Planning for Retirement 

Types of Plans

Profit Sharing Plan

Company contributions may be determined either by fixed formula or at the decision of the Board of Directors annually.  May combine with a 401(k) Plan to allow for a salary-reduction agreement.

Pension Plan

Employers' determine a fixed amount to contribute to an account for the benefit of the employees.  Contributions are determined by a fixed formula.

401(k) Plan

Employees choose between receiving current compensation and making pre-tax contributions through a salary-reduction agreement.  Employers may also make contributions to employees' accounts.

Safe Harbor 401(k)

Employers' commit to a fixed amount to all employees and in return are not subject to some discrimination tests.

ESOP

Company is owned by its employees through an Employer Stock Ownership Plan.

Beneficiary Designation Form

Small Employer Plans

• Simplified Employee Pension Plan (SEP)
  Employer makes a uniform contribution to IRA accounts for all employees.  Salary deferrals are not allowed.
• Simple IRA
  Employer makes a uniform matching or non-elective contribution to all employees who make over $5,000 the preceding year.  Salary deferrals are allowed.
• Simple 401(k)
  Offers higher contribution limits than Simple and SEP Plans.  Designed for businesses that employ owners and their immediate family only.

Wondering what to do with your qualified employee benefit plan payout?

Retirement planning becomes critical when you become eligible to receive a lump sum distribution from a qualified employee benefit plan. This can occur when you retire, change employers or when the qualified plan you are participating in terminates.

Your Options

• When receiving a lump sum distribution, you have the option to either receive the lump sum payment or rollover your distribution.
• Receiving the distribution as ordinary income provides cash immediately, but also results in the distribution being taxed immediately.
• You may be eligible to minimize your tax liability by income averaging, depending on your age.
• A rollover is a tax-free transfer of cash and/or securities from one retirement plan to another. An IRA Rollover allows tax-deferred growth of your retirement plan distribution and avoids current taxation of your distribution.
• Your contribution to an IRA Rollover must be made within 60 days of receipt of your lump sum distribution.
• To avoid the 20% federal income tax withholding requirements mandated by recent tax law changes, the distribution must be handled as a direct transfer from the distributing plan to another qualified plan or IRA.

You Retain Control

You have two choices regarding the selection of investments for your portfolio:

• If you are an investor who desires active management of your investment strategies, you may opt to reserve full investment discretion.
• Or Cornerstone Bank can assume full investment discretion for those individuals who do not have the time or desire to direct their investments. Refer to our page describing our investment agency management services.