For your industry
401(h) for Law Firms
How partner-owned law firms evaluate 401(h) retiree medical sub-accounts.
Law firms — particularly partner-owned practices with established profitability — frequently use defined benefit and cash balance plans to accelerate retirement savings. That same chassis can host a 401(h) sub-account when properly drafted and administered.
Why the fit comes up here
Partner ownership and key-employee treatment
Most partners are key employees, which triggers separate-accounting requirements for their 401(h) medical benefits. Firms with experienced ERISA counsel and an enrolled actuary on the team are best positioned to navigate this.
Ongoing partner draw structure
Stable annual partner compensation supports the actuarial funding pattern a DB + 401(h) structure depends on.
Long-horizon retirement planning
Partners often retire with significant healthcare runway before Medicare. 401(h) is one of several tools sometimes considered to formalize and pre-fund that exposure.
Key considerations
- Partnership agreements and plan documents must align.
- Coverage and nondiscrimination testing across associates and staff is non-trivial.
- Ownership transitions and lateral movements affect 401(h) administration.
- Coordinated tax, ERISA, and actuarial review is essential.
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.