Planning in Plain English
Kleinrock Publishing (www.kleinrock.com),
Print, CD, and online editions; $65; ISBN:
Reviewed by William Bregman, CPA/PFS,
2005 - As the title declares, Kleinrock’s Retirement
Planning in Plain English is a guide written in plain English
that attempts to provide quick answers to often complex
questions in an area that is difficult for many CPAs. Just
before I started reading the book, a client called about
taking funds out of his IRA to buy a new house. Answer time
with the guide: two minutes. The next question was whether
the money in the IRA, which came from a qualified plan,
could be rolled over into a new employer’s plan and
then taken out as a loan. The answer time was the same two
minutes. Throughout, the guide has enough depth for a CPA
to use it as a sole source for the majority of retirement-
first part of the guide is a short introduction to the topic.
The second part, dealing with employer-sponsored plans,
begins with a general discussion of deferred compensation,
and discusses the merits of qualified and nonqualified plans
before moving into defined-benefit and annuity plans. In
addition to discussing the basic workings of such plans,
it covers collectively bargained and multiemployer plans.
It then talks of plan qualification requirements, minimum
funding standards, and actuarial issues. Money purchase
and target benefit plans are then discussed, followed by
profit sharing, stock bonuses, employee stock option plans
(ESOP), and 401(k) plans.
guide then moves on to qualified plan requirements. It notes
that the plan must be written and created by the employer
as a permanent arrangement; it outlines formulas for allocating
contributions, trust requirements, exclusive benefits, and
communication-to-employees rules; and it presents nondiscrimination
requirements, participation, coverage, vesting, forfeiture,
and top-heavy rules. The guide gives detailed but generally
easy-to-follow examples. It also provides compliance tips,
observations, cautions, and practice tips; it covers ERISA
rules; it carefully details qualified plan contribution
and distribution rules. Finally, nonqualified plans are
mentioned. It discusses employer withholding requirements
and the new IRC section 409(A) rules.
third part of the guide deals with small-employer plans.
In this section, the savings incentive match plan for employees
(Simple IRA) has more pages devoted to it than to simplified
employee pension (SEP) plans or to section 403(b) tax-sheltered
annuities. The guide points out that, under a Simple IRA,
a contribution is required even if the business is not profitable.
A more traditional plan, such as a Keogh, allows for much
higher annual contributions, and a 401(k) Simple arrangement
is also permitted. While many CPAs are familiar with the
requirements for SEP plans, which must be in the form of
an IRA or an individual retirement annuity, the guide covers
participation requirements, nondiscrimination rules, and
vesting and withdrawal requirements. It then discusses the
maximum permitted contributions ($42,000 for 2005) and tax
treatment of employers and employees.
fourth part talks about retirement plans for individuals,
and unlike many retirement guides, it deals with Social
Security. It discusses issues affecting U.S. citizens residing
abroad, as well as the treatment of nonresident aliens.
The guide goes on to discuss traditional IRAs, Roth IRAs,
and Keogh plans. It then covers contribution limits, rollovers,
and distributions, using many examples. The guide concludes
with a section on planning and practice. It gives numerous
tables and charts, checklists, worksheets, and sample elections.
Bregman, CPA/PFS, CFP, has a tax and financial planning
practice in New York City. He is a member of The CPA
Journal Editorial Board and former chair of the Personal
Financial Planning Committee.