In a recent blog, Synergy Settlement Services President Anthony F. Prieto, Jr., CFP® and Vice President & General Counsel Daniel J. Alvarez, J.D. discussed some “unique pre-tax and tax deferred retirement planning options” that plaintiff law firms’ should consider.
Below is a comparison of a traditional small business retirement plan with one of the unique tax deferred options:
- Traditional Small Business Retirement Plans: Examples include 401(k)s, Defined Benefit Plans, Profit Sharing, SEP IRAs and Simple IRAs.
- Pros are these plans are easy to install and each employee/owner makes independent deferral and investment decisions.
- Cons include these plans “typically have low deferral limits”, “require the employer to match contributions” and “are subject to withdrawal penalties.”
- Attorney Fee Structured Settlement Plans: These plans allow attorneys to “defer their fees by utilizing structured settlement annuities similar to those that are used for planning purposes with personal injury clients.”
- Pros include these plans are easy to use, have no investment risk and no early withdrawal tax penalties.
- Cons to this plan are they “cannot be modified after the release is signed”, only a “fixed investment option” and they require “coordination with client and defendant.”
This article emphasizes that “each attorney should seek out a qualified planner and tax professional to help them navigate the options.” If you have any questions of would like to discuss utilizing these planning opportunities for your firm, contact Synergy Settlement Services at 877-242-0022 or email [email protected].
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