Broker Check

Employer Sponsored Retirement Plan Success Story

Background: Service industry business owners (husband + wife) had a SIMPLE IRA retirement plan for
the company and were looking for a plan that allowed for higher contributions for themselves, as well as
higher match limits to incentivize participants to contribute greater amounts, as well as recruit and
retain key employees.



Findings:
The client and his wife were both in their early sixties and felt that their current retirement
savings were below where they should be for desired retirement ages.
Their goal was to maximize their personal savings as much as possible for the next 7-10 years.
The company was looking to expand its management staff and retain employees in an industry
that sees high turnover.
Many employees in the company are young and newer to the workforce and did not have access
to a retirement plan with a generous company match.


The Success
We implemented a 401(k) Profit Sharing Plan that allows for a maximum contribution of
$55,000 (combined maximum deferrals + catch up + employer match + profit sharing).
They increased the company match from 100% on the dollar up to 3% of income with the
SIMPLE IRA plan to 100% on the dollar up to 6% of income.
90% of employees who enrolled in the plan are contributing at least 6% of their income.
Employer contributions into the plan are tax deductible for the business.
They have been able to reward key employees and management staff, and the plan has been
used as a recruitment tool for new key staff.
The company implemented a vesting schedule for the Profit Sharing assets to protect the
business in the event that employees terminate within a certain amount of time.
The business owners have contributed the maximum limit (less profit sharing) for each year
since they have had the plan.
They have also received the 6% employer match into each of their accounts as well.
We created a Financial Plan for the business owners after implementation of the plan and
discovered that with maximum contributions into the 401(k) plan plus employer match, they are
on track for a fully funded retirement after desired retirement ages.