Retirement planning is increasingly complex. A host of investment options, combined with fluctuating interest and inflation rates and other variables, make it difficult to determine how much you will need, where you should invest, and who to turn to for assistance. The complex tax and legislative environment surrounding retirement planning compounds the confusion. With qualified plans (such as IRA, pension, profit sharing, 401(k) and Keogh plans), the timing and amount of withdrawals are critical in order to avoid additional tax penalties. And, if you have accumulated significant qualified plan assets you may face additional problems, including the “Double Tax Dilemma,” where the government can tax these assets twice. We guide our individual and corporate clients through the confusion surrounding retirement planning. Our professional staff are focused on helping you:

  • Develop customized short and long term investment strategies based on your personal objectives, risk tolerance, time frame for accumulation, and current financial situation.
  • Preserve and help to grow your net worth through proper allocation and diversification of assets. *
  • Provide you with access to select investment vehicles, including those that offer tax-deferred accumulation and tax-free distribution potential.
  • Reduce or eliminate income and estate taxes on qualified plan assets.

* Diversification does not assure against market loss.

Qualified Plans

We offer objective advice, custom products, quality service, and practical ideas about qualified retirement plans. Particularly today, with the complexities of new pension laws, and the desire of employers to hire and retain valuable employees, more employers are seeking professionals with proven experience and knowledge. Employers now appreciate advisors who pursue the right principles: analyze, design, and then act.

We offer comprehensive and sophisticated capabilities in all aspects of qualified retirement plans. Working closely with our clients, we help them to set theirretirement plan objectives, review any existing plan, and/or design a new retirement program to help achieve their goals.

We design and service all types of qualified retirement plans, including: Profit Sharing Plans, Money Purchase Pension Plans, Target Benefit Pension Plans, Defined Benefit Pension Plans, 401(k) Plans, Age-Weighted Plans, and New Comparability or Class Based Plans.

We serve employers ranging in size from one employee to several thousand employees. We assist fiduciaries in fulfilling their ERISA mandated responsibilities. With increasing participant litigation, as well as increasing audits conducted by the Department of Labor (DOL), our clients understand the value of experts in the ongoing operation of their retirement programs.

Our process can help our clients pursue the right principles.

  • Understand: We seek to establish realistic relationship expectations along with a careful analysis of all the issues in qualified retirement design and installation.
  • Listen: We take time to get to know our clients and use a detailed questionnaire to explore issues that may or may not have been considered.
  • Act: We choose appropriate solutions from a variety of sources, set realistic goals, and then plan monitor results, including legal requirements under the Internal Revenue Code and ERISA.

Define your Objectives

Each type of retirement plan has its own special characteristics, advantages and disadvantages. The proper retirement plan for your organization will be the one that most closely corresponds to your organization’s unique circumstances and objectives. In order to define your objectives, it is important to consider the following questions:

  1. Who should the plan cover? Are there specific classes of employees, such as union members or part-time employees, who should be excluded?
  2. How much can the company afford to contribute to the plan? i.e., x dollars per year or y% of payroll?
  3. Can the company afford a fixed commitment to the plan each year or must employer contributions be discretionary?
  4. Should employees contribute to the plan?
  5. Should the plan be designed to favor any particular employees? i.e., owners, other key employees, older employees, longer service employees?
  6. How important is it to maximize contributions and employer tax deductions? (Some types of plans allow higher employer deductible contributions than others.)
  7. Should investment decisions be controlled entirely by the employer, or should some level of participant investment discretion be involved? (Participant-directed investments provide employees with greater personal financial control and tend to reduce employer fiduciary exposure, but this feature  may add to plan complexity and expense.)
  8. How important are simplicity, ease of administration, and low administrative expenses? (Low administrative expenses are particularly important to small employers. However, some of the plan types with lowest administrative expenses have mandatory funding requirements and restrictive provisions not found in other plan designs.)

Click on Types of Plans for a brief description of each major plan type. We hope this background information will help you identify the type or types of plans that are most likely to respond to your objectives.

Types of Plans

  • Money Purchase Pension Plan
  • Discretionary Contribution Plan
  • Simplified Employee Pension Plan
  • 401K Profit Sharing & Savings Plan
  • Defined Benefit Pension Plan
  • Target Benefit Plan
  • Simple Plan

Money Purchase Pension Plan

In a money purchase pension plan, an annual contribution is made on behalf of each plan participant. This contribution is determined by a formula stated in the plan. Most frequently, this formula is expressed as a percentage of compensation, although it may reflect other factors such as service or the employer’s contributions to Federal Social Security.

An account is maintained on behalf of each participant in the money purchase plan. This account most often represents the employee’s share of general trust fund assets. In some plans, individual accounts are actually segregated and invested in funds chosen by each participant.

