As baby boomer law firm partners approach retirement age, many law firm partners are considering how best to ease into or transition their practice. Some will sell or transfer it, while others may close altogether; whatever their choice, tax considerations must always be taken into account for all options.
With the right legal tax planning advice, your law firm can build wealth while creating an individual retirement plan to ease your transition into life after practice. A lawyer retirement plan can also serve as an invaluable wealth management tool by creating a financial safety net separate from its value.
As a partner in a law firm, it’s vitally important that you fully comprehend the advantages of having a qualified retirement plan. Not only are contributions tax deductible for business expenses purposes; additionally, FICA taxes do not apply when contributing money to these plans, saving an extra 7.65% per dollar contributed!
Councilor, Buchanan & Mitchell can explain and help select the ideal plan for attorneys and law firm owners alike, including profit sharing and cash balance plans.
Contrary to individual retirement accounts (IRAs), law firm retirement plans permit partners to contribute a percentage of their salary directly, as well as contributing on behalf of the firm itself. These features can significantly increase how much you’re able to put away into your retirement fund.
Also, some law firms offer matching contribution policies which will match your contribution up to a certain percentage of your salary, making sure to contribute enough in order to take full advantage of this feature.
No matter the size of your law firm, implementing and managing a retirement plan that keeps pace with its expansion will likely be required at some point. Small firm owners commonly cite “overwhelming administrative tasks” as one of their top challenges according to a Thomson Reuters study; with so much on their plate already, creating and overseeing an investment plan might seem like just another task that’s hard to prioritize among busy partners; but with professional guidance available today it could become an excellent way of saving for the future and growing your firm together! Talk with one of our experts now and start saving for tomorrow today!