DB/Non-qualified Plan Design

[kmciver]

I have a potential client (doctors) that want to do a DB, but the younger doctors are not happy. Does anyone have any good design tips to satisfy the young doctors (qualified or non-qualified)? Thanks, I know this is a very general question but I wondered if there was an easy answer out there.

[Guest Keith N]

Hire an actuary!

Lots of possibilities that would require to many details for this board. Try cash balance or use combination DB & DC.

The first thing you need to do is define "equality". Do they want equal benefits, equal costs, equal benefits per years of service?

[kmciver]

They are looking for equitable costs.

[AndyH]

How about a great big 412(i) plan!

Each doctor can get a huge deduction no matter how old they are and they can evenly split the meager proceeds upon plan termination.

When will we start seeing nonqualified 412(i) plans?

Sorry, kmciver, but this is kind of an inside joke. I couldn't resist.

[AndyH]

kmciver, the "model" answer to your question is, as Keith suggested, a cash balance plan or a db/dc combo.

Perhaps better still, you might try to get them to simply adopt a discretionary class new comparability profit sharing/401(k) plan, with each opinionated doctor in his own class. This assumes that they are willing to live with a deduction of not more than $40,000 or $41,000 if they are 50+.

The latter is the approach that will minimize your aggravation, IMO.