Qualified Retirement Plans
Strategy beyond the basics — 401(k), pensions, excess plans, Roth, solo 401(k), cash balance, and more.
401(k) plans
Qualified cash-or-deferred arrangements remain the default wealth engine for employees. Key 2025 reference points include employee deferral limits, catch-up paths (including SECURE 2.0 “super” catch-up ages), and the overall Section 415 limit that caps total annual additions.
- Traditional and Roth elective deferrals, employer match, and profit sharing within one integrated limit
- Plan menu design, auto-enrollment, auto-escalation, and QDIA structure
- Nondiscrimination testing (ADP/ACP) and top-heavy rules that constrain highly compensated employees when rank-and-file deferrals lag
- After-tax contributions plus in-plan Roth conversions (“mega backdoor”) when the plan allows
Common failure modes: matches set at statutory minimums instead of competitive targets; default deferrals stuck at 3% without escalation; weak investment lineups; testing failures that cap HCE deferrals.
Pension and defined benefit plans
Traditional pensions shift investment risk to the employer and provide formula-based benefits. They remain powerful where maintained, but freezes, lump-sum windows, and derisking transfers have reshaped the landscape.
- Actuarial funding, PBGC coverage (private sector), and benefit formula design
- Funding shortfalls and restrictions when funded status falls below key thresholds
- Interaction with Social Security (permitted disparity) and executive “restoration” needs
Excess and non-qualified plans
When IRC limits cap qualified benefits, SERPs, top-hat NQDC, and excess 401(k) arrangements restore flexibility for owners and key employees — at the cost of unsecured promises and strict Section 409A operational rules.
| Arrangement | Role | Notes |
|---|---|---|
| Excess 401(k) | Deferrals above 402(g) or 415 | Ordinary income at distribution; creditor exposure |
| SERP / excess pension | Benefits above 415(b) or pay cap | Employer deduction timing; 409A triggers |
| Top-hat NQDC | Broad executive deferral | Election timing and payment events are heavily regulated |
Roth options inside qualified plans
Roth elective deferrals, in-plan Roth conversions, and after-tax buckets can move tax risk to today while clearing future RMD friction — especially valuable when tax brackets are temporarily low.
- Roth 401(k) shares the same deferral limit as pre-tax; SECURE 2.0 aligned Roth 401(k) RMD treatment with policy intent
- Mega backdoor Roth: after-tax contributions to 415 cap plus in-plan Roth conversion or rollover to Roth IRA when permitted
- Pairing Roth deferrals with taxable brokerage and IRA strategies for layered tax diversification
Solo 401(k) for self-employed owners
Owner-only businesses can often stack employee deferrals with profit sharing up to the Section 415 cap, with streamlined administration until asset thresholds trigger Form 5500 filing.
- Coordination with other 401(k)s when the owner also has a day-job plan
- Roth vs. traditional election, loan features, and custom investment menus
- Pairing with a cash balance plan for materially higher deductible contributions when cash flow supports it
Cash balance and “combo” designs
Hybrid DB/DC designs can accelerate deductions for profitable practices and closely held businesses while managing IRS minimum funding pressure. They require actuarial discipline and clear ownership cash-flow planning.
Overfunded and frozen plans
Surplus assets, reversion risk, and 415 restoration issues require specialized counsel. If your business carries legacy frozen DB liabilities, proactive remediation beats crisis management.
Whether you are an employee trying to maximize a workplace plan or an owner designing executive benefits, we stress-test numbers against longevity, taxes, and sequence risk — not slogans.