Plan RedesignRetirement Plan Redesign
We were asked to take over a plan for a New York based law firm, with approximately 300 employees. They had a safe harbor 401(k) plan because the owners felt this would be the best way for them to maximize their contributions. We were brought in because the owners now wanted to also use the plan to attract and retain mid-level associates.
The existing safe harbor plan did not require testing and had a set contribution for all participants. It was expensive for the firm to run but did not require much from an administration standpoint. Once the firm’s partners realized that the plan design no longer met the needs of the firm we eliminated the safe harbor requirement and applied different testing methodologies, which enabled us to use “carve outs” by employee class. By redesigning the plan the firm was able to allocate the same dollar amount to its partners, but also reward specific attorneys who brought value to the firm.
The plan was originally utilized as a retirement plan for the firm’s owners, but later became an employee benefit tool. As an added bonus the shift from the safe harbor to a cross tested plan saved the client significantly as the new plan was far less expensive to run.