This article appeared in Accounting and Financial Planning for Law Firms, an ALM/Law Journal Newsletters publication covering all financial aspects of managing law firms, including: building a law firm budget; rates and rate arrangements with clients; coordinating benefits for law firm partners; and the newest strategies to grow your firm and your career.
The COVID 19/Pandemic/Shutdown has caused turmoil and upended benefit planning. The voluntary benefits platform has also been open to new rules and regulations. This miasma was heralded by the IRS issuing final regulations on deferred compensation in June 2016 that provides guidance and a roadmap to positive planning. The guidelines support the uses of an actuarially based patent to provide benefits for selected employees on a tax efficient basis. If you already have a plan in place it is most likely a traditional deferred compensation plan for your executive and professional employees. This is not meant to replace a plan in existence, rather it compliments it as there are decided differences. Most significant for the participants is the opportunity to provide for their families, a pre-retirement death benefit without risks of forfeiture and with enormous flexibility. This is not an ERISA plan; it does not need a Trustee and the participant and plan sponsor will avoid the claims of creditors while providing for the participant’s loved ones.
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