Contribution Consulting
In stark contrast to most other providers, the Law Offices of R. David Danziger, P.C. specializes in annual contribution consulting. Contribution consulting is the single greatest source of value to any retirement plan sponsor. Without contribution consulting, clients are likely to:
- Overlook valuable tax sheltered contribution opportunities, or
- Spend too much on contributions for the wrong employees.
Most of the low cost service models fail to provide contribution consulting. This is a perfect example of the expression: “You get what you pay for.” Our Contribution Consulting Services include:
1. Communicating with you at least twice each year to see if there are developments that will merit a shift toward larger, or smaller, contributions. We do this by personally discussing with you and your accountant such issues as:
- Should family members be on payroll;
- Has there been a change in cash flow or profits;
- Might there be changes in ownership of the business;
- Have changes in law created new savings opportunities.
Ask Yourself: When is the last time I spoke with my TPA about the state of my business? Did the person I spoke with have the experience to provide useful strategic advice?
2. We don’t require you to identify critical markers such as Highly Compensated Employee (HCE) and Key Employee. We run these test for you. In addition:
- We help our clients look over the horizon to identify employees whose status might change next year. Such pro-activity can help you save thousands of dollars in contributions;
- We counsel you on strategies to help your HCEs maximize 401(k) contributions;
- We remind HCEs to increase deferrals at year end if opportunities are available.
Ask Yourself: Does my TPA review compensation and bonus strategies with me before year end to help me understand its impact on my plan? Is my TPA a trusted expert consultant and advisor?
Each year, we review your testing strategies such as Safe Harbor, Top Paid Group and Cross Testing and recommend a strategy that fits your changing circumstances.. Most other TPAs set up your elections up front, and then, leave them on auto-pilot. Truth is, a change in testing election can have a major impact on the amount of contribution that will go you and your key employees.
Ask Yourself: Does my TPA contact me each year to suggest a testing strategy for the year ahead? Does my TPA ask about my business conditions and show me and my accountant how we can best adjust to any change?
3. For clients using our most flexible plan design, we speak with you personally each year to find out which individual employees you want (or are willing) to favor, and which are to be minimized, or excluded entirely.
Ask Yourself: Does my Plan allow me to pick and choose among employees? Has my TPA even asked me whether I want to benefit some employees more than others? Am I able to change my preferences every year, after the end of the year, without having to amend the Plan?
4. We illustrate and recommend an annual plan contribution scenario for review and approval. We’ll help you and your accountant make a cost benefit analysis.At your or your accountant’s request, we’ll run alternative illustrations.
Ask Yourself: Does my TPA reach out to me and my CPA, or do we have to call them? Does my TPA illustrate a variety of alternative contribution scenarios? Do my accountant and I get useful information to evaluate the cost of a contribution versus the benefit going to me, my family and key employees?
The sad truth is that most clients and CPAs are not even aware that services such as ours are available. Contribution consulting is where a TPA can truly add value. Are you shopping for a service provider on the basis of fees alone without asking about contribution consulting services? You may be spending a lot more than you think through lost opportunities.