Case Study 3:
Strategy + execution = maximum tax savings today and tomorrow.
Vehicles: Safe-Harbor 401(k)/Profit Sharing Plan and Defined Benefit Plan
Challenge: The partners at a mid-size law firm realized that their existing 401(k) plan didn’t allow them to maximize their own annual contributions because their employees were not contributing an adequate percentage to the plan. The partners sought an alternative solution that would allow them to increase their contributions as much as possible.
Solution: JC Actuarial Benefit Consultants, Inc. met with the partners and discussed the challenges that they faced. From this, we proposed a solution that essentially packaged the firm’s existing 401(k) plan with a custom-designed Safe-Harbor Profit Sharing plan and a Defined Benefit plan. Several variations of this three-tiered solution were developed and presented to the partners. After discussion and consideration, consensus was reached on a final plan.
Results: Once implemented, this unique solution enabled the firm’s partners to make substantially higher contributions and realize collective tax deferred benefits annually in excess of $1.5 million. Moving forward, each partner will be able to accumulate up to $2.7 milion in his retirement account by the retirement age.Next: Case Study 4