Case Study: A Smarter 401(k) Strategy for a Busy Doctor's Office

THE BACKGROUND

Two physician-owners with a team of 34 employees had relied on the same 401(k) plan for years - without realizing how outdated it had become. Referred by a trusted CPA partner, they connected with our team to explore whether their retirement plan was truly aligned with their business goals, employee needs, and long-term financial strategy.

The existing plan design was basic, the fee structure was inefficient, and the administrative responsibilities were entirely on their shoulders. Like many business owners, they didn't realize there were better options available - until we helped them see what was possible.

The result: a thoughtfully redesigned 401(k) strategy that significantly increased the owners' retirement savings, reduced taxes, lowered overall plan costs, and offloaded the day-to-day administrative burden.

THE CHALLENGES

As the owners reviewed the plan's current structure, they knew there were necessary changes to make.

Advisor Expertise

The previous advisor was focused on individual wealth, not retirement plans, leaving key strategy opportunities overlooked.

Plan Design Efficiency

The existing match-only structure limited the owners' ability to maximize contributions and tax savings, and offered minimal flexibility for strategic enhancements.

Cost Structure

All plan expenses were paid by participants, disproportionately impacting the doctor-owners who held the majority of plan assets.

Employee Education & Engagement

Employees had limited understanding of the plan's value, with no history of personalized support or one-on-one guidance.

Administrative Burden

The practice carried the full weight of plan administration and compliance oversight - creating time constraints and potential risks.

Missed Tax Opportunities

Without strategic plan design, the owners were not capturing the full tax advantages available through profit-sharing and optimized employer contributions.

THE LUTZ FINANCIAL APPROACH

We guided the owners through a strategic plan redesign focused on tax savings, operational efficiency, and employee value - while preserving their time and peace of mind.

Plan Design Optimization

We transition the practice from a match-only plan to a safe harbor non-elective + new comparability profit-sharing design, allowing the owners to significantly increase their retirement contributions and reduce overall tax liability.

Tax Savings Strategy

By aligning contributions with a more tax-efficient design, the practice achieved a total tax savings of $64,100, while delivering a net plan cost of just $15,150 after owner benefits were factored in.

Cost Structure Overhaul

We eliminated participant-paid administrative fees and shifted all plan advisory and administrative costs to the business, reducing the owners' personal plan expenses by $11,420 annually. While employees continue to pay their own investment-related costs, the average participant fee decreased from 0.69% to 0.12%, depending on investment selection.

Administrative Simplification

The practice was transitioned into the Lutz Pooled Employer Plan (PEP) - offloading administrative tasks and compliance responsibilities, while ensuring professional oversight moving forward.

Employee Education & Engagement

We hosted a pre-shift group presentation and conducted individual meetings with all employees to walk through the new plan and help them get set up - leading to stronger understanding and participation.

Enhanced Employee Benefit

In addition to a more efficient plan, employees received a 0.5% increase in their employer contribution - enhancing retention and morale while aligning incentives across the team.

THE OUTCOME

The doctors now have a high-performing retirement plan that aligns with their financial goals, supports their employees, and reduces their administrative burden. Their new design maximizes contributions, lowers total cost, and strengthens the long-term value of their benefit offering - all while giving them time back to focus on their practice.

Strategic Contributions

The new plan design enabled the owners to contribute a combined $81,000 toward retirement as part of the $160,250 total employer contribution - resulting in meaningful tax savings.

Operational Relief

By moving to the Lutz Pooled Employer Plan, the practice transferred administrative responsibility and gained peace of mind.

Tangible Savings

Participants saw their average fees drop from 0.69% to 0.12%, and the doctors saved over $11,000 annually by restructuring plan advisory and administrative expenses.