Case Studies

A Flexible Savings Tool Used by a Variety of High-Income Professionals

The following case studies illustrate different scenarios in which self-employed professionals and business owners use Defined Benefit and Cash Balance plans to save tens of thousands in taxes each year while quickly amassing large retirement nest eggs.  Defined Benefit plans are flexible enough to be used in a wide variety of situations.  We will work with you to determine the most favorable and tax-efficient retirement plan structure for your specific circumstances.

Michael

Michael is a 50-year old consultant with no employees earning $350,000 annually.

Michael’s Goal

Michael wants to retire comfortably in 10 years and travel extensively. Therefore in the next 10 years, he would like to quickly build a large retirement account, while also reducing his annual tax bill.  He has paid off his home and is able to put a considerable percentage of his $350,000 in earnings into a retirement plan.

Orion’s Solution

After discussing his options with his Orion advisors, Michael decides to contribute $190,000 to a Defined Benefit plan and another $30,000 to a 401(k). This plan saves him tens of thousands in taxes every year and allows him to accumulate over $2 million for retirement.

Taxes Saved Annually

$77,000

DB Plan in 10 years

$2.5M

(Assumes contribution every year and 5% growth)

Jane & David

Jane, 51, and David, 55, work together as attorneys. They make $600,000 per year and have no employees.

Jane & David’s Goal

Jane & David love what they do but they would like to retire in 10 years and they have not saved enough. They want to quickly build a substantial retirement fund so they can retire comfortably.

Orion’s Solution

They decide that after their expenses, they can contribute a combined $280,000 per year to a DB plan. This saves them close to $100,000 in taxes per year and puts them on course to build retirement savings of roughly $3.7M

Taxes Saved Annually

$98,000

DB Plan in 10 years

$3.7M

(Assumes contribution every year and 5% growth)

Anne

Anne, 57 works as a medical school professor, and also works part-time as a freelance physician. She typically earned $175,000 per year in freelance income. She is married and her husband is also a university professor.

Anne’s Goal

Anne and her husband earn enough from their university salaries to fund their lifestyle so they would like to reduce the taxes they pay on Anne’s freelance income and boost their retirement savings.  Anne would like to retire at 65.

Orion’s Solution

Anne will contribute $125,000 of freelance income to a Defined Benefit plan.  This will save her $44,000 in taxes on her freelance income every year and allow her to add $1.3M to retirement savings in 8 years.  

Taxes Saved Annually

$44,000

DB Plan in 8 years

$1.3M

(Assumes contribution every year and 5% growth)

Tom

Tom is a 45-year old real estate agent who generally makes about $225,000 per year, but his income can fluctuate. 

Tom’s Goal

Tom wants to cut his taxes significantly and start saving more for retirement. He would like to retire at 62.  He wants to save more than he can the standard 401(k) limit but doesn’t want to commit to too much because of his fluctuating income. 

Orion’s Solution

After discussing his options with his Orion advisors, Tom decides to contribute $90,000 to a Defined Benefit plan and start a 401(k) plan to which he will contribute another $30,000. This solution saves him $42,000 in taxes every year when he contributes to both plans and allows him to accumulate over $3.2 million by the time he would like to retire.

Taxes Saved Annually

$42,000

DB Plan in 17 years

$3.2M

(Assumes contribution every year and 5% growth)

Dr. Andrews

Dr. Andrews is 58 and runs a thriving dental practice with 3 employees. He makes $325,000 per year and his employees make between $35,000 and $45,000.

Dr. Andrews’ Goal

He would like to offer his employees a retirement savings plan as an incentive to stay with his practice. He would also like to reduce his own tax bill while quickly building a retirement account so he can retire in 10 years.

Orion’s Solution

His Orion advisors suggest a Cash Balance plan with a 401(k)/Profit Sharing plan.  Dr. Andrews will contribute a total of $175,000 for himself – $150,000 to his Cash Balance plan and $25,000 to the 401(k)/PSP. For his employees, he contributes $10,000 divided between the Cash Balance plan and the 401(k)/PSP.  With this combination, he cuts his taxes by over $65,000 per year and the value of his retirement plan could reach $2M in 10 years.

