Strategic Slicing (Cross-Testing)
A common anxiety for the high-earning business owner is the 'Equality Trap.' They want to take care of their team, but they realize that if they contribute the same percentage to everyone, they won't be able to hit their own retirement goals without draining the company's cash.
The Both/And Resolution is found in Strategic Slicing via Cross-Testing.
Using sophisticated IRS-approved formulas—known as 'New Comparability' or 'Cross-Testing'—we can design plans that look at the projected value of a benefit at retirement age rather than just a flat percentage of today's pay. This allows the business owner (who is often older or has a higher income) to aggressively 'slice' more of the contribution toward their own account while still providing a 'Sound,' compliant, and meaningful benefit to the staff.
Why is this essential?
- Owner Priority: The owner takes the most risk; the plan should reflect that reward.
- Compliance: These aren't 'loopholes'; they are technical ERISA standards that ensure fairness through a different lens.
- Retention: You can still provide a better benefit than your competitors while keeping your personal accumulation on track.
This is Sound Data in action. It moves the conversation away from 'What is fair?' to 'What is mathematically optimized for everyone’s success?' You don't have to choose between being a good boss and having a great retirement. You can do both.
Learn EVERYTHING about this topic:
https://youtu.be/vRb0EC9I6UQ
DISCLAIMER: This content is for educational purposes only and should not be considered personalized financial advice. Always consult with a qualified financial professional before making financial decisions.