Last month we talked about how a SIMPLE was like flying from coast to coast sitting in a middle seat instead of first class. After thinking about it I realized I was completely wrong. Both first class and coach arrive at the final destination with the same success rate and this is absolutely not true of The Cambridge Plan and the SIMPLE and certainly not true of this month’s topic the SEP. There are too many problems with a SEP for most of the employees to arrive successfully at their final destination (Retirement with Dignity). Let’s start with only an employer contribution; that’s right no employee contributions. No Roth option or profit sharing option, and no catch-up if you’re behind. Forget about automatic salary deferrals and escalating contribution levels over time. Probably not using Institutional funds or any type of model portfolios. Most of the time invested in “Retail” loaded funds. With all these deficiencies’ there’s no wonder why we can’t safely get to our destination. As you can see it would be a much better analogy to compare a first class flight “The Cambridge Plan” with attempting to fly across the United States in a glider. Statistics I’ve read indicate that less than 7% will successfully navigate the retirement dilemma with a standard 401(k) where they can contribute; I would love to see the statistics on SEPs.
As many of you are aware; we have discontinued the monthly training sessions on “The Cambridge Plan” but we are still available to help and support on any individual cases you may run into throughout your year. We have found that both CPAs and accountants are very receptive to the idea of discussing and upgrading their clients SIMPLE, SEPs and Profit Sharing Plans. This is a big win for the CPAs in front of their clients but in most cases need to be educated on what a MEP is and how it can help their clients. Take a CPA to lunch and have the talk. It works.
