Choosing the Right Retirement Plan for Your Team

I’ve been making the rounds of podcasts recently, and my latest guest appearance was on the Leadership in Law program with host Marilyn Jenkins. What was I doing on a podcast aimed at lawyers? Talking about how law firms can benefit from their retirement plan for their staff, of course! We had a wide-ranging discussion that touched on several topics, including SEP and SIMPLE IRAs, 401ks, employer contributions, company culture and more. You can watch our conversation on YouTube, or listen to it on BuzzSprout, Spotify, and other podcast distributors. We've also got the transcript below if you're more into reading than listening. Enjoy!

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Speaker 1 (00:02):

Welcome to the Leadership in Law Podcast with host Marilyn Jenkins. Cut through the noise, get actionable insights and inspiring stories delivered straight to your ears, your ultimate podcast for navigating the ever-changing world of law firm ownership. In each episode, we dive deep into the critical topics that matter most to you. From unlocking explosive growth to building a thriving team, we connect you with successful firm leaders and industry experts who share their proven strategies and hard-won wisdom. So whether you're a seasoned leader or just starting your journey as a law firm owner, the Leadership in Law podcast is here to equip you with the knowledge and tools you need to build a successful and fulfilling legal practice.

Marilyn Jenkins  (01:01):

Welcome to another episode of the Leadership in Law podcast. I'm your host, Marilyn Jenkins. Please join me in welcoming my guest, Courtenay Shipley to the show today. Courtenay Shipley is the founder and Chief Planologist of Retirement Planology, a consulting and registered investment advisory firm for corporate-sponsored retirement plans. With a wealth of experience in the retirement plan industry, Courtenay not only offers her clients expertise in investment analysis, plan design, and employee education but also helps them leverage their employee benefits in a way that supports their own business goals. She has worked with qualified retirement plans, developed strategies for third-party administrators, and conducted over 10,000 educational meetings. Courtenay holds various designations including Accredited Investment Fiduciary, Chartered Retirement Plan Specialist, Certified Plan Fiduciary advisor, and certified exit planning advisor. She's also the esteemed president of the Retirement Advisor Council, and her outstanding contributions have earned her accolades such as Top Woman Advisor, NAPA Young Gun, and FT Top 401k advisor. Wow, I'm excited to have you here, Courtenay. Thank you. Welcome. 

Courtenay Shipley:

Thank you so much. I'm excited to be here. 

Marilyn Jenkins:

That's incredibly impressive. Tell me your backstory. How did you get started and what are you doing?

Courtenay Shipley (02:21):

Well, I got started kind of on accident. I have a degree in music performance and when it came time to graduate from college, I needed a job. And so I interviewed with a career center and landed at an insurance company that also helped school teachers with their retirement planning. And I thought, I love everything about this retirement and investing side of things. How do I never sell insurance again? But not that there's anything wrong with that, it just wasn't for me. And so then my career took the steady path of helping employees figure out their retirement and what that's going to look like for them with their corporate sponsored account. So that's where I am today.

Marilyn Jenkins  (03:01):

Okay, excellent. So talking about leveraging retirement benefits for employees, retaining employees, that sort of thing, and helping, say a law firm, set up a retirement plan. How would you begin? What would be your requirements to get started? Size of firm, that sort of thing?

Courtenay Shipley (03:17):

Okay. If we take a step back and say, why are we doing this? - that would probably be a good idea. So why would you want to start a retirement plan for your employees? Or why would you want to even look at the one you already have in place? Because many of you forget, right? The reason would be because I think at this point it's table stakes for a lot of employees. They expect to have some way to have health insurance, some way to save for retirement, maybe some short-term, long-term disability, those types of benefits. And having a 401k or having some sort of retirement plan in place is valuable in attracting and then retaining the talent that you want. So that would be the purpose behind it. But when you go to start it, you have to think about, what do we want this plan to do?

It's not just enough for it to say we need to have it and have it in place, but rather what should this also do for the business? And it could be that the managing partners are like, you know what? We've spent all of our time and money building this firm. We haven't given two thoughts about our own retirement. We need to get something in place for us. And as a byproduct of that, our employees get access to it, too. It could be that they're finally at a tax situation where they're pretty profitable and they want to either give back to employees or just help to offset the type of taxes that they have to pay from an income standpoint. It could also be that they really have some important level employees. Maybe they're not partners or maybe they're non-equity partners, or maybe it's the support staff that they just could not live without that they want to make sure are rewarded in a certain way. And so this plays a role in that, as well. So there's all these different types of reasons why you would want to offer the plan and then what you want that plan to do. So that's step one when it comes to thinking about offering something for your employees.

