For your industry
401(h) for Financial Advisors
A framework for financial advisors evaluating client fit for a 401(h) sub-account.
Financial advisors increasingly hear questions about 401(h) accounts from owner-led business clients. The structural prerequisites — a qualified pension or annuity plan and ongoing actuarial funding — narrow the fit substantially, but where it does fit, it can be a meaningful piece of a broader retiree healthcare conversation.
Why the fit comes up here
Already-implemented DB/CB clients
Advisors with clients who already sponsor a defined benefit or cash balance plan are the natural starting point. The host vehicle is the gating factor.
Long-runway retiree medical planning
For clients planning to retire before Medicare eligibility, retiree medical funding is a known gap. 401(h) is one of several tools sometimes evaluated to address part of that exposure.
Multi-disciplinary coordination
401(h) decisions typically involve the CPA, ERISA counsel, an enrolled actuary, and a TPA. Advisors who routinely convene that team can move clients through the decision cleanly.
Key considerations
- 401h.com is educational, not advice — recommendations should come from the qualified plan professionals.
- Plan-document language must specifically authorize the 401(h) sub-account.
- Ongoing administration, valuation, and compliance obligations are non-trivial.
Related reading
What Is a 401(h) Plan? A Plain-English Guide for Business Owners
A 401(h) account is a separate sub-account inside a qualified pension or annuity plan that may be used to fund retiree medical benefits. Here's the plain-English version every business owner should read first.
401(h) Plan Rules: What Business Owners and Advisors Need to Know
401(h) accounts are powerful but rule-driven. Five buckets — documentation, accounting, incidental benefit, nondiscrimination, and funding — determine whether the structure stands up.
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.
Next step
Find out whether a 401(h) strategy may fit
Talk with a 401(h) specialist about your plan, participant group, and retiree medical objectives.
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.