Spring/Summer Series

I had a lovely chat with a woman I connected with on LinkedIn a few days ago. She asked me a simple question: “Where can I find information about pensions so that I’ll know what type to suggest to my clients who need a retirement plan.” I jokingly suggested she could read Internal Revenue Code Section 401(a), adding that I’ll try to email her some good resources. She appreciated the joke and the offer, but also said that she just might read the code anyway.

Most of the professionals I meet have no interest in learning about pensions through the Internal Revenue Code or it’s regulations. I think what most professionals want is an actuary who can recommend and design a plan for their clients based on each particular client’s goals and objectives. But I think most professionals also want at least a basic knowledge of what’s available, and they want to have an idea of when to use each type of plan. Let’s face it, we can all speak intelligently about our own area of expertise. But as professionals, we also want to speak somewhat intelligently about peripheral fields. I can rely on the accountant to recommend forming a C Corp or S corp, the financial professional to advise whether to use a target date or index fund, and the life insurance expert to know the type and amount of insurance to recommend. But it’s still good for me to know the differences and advantages of each.

My next several blog entries (I’m informally calling them my Spring / Summer Series) will be about different types of plans. The purpose is to provide some basic information about each plan: how it works, what are the advantages, and in which situations the plan will work, may work, or won’t work at all. I’m plan to break it down into five sections (six if you count this as a Spring / Summer Series introduction), focusing on traditional profit sharing plans (plain and with Permitted Disparity), hybrid profit sharing plans (including age-based and new comparability), 401(k) plans (traditional and safe harbor, both with Roth options), defined benefit plans, and cash balance plans.

I won’t bombard you with a plan every week, and I may squeeze in some other topics along the way. I’ve got plenty of other things I’d love to discuss. Maybe you’d like to hear about my top ten favorite movies?