Marilyn Jenkins  (05:09):

And after hearing about all the quiet quitting and that sort of thing over the last few years, when you have an A player on the team, you want to make sure that you have something that'll keep them. And I think people are looking for something beyond just salary right now, the advantage or the benefits that they can look forward to in the future. Absolutely. So you would start with the partners. A lot of the time you do it starting with partners and then it just trickles down through the company like you're talking about. So it becomes something that the partners say, okay, now we need to do something. And it's tax advantageous for them to bring in the employees on the program.

Courtenay Shipley (05:44):

Yeah, and so most of these types of programs, you're going to have to include your employees in. If it's a small business, you have the option of the SEP IRA, and you can work with your accountant on that to figure out how much you could set aside. And with a SEP IRA what you give yourself, you also have to give the same proportion to all of your employees. So if you are able to put 25% of your income away, then you would have to provide that for your employees too. So it tends to be a little bit more expensive but can work really well in just a very small firm setup. The next option would be a SIMPLE IRA where everybody has their own, it's like a souped-up IRA. It's a large IRA, if you will, where it has a higher limit. The employer is responsible for either making a matching contribution or a small contribution to everybody's account, whether they contribute or not.

And then once you outgrow those, the 401k plan is typically what you see happen next. And with the 401k plan, it's a trust so you have some fiduciary responsibility for overseeing it and making sure that you're making good decisions in the best benefit of your employees. You are safeguarding things and you're making good decisions overall. There is a lot more flexibility though with that one because you can set different parameters around eligibility, you can set different parameters around vesting. So if you make an employer match or employer contribution and your employee quits tomorrow, could they take all of that with them or would they have to have worked for you for a certain amount of years? So with more complexity comes more rules and the IRS and DOL are more involved. So once you step out of that IRA world and into the 401k world, it does get more complicated, but you do have the ability to really tailor that plan to your employer base - or employee base, rather - your demographics, what kinds of purposes you want the plan to serve. And so that's where we come in, is to help you slice and dice that and figure out what the best setup for the plan looks like and then how do we keep it going forward. And for many of your maybe larger listeners, larger firm listeners, you may already have something in place, but it might've been something that was put in place years ago when things were different. And so these plans do change and evolve over time as your business changes and evolves over time, too.

Marilyn Jenkins  (08:09):

Okay. Alright. Excellent. And what is the ideal size to start looking at this? Or would you say profitability?

Courtenay Shipley (08:17):

Yeah. I would say most firms, we don't see them putting a 401k plan in place until you get above about 10 employees. In general, the smaller plans that I mentioned before, the SEP and the SIMPLE IRA tend to be easier to administer for smaller firms, but when you do grow into that 401k, you get the profit-sharing piece so you can make a discretionary profit-sharing contribution at the end of the year. And many firms like that flexibility of being able to say, do we want to give something to everybody in the plan at the end of the year, once we know what the books look like for the year…that's a pretty powerful tool to have.

Marilyn Jenkins  (08:59):

Okay. Thinking about…what are the four key components that organizations should consider when they're creating a retirement plan?

Courtenay Shipley (09:07):

Well, there's several things. One is, what purpose does it serve? The second would be, what kind of investments need to go in this? And you may have employees who are, do-it-for-me type of employees. You may have very hands-on do-it-myself…I like investing, I understand the concepts. You need to think about how your employees are going to find out about the plan and how they are going to absorb information about the plan. So you can call this employee education, but really it fits in with their financial wellness and also your stance as a firm on how much of that type of education and help you want to provide. And then I would say the last part is your fiduciary responsibility. Just making sure that you're overseeing the plan, what's going on and the marketplace. And really when this comes down to it, you do need help because your time really should be spent on your work in the lawyering that you're doing rather than all the administrative back office. But on the administrative and back office part of it, operationally speaking on the backend, you want to have a plan that's easy for your staff to administer for you. So this should not be something that becomes a burden, but rather something where the systems align. Your payroll system maybe talks to your 401k record keeper and they exchange information. So things like that. So those are the types of things to be looking for.

