ABC Inc. is a consulting firm organized as an S-Corporation and is wholly owned by Jane Doe. The corporation does work relating to the oil industry, and business and profits are directly tied to the price of oil. Lately, the business has been doing well and Jane Doe is interested in implementing some sort of retirement plan for the firm. She would like your advice as to which plan would fit the best. He has answered some of your questions below.

Profitability is inconsistent, so mandatory funding would not be the best situation.

Jane Doe would like a plan that can shelter some of her income from taxation, while still providing a benefit and plan design that will help attract and particularly retain good employees.

Turnover isnt good for ABC Inc. due to training costs.

Jane Doe is 40 years old, and the average employee age is 35.

Jane Doe has a salary of $155,000, and all other employees are under $100,000.

There are 102 full-time employees of the firm.

Due to inconsistent profitability, Jane Doe would like to have the employees be able to save some of their own salary (pre-tax) in the plan while still allowing ABC Inc. to share profits through non-elective contributions.

Participant plan loans should be permitted.

The plan should be fairly inexpensive and not dilute ownership.

What type of retirement plan should Jane Doe choose? and why?

Things to consider:

Who will the plan benefit? What type of benefit is desired? Is the plan to retain employees? Is the plan to encourage early retirement? What are the cp cash flows? Who will fund it? Who will bear risk? Will the company contribute stock? Costs?