This business owner had delayed saving for retirement and was looking to maximize retirement contributions for himself having not contributed significantly for retirement in prior years.
In this case, the junior partner was looking to buy out the senior partner in a Medical Practice. The HCEs in this medical practice were the Partners and their spouses. HCEs include employees that have at least 5% ownership in the company during the current plan year or the prior plan year regardless of their annual compensation. Immediate family of the Owner(s) of the company, e.g., spouse and children, are also considered HCEs for plan purposes.
This law firm wanted to implement a cash balance plan to maximize tax deductions for the founding partners and give larger contributions to the junior partners using an advanced profit sharing design. We worked with the firm to maximize each founding partner’s profit sharing and cash balance contributions while providing larger contributions for the junior partners.