Case Study: Retirement Plan Options
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SITUATION: In late 2014, an existing client founded a management consultancy firm specializing in bio-pharmaceuticals. In six months, the firm was financially strong, and was seeking ways to minimize exposure on their taxable business income. Our client’s tax professional who specialized in self-employed professionals only knew about SEP IRAs. Thus, our client sought our guidance regarding other retirement plan options.
SOLUTION: Working with our client and his tax professional, Furuya & Co. identified retirement plan options for this growing business. We recommended an ERISA-based retirement plan that allowed our client to make higher tax-deferred (yet discretionary) contributions than traditional SEP IRAs.
ACTION: Upon obtaining approval from our client and tax professional, Furuya & Co. implemented an ERISA-compliant plan by engaging with a third-party administrator who handles the plan documents and annual 5500 filing, and an institutional third-party investment manager. To lower the plan expense ratio, Furuya & Co. had our client rollover his 401k assets from his previous employers, and consolidated those assets into his firm’s newly established ERISA plan.
All fees from the third party administrator and the third-party investment manager were paid directly (rather than being withdrawn from the fund itself) and thus gave our client additional business tax-deductions.
RESULTS: Our client decreased his firm’s taxable income by 40% by making larger tax-deferred contributions into his firm’s ERISA-compliant retirement plan. And this plan became an attractive employee benefit for our client’s new hires.
The case study presented is a real description of an actual client relationship. We have protected the identity of the client and their occupation. Given that many of our clients experience similar life events, the case study is designed to depict the value proposition Furuya & Co. brings to the table. Each client we work with is unique. There is no “cookie cutter” set of solutions. We bring our full set of resources to the table to solve, educate, implement, and monitor.