I am currently employing a firm that is handling some of my accounting and business categorization from a liability standpoint as well as a tax savings standpoint. For the most part I trust their advice, but I am still early on in the process so I haven't seen a lot of actual work product so I'm trying to make sure I'm not just continually throwing more and more money at a never ending list of add-ons.

What they are currently saying would be beneficial to me is to shift from my SEP-IRA to a S-Corp with a Profit Sharing Plan and more significantly a Cash Balance Plan, and that employing these two investment vehicles will offer me significant tax savings. However they are saying the company that "advises" and handles setting up these vehicles for them charges $1000 to set it up and an additional $2500/year to maintain it and do all the compliance and paperwork.

A scenario like that typically sets my alarms off... "well you're not paying *US* any more money, just this other company that we partner with!" (that I'm sure there is some beneficial kickback to)

For those in the industry, do these seem like reasonable rates to you? Or is this a scenario where these have little to no fees to setup or overhead and they are just hitting me up for some more "add-ons" ?

Any advice anyone can offer would be welcomed.

What is your employee mix? Without that, responses will be almost meaningless.

In simple terms basic retirement plans like a SEP and Simple are narrow/easy retirement plans. Going to PSP and other plans are more complex, have more choices and more testing/requirements. But for that, typically offer more customization that is beneficial. Without a census, and a sense of your company trajectory/goals… we'll all be guessing.

Casey TableTennis said:

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What is your employee mix? Without that, responses will be almost meaningless.

In simple terms basic retirement plans like a SEP and Simple are narrow/easy retirement plans. Going to PSP and other plans are more complex, have more choices and more testing/requirements. But for that, typically offer more customization that is beneficial. Without a census, and a sense of your company trajectory/goals… we'll all be guessing.

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Company of 1 (myself). May hire someone this year, but will likely be contract work.

I was paying slightly less for a group through my FA to administer my 401k plan when I was a business of one. They did a great job. DWC was the plan administrator through Whitley Penn. No complaints.

Cash balance plans and other DB plans in general will allow you to put away a large amount of money compared to a SEP but will add a lot of complexity and cost more on the third party administrator (TPA) side.
I doubt there is a kickback from the TPA. There isn't for me when I refer them business at least.

I'm not a cpa or your tax advisor but it seems like if you're self employed and making good money filing taxes as an S corp (perhaps through an LLC) makes a lot of sense to reduce your FICA taxes which are probably through the roof.

Assuming you can contract the 1 employee, the ones mentioned allow a decent amount into the plan. First, you need to see how much you would put away in a plan each year. It also depends on what your salary is.


If only want to do 24k/yr, then you likely don't need the proposed plans.

You could do a solo 401k and it usually allows you yo put more than a SEP into it if your salary is keeping the SEP contribution from maxing out..

If you are wanting to invest more than $61k/yr, then consider their proposal.

Thanks for all the input. So $1000/setup and $2500/year maintenance/paperwork/oversight isn't on the exorbitant side for something like this? That's really all I'm trying to determine -- I think their suggestion on using it is wise, just making sure I'm not paying $3500 for something that is a $50 filing fee.

I do think that is in line, especially with 2 plans. Most places charge $1500/yr min for 1 plan.

Comparing plans is tough because you can have 3 types of fees (maybe 4).

1. The payroll/retirement plan company.
2. The TPA.
3. The company managing/investing the money.
4. The advisor - this one is most likely in the fund expense.

Your fees sound like the payroll and TPA are the same place. It also sounds like you don't have high fees hidden in 3&4.

Some payroll/retirement places will only charge $500, so you think you are getting a deal, but then you have to pay for a TPA who then charges $1500 min.

Some TPAs are paid by the underlying fees of the funds in the plan. So, the TPA may say you don't pay us, but you really do through the funds.

You really have to see what ALL the fees are for you to determine if $2500 is reasonable.

If the $2500 is the total for 1&2, and 3&4 is .35% or less, then you could argue you have a competitive plan.

Wanted to thank everyone for the input - made my decision much easier.