Small Law Firm

A seven-partner Chicago law firm added a Cash Balance plan several years ago, but they were limited in their contributions by pension laws that were in place at the time. The firm was contributing about $400,000 for the seven partners.

The Pension Protection Act of 2006 allowed Kravitz to redesign their plan to allow for larger contributions. The seven partners are now enjoying contributions totaling $1.3M, including $966,000 in the Cash Balance plan alone.

While the employees enjoy an enhanced 401(k) benefit package because of the Cash Balance plan, this redesign of their plan did not cost the firm anything in additional employee contributions.

Retirement Plan Illustration

Year Ending December 31, 2019

(IRS Testing)
401(k)Profit SharingCash BalanceTotal Contribution
Partner 161$280,000$25,000$37,000$274,000$336,000
Partner 257$280,000$25,000$37,000$225,000$287,000
Partner 352$280,000$25,000$37,000$175,000$237,000
Partner 450$280,000$25,000$37,000$0$62,000
Partner 550$280,000$25,000$37,000$158,000$220,000
Partner 648$280,000$19,000$37,000$143,000$199,000
Partner 740$280,000$19,000$37,000$96,000$152,000
4 Associate Attorneys$460,000n/a*$0$0$0
15 Other Employees$900,000n/a*$67,500$15,000$82,500

Percent to Partners: 95%

*This illustration shows only the cost to the firm.
Staff employees and associate attorneys pay for their own 401(k) contributions.