Plan design
No two businesses fund a plan the same way. We design each plan around the client's goals, within the limits the law allows, and start from one of three proven designs.
Deduction
How much the owners want to contribute and deduct, this year and in the years ahead.
Stability
How much the required contribution can move from year to year without straining the business.
Flexibility
How wide the range between the minimum and the maximum needs to be in a strong year or a slow one.
Once requirements are collected, a custom proposal is generated. Typically we start with the Pro Plan™ to show the standard level contribution, and adjust from there as needed.
Standard design
Variable income
First-year deduction
Typical contributionMinimum requiredIllustrative patterns, not to scale.
| Pro Plan™ | Flex Plan™ | Max Plan™ | |
|---|---|---|---|
| Goal | Predictable, level deduction | Flexibility when income swings | Biggest first-year deduction |
| First year | Level target | Significant, owner's choice within the range | Boosted, larger than the Pro Plan™ |
| Later years | Level target | Owner's choice within the range | Reduced |
| Minimum required | Usually declines over time | Lower than the Pro Plan™ | High in year one, lower after |
| Typical client | Doctors, dentists, any stable business | Real estate agents, some small law firms | Commercial real estate agent with a large deal closed |
Questions about cash flow and timing, future business expectations, any potential significant upcoming changes, etc are considered to help a client decide on a design. For plans with employees, the impact on employee required costs of various owner cash balance formulas are illustrated. See Adding employees.
Within the rules
Every design stays inside the same legal limits: the minimum funding and maximum deduction rules, the 415(b) lifetime limit, and the nondiscrimination tests when there are employees. The design changes the relative contribution amounts. It does not change the valuation and testing rules, and most importantly does not change the 415(b) lifetime limit itself.
