# Our custom plan designs

> Every plan is built around the deduction target, how stable contributions need to be, and how much flexibility the business needs. Pro, Flex, and Max designs.

Source: https://askactuary.com/custom-designs  
Author: Mike Rutkowski, FSA, EA, MSPA

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.

## The short version

- Every design balances three things. The **target deduction**, how **stable** contributions need to be, and how much **flexibility** the business needs from year to year.
- **Pro Plan™:** a level contribution target, with minimums that usually decline over time.
- **Flex Plan™:** lower minimums for businesses whose income swings, with room to contribute much more in good years.
- **Max Plan™:** the largest possible first-year deduction (typically 50% greater than the Pro Plan™), with smaller contributions after that.

## What we design around

### The target deduction

How much the owners want to contribute and deduct, this year and in the years ahead.

### Contribution stability

How much the required contribution can move from year to year without straining the business.

### Room to adjust

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.

## Three designs

### Pro Plan™

- **Best for:** Owners with steady income who want a predictable deduction every year.
- **Contributions:** A level target each year.
- **Minimum required:** Usually declines over time as the plan builds a funding cushion.

### Flex Plan™

- **Best for:** Businesses with highly variable income, such as real estate agents and some small law firms.
- **Contributions:** Significant amounts are still allowed, and owners choose how much to put in each year.
- **Minimum required:** Lower than the Pro Plan™, so a slow year doesn't force a large deposit.

### Max Plan™

- **Best for:** Owners who want the largest possible deduction in the first year, such as after an unusually profitable year.
- **Contributions:** A boosted first year, larger than the Pro Plan™, then reduced contributions after that.
- **Minimum required:** Higher in the first year, lower in the years that follow.

## Side by side

|  | 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 |

## Choosing between them

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](https://askactuary.com/nondiscrimination).

**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.

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Educational information only. Not tax, legal, or investment advice, and not an actuarial valuation.
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