Discretionary Contribution Plan

Under a discretionary profit sharing plan, the employer contributes to the plan periodically on behalf of eligible employees. The employer may vary the amount of contribution from year to year or may eliminate a contribution entirely in certain years. As a general rule, however, contributions to a profit sharing plan must be “substantial and reoccurring.”

As contributions are made to the plan, they are allocated among participating employees. The method of allocation is defined by a formula stated in the plan. The most common and straightforward method of allocation is in direct proportion to an employee’s compensation; however, other methods of allocation, recognizing factors such as age or the employer’s contributions to federal social security may be used.

An account is maintained on behalf of each participant in the profit sharing plan. This account most often represents the employee’s share of general trust fund assets, although in some plans individual accounts are actually segregated and invested in funds chosen by each participant.

Simplified Employee Pension Plan

Under a Simplified Employee Pension (SEP), the sponsoring employer makes contributions to the plan periodically on behalf of eligible employees. The employer may vary the amount of contribution from year to year and may choose not to contribute in some years.

Each participant’s share of the employer’s contribution is deposited in an Individual Retirement Account or Individual Retirement Annuity in the name of the participant. Once the contribution is made, it effectively “belongs” to the participant. As with any individual account type plan, the participant’s ultimate benefit is tied directly to the value of his or her personal (IRA) account.

401K Profit Sharing & Savings Plan

A 401 (k) is a profit sharing plan that includes special features permitting employee contributions with pre-tax dollars.

Individual record keeping accounts are maintained for participants, and participants may be given the option to “direct” the investment of their accounts among alternative investment funds offered through the plan.

The employer’s contribution commitment may be expressed in a number of alternative ways, with all or a portion of employer contributions determined on a purely discretionary basis each year.

Defined Benefit Pension Plan

Projected retirement benefits are determined in advance for each participant. This determination is made from a formula stated in the plan. This formula may recognize factors such as compensation and past and future service.

Because participants are guaranteed a pre-determined benefit under the terms of the plan, it is important that plan assets are sufficient to meet emerging plan liabilities. An actuarial review is performed each year to monitor the growth of plan assets in relation to the benefits being earned by participants. Among other things, this review will determine the amount of contributions required for the plan year.

Plan contributions are deposited to an “unallocated” trust fund and are invested in the aggregate by the plan’s Trustee(s). In other words, plan assets are not “allocated” to any participant. As each participant retires, assets sufficient to provide such participant’s benefits are released from the fund.

Target Benefit Plan

A target benefit plan is a hybrid or cross between a defined benefit plan and a money purchase pension plan. It is like a defined benefit plan in that the annual contribution is determined by the amount needed each year to accumulate (at an assumed rate of interest) a fund sufficient to pay a projected retirement benefit (the target benefit) to each participant on reaching retirement age.

This is where the similarity ends. In a defined benefit plan, if the actual experience of the plan differs from the actuarial assumptions used (for example, if the interest earned is higher or lower than the assumptions), then the employer either increases or decreases its future contributions to the extent necessary to provide the promised benefits. In a target benefit plan, however, the contribution, once made, is allocated to separate accounts maintained for each participant. Thus, if the earnings of the fund differ from those assumed, this does not result in any increase or decrease in employer contributions; instead, it increases or decreases the benefits payable to the participant.

In this regard, the target benefit plan operates like a money purchase pension plan. In fact, the only difference between a money purchase pension plan and a target benefit plan is the manner in which contributions are determined. In a money purchase pension plan, contributions are generally determined and allocated as a percentage of current compensation; in a target benefit plan, contributions are determined as if the plan were to provide a fixed benefit. In a money purchase pension plan, contribution for identically compensated employees are the same even though their ages differ; in a target benefit plan, age is one of the factors that determines the size of the contributions.

At retirement, the accumulated value of each participant’s account is used to provide retirement benefits. At that time, the actual retirement benefit provided is likely to differ from the “target” benefit.


In 1996, Congress passed legislation authorizing employers to sponsor a “Savings Incentive Match Plan for Employees” or “SIMPLE” Plan. Congress’s objective was to encourage employers to offer their employees a retirement savings program that was similar to a 401(k) plan, but without the associated administrative complexity or expense.

A SIMPLE Plan can be set up as either an IRA arrangement or a 401(k) arrangement. In either instance, employees are generally able to make pre-tax contributions via payroll deduction in an amount up to $7,000 per year. The plan sponsor is required to contribute either (a) by matching employee contributions $1.00 for $1.00 up to the first 3% of pay or (b) by contributing 2% of pay for all eligible employees, whether or not they contribute for themselves. (In the IRA version of SIMPLE, the employer can elect to limit matching contributions to the first 1 % contributed by employees, rather than 3%,in two out of five years.)

Both employer and employee contributions to a SIMPLE Plan are fully and immediately vested. These plans avoid most of the testing and nondiscrimination rules applicable to traditional 40l(k) plans. As a result, they can generally be adopted and maintained at a much lower administrative cost than a typical 401(k) arrangement.