Case Study — 401K Plan Strategy

Recently I had a new client with a profitable business come to us who had been using a 401k plan for years in addition to making annual profit-sharing contributions for owners and employees. In a recent year, the total company contribution was $51,000. Of that amount, $31,000 goes to the owner.

We proposed adding a defined benefit pension plan to their tax planning strategy. This approach allowed the client to continue deferrals into the 401k plan. Total company pension & profit-sharing contributions are now $215,000 and $196,000 go to the owner. This one change increased tax savings by $66,000.