Marilyn Jenkins  (10:30):

Okay. Now thinking about, what are other companies offering at this time? I mean, what are you seeing happening with say, let's go small, let's go six to 12 employees. So just think of a small and midsize firm. What are you seeing out there?

Courtenay Shipley (10:44):

In that case, I would say that they're looking for the opportunity for employees to be able to save. Oftentimes the managing partners in those situations or the partners are looking to save a lot for themselves as much as they can. And so the plan design that we see in that situation says that we're going to give everybody 3% of their pay no matter if the employee chooses to participate or not. And so they build it into their budget. We also see that structured a little bit differently where they can match dollar for dollar up to 4%. So that would be, in general, those two are the most common that we see across the board just because there's some IRS rules and tests that they get out of by implementing that type of plan design. And that tends to be really important on the smaller side for sure.

As you move up into the larger areas, you don't necessarily have to have a guaranteed match or a guaranteed…we call it a non-elective contribution. The gift, you know - here's 3% of your pay in your retirement plan - but as your company grows, you might have a few more options for being a little bit more nimble with how you make that work. So you could match up to a larger percentage than I mentioned before, or structure where instead of it's a dollar for dollar match, it's 50 cents on the dollar up to 8%. I dunno, throwing out numbers here, but one thing that you can do is just look across the board at your competitors. Usually there's some information available on the website; you can ask HR consultants in the area who will probably be helpful as well. And just kind of gauge where you stand against others of your size. And that can be helpful in constructing your compensation package for your employees and think about how much you want to pay in the paycheck versus in the benefits side.

Marilyn Jenkins  (12:37):

And that is definitely for acquiring those A players and keeping the A players. And all of this is tax exempt, or is it pre-tax for the employee?

Courtenay Shipley (12:47):

Yep, it is pre-tax for the employee. There's also the opportunity to put Roth money in there. Now that was a relatively new provision in the last 10 years, so you can put some after-tax dollars into this, as well. But for the employer, the benefit is that when you make the contribution, the employer contribution, then you get that as a tax deduction. And for the employee when they're putting their money in, they are not paying taxes on that money at this time. If it's a pre-tax contribution and you as the employer, you don't have as much to pay in taxes, well, on the payroll taxes.

Marilyn Jenkins  (13:23):

Okay. So I'm assuming with you, you've done 10,000 education programs. I'm assuming that if you step in and you're helping, then you're going to do some sort of employee training. What's your role in helping someone decide what to do and enrolling it out?

Courtenay Shipley (13:40):

Yeah, we feel like as an advisory firm, you spend all this time and money providing this plan. It's imperative that your staff understand and appreciate the plan and are getting the best out of it they can. So when we are looking at how to educate people, we're thinking about things like where are all the eyeballs going? Does everybody log in the same place? Can we put a message there? Is this a virtual environment? These are questions we didn't have to ask necessarily before Covid started. Are we all virtual? Do we get together at any point in time as an in-person meeting versus a video or a virtual meeting better? So it's all about, how do we reach your employees just from that physical…how are they going to get the message? But then also you have to think about, what kind of life stage are they in? What kind of message will be relevant to them? And it could be that they're early on in their career, that's a different type of messaging than somebody who's five, 10 years out from retirement and the types of things that they're thinking about and their life stage and where their family might be or not be, et cetera. So that's what we're helping to think about and craft in that situation.

Marilyn Jenkins  (14:47):

And do you work with the HR departments or who would be the ideal person to speak with you to open the door?

Courtenay Shipley (14:55):

I would say most commonly we work with HR, but a lot of times we're working with controllers or CFOs, just depending on the size of the firm and how they have things structured. In some cases the controller might wear two hats and do some HR. We also have clients where it's an outsourced HR person. Those can be a great resource, especially if you don't have enough employees or don't have enough work full-time for an HR professional to be on staff, especially with the smaller firms. So that's a great resource for those who maybe don't want to hire somebody dedicated all the time. But those are the types of folks that we typically are working with.

Marilyn Jenkins  (15:33):

Okay. So say some of the listeners are like, they really want to start exploring what's going on and what the options are, what would they do? What would be their first step reaching out to you?

