Direct Recognition Variable Investment Plan (VIP) FAQs

WHAT IS THE DIRECT RECOGNITION VARIABLE INVESTMENT PLAN (VIP)?
Direct Recognition VIP, the proprietary product from Chernoff Diamond, is a retirement investment plan comprised of a combined 401(k) plan and defined benefit retirement plan. It enables participating high-income earners to increase tax deductible contributions, minimize risk and greatly optimize retirement benefits.

WHAT KIND OF CLIENTS BENEFIT FROM DIRECT RECOGNITION VIPs?
Direct Recognition retirement investment plans have been designed to help high-income earners, often from professional services firms such as private equity, venture capital, investment banking, hedge fund, accounting and law firms, doctors’ groups and other successful businesses.

HOW MUCH MONEY CAN BE SAVED WITH A DIRECT RECOGNITION VIP?
Direct Recognition VIP savers can set aside up to an additional $310,000 of tax deductible contributions on top of traditional 401k and profit sharing plans, increasing contributions to a far greater amount than those of typical profit sharing and 401(k) plans.

WHAT IS UNIQUE ABOUT THE DIRECT RECOGNITION VIP RETIREMENT INVESTMENT PLAN?
Direct Recognition VIP participants’ account balances increase/decrease in direct relationship to investment results. This eliminates the common under/over funding complications of traditional defined benefit and cash balance plans.

ARE ALL RETIREMENT INVESTMENT PLAN DESIGNS THE SAME FOR VIP PARTICIPANTS?
No. The specific objectives of each plan sponsor are given careful consideration when devising the detailed Direct Recognition VIP retirement investment plan.

ARE DIRECT RECOGNITION VIPs IRS APPROVED?
Yes. Every plan design gets submitted to the IRS for a Determination Letter, making them IRS approved retirement investment plans.

HOW WILL I KNOW HOW MY RETIREMENT INVESTMENTS ARE PERFORMING?
Participants have total access to view their VIP retirement investment plan account balances and administrative reports online, 24/7.

WHAT ARE THE ADVANTAGES OF HAVING A VIP RETIREMENT INVESTMENT PLAN?

  • Maximized Tax Deductions
  • Maximum Flexibility in Plan Design with Unlimited Investment Choices
  • Contributions are Stable, Predictable and Can Be Budgeted
  • Assets Invested for the Benefit of the Business Owners, Growing Tax Deferred and Safe from Creditors
  • Dedicated Business-Smart Service Consultants
  • State-of-the-Art Technology Systems Used to Design, Implement and Administer VIPs

WHAT IS BUSINESS SMART?
Business Smart is how Chernoff Diamond professionals apply deep expertise and perspective to develop business solutions that are efficient, effective and responsive to the specific needs of each client. Business Smart means thinking outside-the-box without stepping out of bounds and setting a standard with uniquely-detailed, comprehensive plans.

I HAVE ADDITIONAL QUESTIONS; WHERE CAN I GET MORE INFORMATION?
For more information, please visit our Direct Recognition VIP page. You may also contact one of our Retirement Advisors today at 516-683-6100 or by email at 411Pensions@ChernoffDiamond.com.

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The information presented here is not intended to be a comprehensive analysis. Chernoff Diamond is a benefits advisory firm and does not provide tax or legal advice. Individuals or Employers should consult with qualified legal and/or tax counsel for guidance in respect of matters of law, tax, and related regulation.