The MAC serves as an investment advisor to small and medium sized businesses on their qualified retirement plans. We have implemented retirement plan solutions to clients throughout Texas including Dallas, Austin and Houston. We provide solutions for the following types of retirement savings vehicles:

401k Plans
Defined Benefit Plans
SIMPLE-IRA Plans
SEP-IRA Accounts

(Disclosure: The MAC does not offer tax advice and does not make any assurances to statements on this world wide website regarding the tax treatment of qualified retirement plans. A tax professional should be consulted before implementing any sort of retirement plan.)

Defined Benefit Plans
Defined Benefit Plans provide small business owners with a means of deferring more income than 401k, SIMPLE and SEP-IRA plans. These plans are being implemented less frequently by big businesses, but they are growing in popularity with certain types of small business owners, such as law firms, medical practices and consulting firms. If you a) have a limited number of employees and b) wish to defer amounts in excess of $50,000, it maybe a solution worth considering.
To discuss starting a Defined Benefit Plan or having our Investment Management team take over your plan, please call our office.

SIMPLE-IRA Plans
The SIMPLE Basics
If your company employs less than 100 people and looking to add a qualified retirement plan (pre-tax contributions and tax-deferred growth), a SIMPLE-IRA Plan (Savings Incentive Match Plan for Employees) is the most hassle-free and inexpensive means of doing so. SIMPLE Plans are certainly not a misnomer. From an administrative aspect, implementing a SIMPLE plan couldn’t be easier.

SIMPLE-IRA Plans do have their limitations (which I’ll cover below), but those limitations are often overshadowed by the advantages they offer, which are as follows:

For Business Owners:
• No testing requirements.
• No annual tax filings.
• No administrative (TPA) expenses (We do charge a minimum Adviser Fee which may or may not be covered the Asset Management fee paid by the plan’s participants, but there are no fees paid to a TPA or the custodian.)
• Reduced administration burden compared to a 401(k).
• Limited fiduciary liability to plan participants.

For Employees:
• Employer contribution or match.
• Employee directly owns his or her own account (the account is not commingled like a 401k).
• Self-directed brokerage account with a relatively limitless number of investment choices.
• No restrictions on percentage of income that can be deferred. (There is a limit on the total dollar amount that can be contributed, but as long as your contribution is under that amount, you can contribute up to 100% of your pay. The limit for 2007 is $10,500.)

Limitations of SIMPLE-IRA Plans:

For Business Owners:
• Company’s with over 100 employees are not permitted to use a SIMPLE-IRA Plan.
• Employers must contribute a minimum amount for employees. In order to satisfy this requirement, a company can either make an automatic contribution equal to 2% of each eligible employee’s salary or a matching contribution of 3% of salary.
• Contributions are limited to $10,500 ($13,000 for persons over the age of 50) for calendar year 2007. (Technically, this is a limitation for employees, but typically it is the business owner who is running up against this limit.)
For employees:
• Loans are not permitted on a SIMPLE-IRA account (I’d argue this isn’t really a disadvantage as a 401k loan is almost always a bad idea.)

The MAC’s SIMPLE Solution
The MAC provides a turn-key, hassle-free SIMPLE plan solution for small and medium sized businesses. The MAC uses Fidelity Brokerage Services as its Plan’s custodian. This allows us to provide participants with the following benefits compares to plans most commonly offered by financial services professionals:

• US: A relatively limitless number of investment options including no-load mutual funds, individual stocks and bonds, ETF’s and Separately Managed Accounts. Them: Typically, brokers recommend implementing SIMPLE plans directly with a mutual fund family, such as American Funds or Vanguard. This often times limits the investment choices to that single fund family. This can be detrimental as this limits participation to a few funds that often specialize in one area of the market. For example, American Funds specializes in large-cap value stocks while Vanguard funds primarily consist of index funds.
• US: The option for participants to invest in our actively managed accounts relieving them of the burden of deciding on fund selection. Our asset management approach uses sophisticated tactical and strategic asset allocation models designed to deliver superior risk-adjusted returns. Them: Brokers will typically offer a static asset allocation model based on the participants age and risk tolerance with no consideration given to technical indicators or market fundamentals.

In addition to offering the aforementioned benefits to our SIMPLE clients, we provide the following to make life easier for you and your administrative staff:

• Establish an electronic transfer of funds eliminating the need for a physical check.
• Assistance in setting up your accounting software to automatically deduct employee contributions from their paychecks.
• Assistance in calculating the employer match.

To discuss implementing a SIMPLE-IRA Plan for your company or if you’re considering moving your company’s existing plan, please contact an Advisor in our office.

SEP-IRA Accounts
A SEP-IRA (Simplified Employer Pension) allows a company to defer up to the lesser of 25% or $45,000 of an employee’s salary.(deferral amount is for 2007). As with all qualified accounts, the money is a pre-tax contribution and the account grows tax-deferred until distributions are taken.

The singular drawback to SEP-IRA’s is the requirement that the company must defer the same percentage of each employee’s salary (given that the employees meet certain criteria relative to length of service and hours worked). Therefore, a SEP is a good solution if you are self-employed or if the business owner is comfortable making equal contributions, on a percentage basis, for all of its employees.

SEP-IRAs do offer a few advantages such as limited administration and contributions can be made up until the date that the company’s tax return is filed.

To discuss the viability of a SEP-IRA Plan for your company or if you’re considering moving your company’s existing plan, please contact our office.