Growing Healthcare Technology Solution Provider Finds Success with SD Mayer’s Retirement Plan Solution
Armus, a technology solution provider focused on healthcare quality in Silicon Valley, sought assistance finding a retirement plan that better suited the growing company.
The team at SD Mayer helped to take us from early startup mode, running accounting with Excel and lump-sum journal entries, to proper audit-ready accounting practices. Highly recommended for a bootstrapping startup that needs to up their game. Great team to work with! Friendly, responsive and accurate. Just what you need.
THE CHALLENGE
While they had previously implemented a retirement plan, Armus faced difficulty altering it as business improved. The owner desired better results from the plan, while also rewarding long-serving employees who were contributing to the company’s success.
HOW SD MAYER HELPED
Because of Armus’s two-fold problem, our solution was multi-layered. SD Mayer set up a 401K Safe Harbor retirement plan. Safe Harbor plans allow owners and employees to be on different contribution levels with different amounts. Age and salary is taken into account when making contributions, allowing for a more individualized plan that best suits your company.
In this case, Armus can give 3% contribution to all eligible employees where the 3% is based off on their annual salary. This allows Armus to circumvent testing based on the regulations of Safe Harbor plans. With different levels of contributions some people received the 3% contributions, while the owners were able to have a more significant contribution of 10%.
Additionally, when the company makes a profit sharing contribution with the Safe Harbor plan, the 3% the company already contributed is deemed an already paid deposit. This allows the company to contribute to different employees at different levels—where the level is based on age, salary, and qualifications—while remaining compliant with 401k standards.
Once the 401K Safe Harbor plan was established, the owner was able to invest as much money into the plan as when wanted, allowing him to earn tax-free money from the business. He also had the ability to reward employees who had contributed to company success by implementing a plan that allowed employees to invest in their own future.
A strategy that SD Mayer uses for our clients is an aggressive plan design, encouraging employees to participate in beneficial financial planning behaviors. Our work with Armus did not stop after we developed their new retirement plan—our work still isn’t finished. We trained the Armus employees with financial education and confidence in their retirement contributions so that they are financially fluent and have the knowledge to come to us with any future questions.
THE RESULTS
As a company who cares, we look for employers who care. Armus met and exceeded that criteria. Planning for retirement seems to constantly be on the back of everyone’s minds whether or not they have the ability or skillset to take action. Having employers who look out for their employees future is critical for retirement, and our retirement consulting demonstrated our shared values with Armus.
DISCLAIMER:
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. The services of an appropriate professional should be sought regarding your individual situation.
