{"id":8952,"date":"2026-09-23T10:35:12","date_gmt":"2026-09-23T14:35:12","guid":{"rendered":"https:\/\/therosenbaumlawfirm.com\/blog\/?p=8952"},"modified":"2026-09-23T10:35:12","modified_gmt":"2026-09-23T14:35:12","slug":"the-owners-contribution-isnt-the-only-thing-that-matters","status":"publish","type":"post","link":"http:\/\/therosenbaumlawfirm.com\/blog\/?p=8952","title":{"rendered":"The Owner\u2019s Contribution Isn\u2019t the Only Thing That Matters"},"content":{"rendered":"<p>When business owners establish a 401(k) or profit-sharing plan, one of the first questions they usually ask is: \u201cHow much can I put away?\u201d<\/p>\n<p>I understand.<\/p>\n<p>The tax deduction and retirement contribution are often major reasons they established the plan in the first place.<\/p>\n<p>But designing a retirement plan solely around maximizing the owner\u2019s contribution is like buying a car based entirely on how fast it can go without asking what it costs or whether you can actually drive it.<\/p>\n<p>There is more to plan design than the owner\u2019s contribution.<\/p>\n<p>You have employees.<\/p>\n<p>Coverage testing matters. Nondiscrimination testing matters. Eligibility matters. Employer contribution costs matter. Safe harbor contributions may matter.<\/p>\n<p>I\u2019ve seen plan designs that look fantastic on paper because the owner can receive a substantial contribution. Then the employer discovers what they have to contribute for everyone else.<\/p>\n<p>Suddenly, that fantastic plan design isn\u2019t so fantastic.<\/p>\n<p>Good plan design requires understanding the entire workforce. That includes compensation, ages, ownership, job classifications, turnover, related businesses, and the employer\u2019s objectives.<\/p>\n<p>It also requires looking beyond this year.<\/p>\n<p>Maybe the demographics work perfectly today. What happens when you hire ten employees next year? What happens when another owner joins? What happens when you acquire another company?<\/p>\n<p>A retirement plan should be designed around the business, not simply around one owner\u2019s desired contribution.<\/p>\n<p>That\u2019s why plan design should involve conversations between the employer, TPA, financial advisor, accountant, and ERISA counsel when necessary.<\/p>\n<p>There is nothing wrong with wanting to maximize the owner\u2019s contribution. That\u2019s often one of the biggest benefits of sponsoring a retirement plan.<\/p>\n<p>Just remember that the owner isn\u2019t the only participant in the plan.<\/p>\n<p>Sometimes the most important number isn\u2019t how much the owner can contribute.<\/p>\n<p>It\u2019s what getting that contribution is going to cost everyone else.<\/p>\n<div class=\"sfsiaftrpstwpr\">\n<div class=\"sfsi_responsive_icons\" data-icon-width-type=\"Fully responsive\" data-icon-width-size=\"240\" data-edge-type=\"Round\" data-edge-radius=\"5\">\n<div class=\"sfsi_icons_container sfsi_responsive_without_counter_icons sfsi_medium_button_container sfsi_icons_container_box_fully_container \">\n<div class=\"sfsi_responsive_icon_item_container sfsi_responsive_icon_facebook_container sfsi_medium_button sfsi_responsive_icon_gradient sfsi_centered_icon\"><img class=\"sfsi_wicon\" src=\"http:\/\/that401ksite.com\/wp-content\/plugins\/ultimate-social-media-icons\/images\/responsive-icon\/facebook.svg\" alt=\"facebook\" \/>Share on Facebook<\/div>\n<div class=\"sfsi_responsive_icon_item_container sfsi_responsive_icon_twitter_container sfsi_medium_button sfsi_responsive_icon_gradient sfsi_centered_icon\"><img class=\"sfsi_wicon\" src=\"http:\/\/that401ksite.com\/wp-content\/plugins\/ultimate-social-media-icons\/images\/responsive-icon\/Twitter.svg\" alt=\"Twitter\" \/>Post on X<\/div>\n<\/div>\n<\/div>\n<\/div>\n<p><span class='st_sharethis' st_title='{title}' st_url='{url}' displayText='ShareThis'><\/span><\/p>","protected":false},"excerpt":{"rendered":"<p>When business owners establish a 401(k) or profit-sharing plan, one of the first questions they usually ask is: \u201cHow much can I put away?\u201d I understand. The tax deduction and retirement contribution are often major reasons they established the plan &hellip; <a href=\"http:\/\/therosenbaumlawfirm.com\/blog\/?p=8952\">Continue reading <span class=\"meta-nav\">&rarr;<\/span><\/a><\/p>\n<p><span class='st_sharethis' st_title='{title}' st_url='{url}' displayText='ShareThis'><\/span><\/p>","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1],"tags":[],"_links":{"self":[{"href":"http:\/\/therosenbaumlawfirm.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/8952"}],"collection":[{"href":"http:\/\/therosenbaumlawfirm.com\/blog\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/therosenbaumlawfirm.com\/blog\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/therosenbaumlawfirm.com\/blog\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/therosenbaumlawfirm.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=8952"}],"version-history":[{"count":1,"href":"http:\/\/therosenbaumlawfirm.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/8952\/revisions"}],"predecessor-version":[{"id":8953,"href":"http:\/\/therosenbaumlawfirm.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/8952\/revisions\/8953"}],"wp:attachment":[{"href":"http:\/\/therosenbaumlawfirm.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=8952"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/therosenbaumlawfirm.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=8952"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/therosenbaumlawfirm.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=8952"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}