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Case Study:

Big Time Production, LLC has sponsored a SIMPLE IRA with a 3% matching contribution for its owners and employees for the past six years. Initially the owners, Jim and Carol, were only deferring about $4,000 a year because their salaries were low at the time the plan was started. In the past two years, business has been better and more stable, so Jim and Carol have maximized their contributions under the SIMPLE IRA and have some additional salary that they would be interested in deferring. Big Time Productions has 28 rankandfile employees, of which only about 28% participate in the plan. They are reasonably paid, ranging from $42,000 to $85,000 per year with the median income around $55,000. Jim and Carol have asked you what other retirement plans they should consider for their company and are interested in hearing the advantages and disadvantages of any change. In addition, there is one salesperson in the company named Craig that is responsible for much of the companys recent growth. Craig receives a salary plus sales commissions that total over $275k per year, but Jim and Carol would like to provide him with an enhanced retirement package to reward him for the hard work he's putting in.

Recommend a plan design and incentive package that will satisfy Jim and Carol's goals. Explain and support your recommendation.

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