Taxes Saved Annually

$65,000

CB Plan in 10 years

$2M

(Assumes contribution every year and 5% growth)

Michael, Solo Practitioner

Michael

Michael is a 50-year old consultant with no employees earning $350,000 annually.

Michael’s Goal

Michael wants to retire comfortably in 10 years and travel extensively. Therefore in the next 10 years, he would like to quickly build a large retirement account, while also reducing his annual tax bill.  He has paid off his home and is able to put a considerable percentage of his $350,000 in earnings into a retirement plan.

Orion’s Solution

After discussing his options with his Orion advisors, Michael decides to contribute $190,000 to a Defined Benefit plan and another $30,000 to a 401(k). This plan saves him tens of thousands in taxes every year and allows him to accumulate over $2 million for retirement.

Taxes Saved Annually

$77,000

DB Plan in 10 Years

$2.5M

Jane & David

Jane & David

Jane, 51, and David, 55, work together as attorneys. They make $600,000 per year and have no employees.

Jane & David’s Goal

Jane & David love what they do but they would like to retire in 10 years and they have not saved enough. They want to quickly build a substantial retirement fund so they can retire comfortably.

Orion’s Solution

They decide that after their expenses, they can contribute a combined $280,000 per year to a DB plan. This saves them close to $100,000 in taxes per year and puts them on course to build retirement savings of roughly $3.7M

Taxes Saved Annually

$98,000

DB Plan in 10 Years

$3.7M

Dr. Anne

Anne

Anne, 57 works as a medical school professor, and also works part-time as a freelance physician. She typically earned $175,000 per year in freelance income. She is married and her husband is also a university professor.

Anne’s Goal

Anne and her husband earn enough from their university salaries to fund their lifestyle so they would like to reduce the taxes they pay on Anne’s freelance income and boost their retirement savings.  Anne would like to retire at 65.

Orion’s Solution

Anne will contribute $125,000 of freelance income to a Defined Benefit plan.  This will save her $44,000 in taxes on her freelance income every year and allow her to add $1.3M to retirement savings in 8 years.  

Taxes Saved Annually

$44,000

DB Plan in 10 Years

$1.3M

Tom

Tom

Tom is a 45-year old real estate agent who generally makes about $225,000 per year, but his income can fluctuate. 

Tom’s Goal

Tom wants to cut his taxes significantly and start saving more for retirement. He would like to retire at 62.  He wants to save more than he can the standard 401(k) limit but doesn’t want to commit to too much because of his fluctuating income. 

Orion’s Solution

After discussing his options with his Orion advisors, Tom decides to contribute $90,000 to a Defined Benefit plan and start a 401(k) plan to which he will contribute another $30,000. This solution saves him $42,000 in taxes every year when he contributes to both plans and allows him to accumulate over $3.2 million by the time he would like to retire.

Taxes Saved Annually

$42,000

DB Plan in 17 Years

$3.2M

Dr. Andrews

Dr. Andrews

Dr. Andrews is 58 and runs a thriving dental practice with 3 employees. He makes $325,000 per year and his employees make between $35,000 and $45,000.

Dr. Andrews’ Goal

He would like to offer his employees a retirement savings plan as an incentive to stay with his practice. He would also like to reduce his own tax bill while quickly building a retirement account so he can retire in 10 years.

Orion’s Solution

His Orion advisors suggest a Cash Balance plan with a 401(k)/Profit Sharing plan.  Dr. Andrews will contribute a total of $175,000 for himself – $150,000 to his Cash Balance plan and $25,000 to the 401(k)/PSP. For his employees, he contributes $10,000 divided between the Cash Balance plan and the 401(k)/PSP.  With this combination, he cuts his taxes by over $65,000 per year and the value of his retirement plan could reach $2M in 10 years.

Taxes Saved Annually

$65,000

DB Plan in 10 Years

$2M

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Case Studies

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