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A firm with five partners in their mid-50s and 12 staff sponsored a 401(k)/Profit Sharing Plan. Partners faced a deferral cap of $77,500 and wanted to increase their retirement savings. Meanwhile, the firm was contributing 7.5% of compensation to the staff profit-sharing plan and sought to maintain these costs while improving partner benefits.
The partners aimed to reduce their annual tax liability and increase their retirement savings limit while keeping the cost of their staff retirement plan consistent.
After conducting a strategic retirement plan assessment, including detailed plan illustrations, a flexible market-based cash balance plan was introduced. October Three also designed a solution to enable increased levels of deferrals for partners and keep staff benefit costs consistent at 7.5% of compensation.
The tailored solution enabled:
Significant increases in partner deferrals—now up to $200,000 more annually, a 3x boost in qualified retirement savings
Reduction in partner tax liability by over $50,000 each year
Maintenance of staff benefit costs steady at 7.5% of compensation
This strategic redesign balanced enhanced retirement savings and tax efficiency for partners with cost-effective, consistent benefits for staff, aligning with the firm’s financial and talent goals.
Whether you want to reward key executives, reduce tax exposure, or boost retention with long-term wealth-building benefits, a cash balance plan can help. Reach out to our team to request your free cash balance illustration today.