified specialist. See the IRS defined benefit plan requirements.
- Ideal for high-income business owners and partners.
- Significant need to shelter highly-taxed current income.
- Anticipate substantive health and long-term care needs in retirement.
Alternative Tax Shelters
Beyond defined benefit plans, high-net-worth professionals often explore secondary structures to shelter income.
Charitable Conservation Easements
A conservation easement is a voluntary, legal agreement that restricts the development of a property. Donating these to a qualified charity can yield significant tax deductions based on the appraised lost value.
Energy Credits
Tax treatment depends on the investment, ownership structure, eligibility, and current law. Have independent tax counsel evaluate any proposed credit or deduction alongside the investment risk; do not assume an investment will offset W-2 income.