Managing Your Multiple Roles
Managing your multiple roles as a solo practitioner, we know that your main focus is the practice of law. Your present and future well-being in retirement is also important. The ABA Retirement Funds Program (“the Program”) is here to support you in accomplishing your retirement goals and is committed to helping you leverage the benefits of having your own retirement plan. As a solo practitioner with a retirement plan, you have many roles and responsibilities: plan sponsor, plan administrator, and participant. With that in mind, it’s important to remember that the Program exists for one important reason – to support you.
We’ve listed some key tasks below, along with information on additional resources, which you should be aware of in light of your multiple roles.
PLAN ADMINISTRATION: As Plan Sponsor and Administrator
- Submit your annual plan filings on time to avoid late filing penalties.
Form 5500EZ is due to be filed the last day of the seventh month following the close of the plan year (so for plans with a plan year ending December 31, the filing deadline is the following July 31).
Note: If your firm sponsors a one-participant plan and the total plan assets for all one-participant plans maintained by your firm do not exceed $250,000 at the end of the plan year, you are not required to file Form 5500EZ unless it is the final plan year of the plan. If your firm sponsors such a plan and the total plan assets exceed $250,000, your firm may need to file a Form 5500EZ with the Internal Revenue Service.
- To extend the due date of your Form 5500EZ, you must file a paper copy of Form 5558 with the IRS no later than the filing deadline.
The Form 5558 is available at www.irs.gov should you wish to file for an extension.
Please NoteThe Program will never share your personal or plan information; however, once you file Form 5500EZ with the IRS, it may be available to the general public through websites such as www.freeerisa.com. (The Department of Labor posts Form 5500 information on its website at www.efast.dol.gov.) If you have questions regarding the accessibility of your plan’s information, call the Plan Administrator Line at (800) 752-6313.
- Make your contributions on time to ensure the contributions are counted toward the correct plan year.
Plan contributions are generally due by three and one-half months following the close of the plan year (for 12/31 plan years, the due date is April 15). See the section entitled Calendar of Events for more information and key dates.
- Withdraw your Required Minimum Distribution (RMD) by the deadline if you turned 70½.
To review the RMD rules and how the Program can assist you in meeting these requirements, view the Understanding Required Minimum Distributions e-Seminar which is on the Program website.
RETIREMENT SAVING AND PLANNING: As a Participant
- Remember that you can never save too much.
You may spend many years in retirement. That’s just one good reason to contribute the maximum amount you can afford to your Program account. What’s more, if you contribute on a pre-tax basis, you reduce your current income tax burden and build the savings you’ll need in the future.
See the section on the Tax Benefits of Self-Employed Retirement Plans for more information on how you can maximize your contributions.
- Diversify your investment strategy.
Spreading your retirement savings across multiple asset classes can help to manage the fluctuations of the value of your account, which may be important to help you achieve your retirement goal. In fact, many experts recommend diversification as one of the ways to protect your retirement savings account against severe market ups and downs.
View the Program’s 1-2-3 Investing video series which features two videos that highlight the investment options available to you and the importance of diversification to your retirement planning strategy.
Using diversification as part of your investment strategy neither assures nor guarantees better performance and cannot protect against loss in declining markets. You should consider the investment objectives, risks, charges and expenses of the investment options carefully before investing.
- Help is available.
In the Program, you have access to investment advice. Click here for more information.
- When it comes to saving for retirement, the outcome is the income.
You need to make sure you have enough money to last you each year of your retirement and have enough left over to handle any of life’s curveballs. Your retirement may last 20 or 30 years, so it’s important that you plan carefully beforehand and pace your spending in retirement.
Review Your Retirement Blueprint: The Six Areas of Financial Planning, particularly the sections on Investing and Retirement Planning to learn how you can adequately plan for your income needs in retirement.