How come I don't know about this?

Why the big secret? The actual plan design is not important to financial institutions because they derive significant profits from management of assets, not from creative plan design and sophisticated discrimination testing.  As a result, the financial institutions typically offer generic 401(k) retirement plan documents that provide them with the ability to systematize the “one size fits all” approach.

These off-the-shelf documents – utilizing the  “one size fits all” approach – prevent business owners from being able to:

  • Maximize contributions for themselves and favored employees
  • Exercise control over the contribution expense for all other staff
  • Create an efficient tax shelter
  • Adjust company contribution levels when business conditions change

401(k) Plans Above the Surface: Investments

  • What investment will be made available?
  • Who will educate participants?
  • Who will provide reports and performance data necessary to support plan fiduciaries?
  • How quickly can I grow money I am saving?

401 (k) Plans Below The Surface: Plan Document/Design

  • How will contributions be allocated to the staff?
  • How much will you receive?

IRS rules allow flexibility, but big financial institutions' solutions don't include it. Their focus is on investments (and making a profit)! These institutions (including large payroll companies) choose to avoid plan design because of the complexity involved and the associated low profit margin.


Continue to Step 3: Before and After

Step-by-Step Guide:

  1. What Does MMG Do?
  2. How come I don’t know about this?
  3. Before & After
  4. Still too good to be true?
  5. Get a free analysis

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