Courtenay Shipley (15:43):

For reaching out to us? You can go to retirementplanology.com/learnmore and there's a wealth of information there. Also, they can book a call to just discuss what's on their mind or send us an email. Another way might be to follow us on LinkedIn and I'll just go ahead and put a plug out there to say of the types of things I mentioned before, we do 401k and up, so you're kind of growing into that larger space. And then you need us for sure on the SIMPLE IRA or on a SEP IRA. Your accountant or your local financial advisor might be a good resource, but the IRS website is actually quite good for those types of programs as well. So kudos to them for having an easy to read website. But otherwise go check us out at retirementplanology.com/learnmore.

Marilyn Jenkins  (16:30):

Okay. So we've talked about a lot and I know that this is a really detailed subject. Is there anything that I didn't ask that you want to, that would help our audience in understanding what you're doing? Anything that you wish I would've asked?

Courtenay Shipley (16:42):

I would just say the last thing is thinking about…your compensation package is an extension of your company culture to an extent. So really concentrating on the fact that you don't have all the dollars in the world to spend on benefits, right? You're constrained by your budgeting. So think long and hard about what types of things your employees appreciate besides just that paycheck that they take home. And then figure out a way to have those benefits be relevant and be something that they appreciate and use as a way of giving back, but also as a way of defining…these are the types of things that are important to us as an organization. I think it was kind of surprising during Covid to hear what employees thought about where the retirement plan fit in. And it was never something that they would've quit over, but it was the last straw. They're like, and after they're done with their tirade, “They don't even give us a 401k match.” So those little things do add up, and we're here to help figure out where those dollars should go. And maybe it's not their retirement plan in some cases, but if it is, we want to make wise use of it.

Marilyn Jenkins  (17:49):

So do you find that over the last - I guess since Covid - that firms and companies are looking more towards a culture as part of the way…their company culture, of keeping those A players and bringing in the A players, which this would be a big part of. Are you seeing that the culture is something that's part of the conversation, as well?

Courtenay Shipley (18:07):

Yes, definitely. We've seen a lot of reconsideration around how they are designing compensation packages. A lot of it came out from the, can we be in a more hybrid or virtual environment, and especially for law firms, whereas how do we focus our time and attention for when we are together in the office? Because I think law firms, much like financial services…there's a lot of apprenticeship that happens and being able to knock on somebody's door down the hall to get expertise is important or bounce ideas around on, how would you approach this? So we saw a lot of focus on what they're doing from a workplace culture standpoint to make it easier for people to want to come back to the office. And then also for a while there we had the Great Resignation, and so it was about keeping people…how do we really make sure those A players stick around? What are the types of things that they appreciate? Are we meeting their needs both from a professional standpoint but also a personal standpoint? So I think all of that, just a big confluence around all of that after.

Marilyn Jenkins  (19:12):

Yeah, I think this plays into the company culture, being, it's not all about the salary, it's about a lot of other things that come into play when it comes to job satisfaction, that sort of thing. So I think this plays in really, really well. This has been really interesting. I know that my listers are going to want to reach out to you, so let's have those URLs again, you said you're on LinkedIn, and then I'll make sure that the URL gets in the show notes, but that's retirementplanology.com/learnmore. Perfect. Perfect. Yeah, this has been great. I've learned a lot on this, as well, and I'm sure our listeners will, too. We'll make sure to put everything in the show notes. And thank you so much for your expertise today. It's been lovely listening to you.

Courtenay Shipley (19:56):

Thank you for having me. This was great.

Marilyn Jenkins  (19:59):

Awesome. Thank you. Thanks for joining me today for this episode. As we wrap up, I'd love for you to do two things. First, subscribe to this podcast so you don't miss an episode. And if you find value here, I'd love it if you would rate it and review it. That really does make a difference in helping other people to discover this podcast. Second, you can connect with me on LinkedIn to keep up with what I'm currently learning and thinking about. And if you're ready to take the next step with a digital strategist to help you grow your law firm, I'd be honored to help you. Just go to lawmarketingzone.com to book a call with me. Stay tuned for our next episode next week. Until then, as always, thanks for listening to the Leadership in Law Podcast and be sure to subscribe wherever you listen to podcasts so you don't miss the next episode.

Speaker 1 (20:46):

Thanks for joining us on another episode of the Leadership in Law Podcast. Remember, you are not alone on this journey. There's a whole community of law firm owners out there facing similar challenges and striving for the same success. Head over to our website atlawmarketingzone.com. From there, connect with other listeners, access valuable resources, and stay up to date on the latest episodes. Don't forget to subscribe and leave us a review on your favorite podcast platform. Until next time, keep leading with vision and keep growing your firm.