I ran across a pair of 50 y.o. attorneys recently, in business for about 20 years. They have an assistant, 55, who has been with them from the start. They have one other employee, 30, who they hired a few years ago. They’re ready to take the plunge and put in a retirement plan.
The catch? They don’t want a 401(k). She does the payroll in-house (always has) and doesn’t want the burden of 401(k) deductions. He worries that they won’t be able to find a proper investment platform with so few employees, and would rather a pooled account.
W-2 pay is $250k for each attorney, $80k for the long-term assistant, and $50k for the other employee. The budget for the plan is $125k. They want most of the contribution for themselves, and they want to favor the long-term employee over the newer one. “Make us happy,” they say.
I propose a new comparability profit sharing plan. They can contribute $55,000 for each attorney, 10% of pay for their faithful assistant, and 5% of pay for the newbee. Total contribution: $120,500. With all objectives met, they are happy indeed.