Question

In this assignment, you will be given several different scenarios. You will need to type on a separate sheet of paper which plan type you think would be best for each situation and why you have chosen that plan type. Each scenario will be worth 1 point. There are nine scenarios, so you will receive 1 extra point for turning the assignment in on time. Each scenario will have only one correct answer and you may not use the same plan type for more than one scenario. The plan types that you can choose from are: a Straight Defined Benefit Plans, a Target Benefit Plans, an ESOP, a SIMPLE, a SEP, a 401(k), a 403(b), a Profit Sharing Plan, or a Money Purchase Pension Plan.

Scenario #6

A regional law firm has just recently won a case with national exposure. Since winning this suit, they have received a burst of requests for legal services in cases with a similar footprint as the one they just won. There are only three partners in the law firm with a team of five full-time paralegals and three full-time administrative assistants. The partners know that they need to admit several new partners to handle the potential case load. They also know that they will need to offer a retirement plan in order to attract the best and brightest. Being lawyers, they do not want to bear investment risk, but they are willing to make all contributions from the company itself. They also want both flexibility in plan design and the flexibility to adjust the annual contributions should the surge in their case load experience a dry spell. What plan type is best for this potential client?

Answer 1

Answer :

401(k) PLAN is the best Suited Plan Type for this Potential Client.

Reasons :

• 401(k) Plans are Suitable for Companies of all Sizes. They allow GENEROUS CONTRIBUTION LIMITS and most FLEXIBILITY in Plan Construction.
• It is a fundamental Component in a Competitive benefits package and a tool that Savvy employers use to recruit & retain talent. As it ENTICE PEOPLE to want to work for the employer.
• It also Allows the Specific tax advantages with high contribution limits.
• It will Contribute more to a partner's account in a good year.

So, 401(k) can be said as most suitable Plan for this Potential Client, As all the Conditions mentioned under the given Scenario are met by the same.