Case study – New England Dental

Background

New England Dental is a small dental practice in the northeast United States with fewer than 10 employees. They vary widely in age and salary, making it difficult to structure a retirement plan or any other tax-advantaged plan that is not cost-prohibitive to the business or not too expensive for employees. Before working with UFG, New England Dental’s owner had focused solely on building the business. His personal financial planning had been on the back burner for years but he knew he had to play catch up in his retirement planning without overspending on his staff. He liked the idea of a defined benefit plan, which would offer some security through the use of guaranteed investment choices, life insurance, plus the ability to invest in other, more aggressive, opportunities as well.

The UFG Solution

The first step was to perform a feasibility study of all available and appropriate retirement planning options for dental practice, based on its employee makeup. We looked at a 401(k), a profit sharing plan, a defined benefit plan, a 412 fully insured plan, and the UFG Multiplan. New England Dental’s owner was able to review an objective study that included a brief description of each plan design with pie charts that clearly showed what percentage of the contribution would go to the employees and what percentage would go to the business owner.

Based on the business owner’s desire to make significant annual contributions toward his retirement, he wanted to move forward with a defined benefit plan but with nearly every available option there was still a problem: the cost for the employees was simply to high. The win-win solution was UFG’s Multiplan design, through which his contribution accounted for more than 90 percent of the total corporate contribution into the qualified plan.

Results

The dental practice owner was able to provide cost-effective 401(k) and group life insurance benefits for his staff while establishing a large defined benefit plan for himself. Further, New England Dental was able to take significant annual tax deductions.