We had a longstanding client relationship with a 12 partner Orthopedic group. As is happening in the health field, they wanted to merge practices with four other Ortho groups to form a super group with 50 partners. We had established a 401k plan and a cash balance pension plan for our group, and the partners were projected to end up with $2.5-3.0 million in each of these plans by retirement. Incredulously the other four groups all had just safe harbor 401k plans, and one had a cash balance plan with only one year of contributions. The other four plans had been serviced by two name brand mutual funds, an insurance company, and an independent recordkeeper.
So after analyzing all the proposed benefit structures, the super group chose ABG to service the new plan(s) going forward after the merger.
We created new 401k plans and cash balance plans for the new group as of 1/1/17. We kept their current 401k/profit sharing plans open to give them some greater flexibility in 2017. But more importantly, there have been $7 million in new contributions to the 401k and cash balance plans as of 2/28/17! And we’ve designed the plans to allow for additional medical groups to join the corporation and participate.
Best Practices Learned
- Even though a so called ‘brand name institution’ may be servicing a plan, that does not mean the plan is designed properly.
- Don’t assume all medical groups have the properly designed plans for their makeup!
- Look to an ABG firm for cash balance pension plan consulting for any professional type group (doctors, lawyers, accountants, engineers etc).