401(h) Plans for Law Firms: Partners, Associates, and Plan Design
Law firms that already run cash balance or DB plans for partners are natural candidates to evaluate 401(h) — with care around partner-vs-associate dynamics.
Key takeaways
- Established partnerships often already host the qualified plan 401(h) needs.
- Partner compensation patterns interact with incidental-benefit math.
- Associate inclusion is a deliberate design decision.
- Governance — who decides — matters more in partnerships than in owner-led businesses.
Why firms look at 401(h)
Law firms with stable profits and an existing cash balance or DB plan often consider 401(h) when partners begin to focus on retiree medical funding. The underlying plan is already there; the question is whether to add the medical sub-account.
Partner vs associate dynamics
Plan design must address who is in the eligible class and how the firm defines retirement. Concentration of benefits at the partner level draws particular nondiscrimination attention.
Governance considerations
Partnerships decide differently than single-owner businesses. A clear governance trail for the plan amendment and the funding policy is good practice and good documentation.
Frequently asked questions
Availability, tax treatment, and plan design depend on the facts and circumstances of the employer, plan document, participant group, and applicable law. 401h.com provides general educational information only — not tax, legal, actuarial, investment, or ERISA advice. Consult qualified tax, legal, actuarial, and plan professionals.
401h.com Editorial
401h.com
The 401h.com editorial team publishes plain-English explainers on 401(h) retiree medical benefit plans. Educational only — not tax, legal, actuarial, investment, or ERISA advice.
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