Topic: partner

How to Juggle Tax Considerations for Partner Retirement Benefits

Minimizing self-employment taxes is desirable but tricky. By Marc Rosenberg Retirements & Buyouts The income tax aspect of practice management issues is an area of my consulting practice in which I have knowledge, but I wouldn’t call it “expertise.” So I sought the counsel of an expert – Jeff Arnol, CPA, Managing Partner of Kessler, Orlean, Silver & Company in Chicago. The information presented here is based on my 20+ years of experience of working with CPA firms on partner retirement plans, liberally supplemented by Arnol’s input. MORE ON PARTNER RETIREMENTS: Two Ways to Retire, and One’s Not Pretty | Mandatory Retirement Varies by Firm Size | Mandatory Retirement? 4 Reasons The Firm Comes First | How to Transition Clients from […]

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Two Ways to Retire, and One’s Not Pretty

The graceful way to slow down and phase out. By Marc Rosenberg Retirements & Buyouts There are two ways that partners slow down as they approach traditional retirement age: Announced – the “cooperative” way to slow down. The partner openly and willingly informs the partners that she wishes to slow down. This change in status is usually related to the retirement process, but some partners who are not retirement-minded may wish to work less than full time in order to pursue other life goals. MORE ON RETIREMENT: Mandatory Retirement Varies by Firm Size | How to Transition Clients from Retiring Partners | Retirement Plan Funding? What Funding? | Retirement Vesting: The Devil’s In the Details | When Retiring Partners Take a […]

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Mandatory Retirement Varies by Firm Size

Practices between “large” firms and smaller firms diverge. By Marc Rosenberg Retirements & Buyouts As is the case with many aspects of practice management, mandatory retirement is addressed quite differently depending on the size of the firm. Here is data from a recent Rosenberg MAP Survey: Percent of firms having mandatory retirement policies for partners: 83 percent for firms with annual fees greater than $20 million. 77 percent for firms in the $10 million-20 million range. 56 percent for firms in the $2 million-10 million range. 21 percent for firms with fees less than $2 million. MORE ON RETIREMENT: Mandatory Retirement? 4 Reasons The Firm Comes First | How to Transition Clients from Retiring Partners | You Want Goodwill Payments? Give Proper Retirement […]

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Mandatory Retirement? 4 Reasons The Firm Comes First

And 6 reasons that firms struggle. By Marc Rosenberg Retirements & Buyouts At CPA firms, the concept of requiring partners to retire at a certain age has been around for decades. The mandatory requirement policy has its roots in the “one-firm” concept of managing a firm: The interests of the firm should always be more important than the interests of any individual partner. MORE ON RETIREMENT: You Want Goodwill Payments? Give Proper Retirement Notice | Retirement Plan Funding? What Funding? | Compromise Is In Order for Some Goodwill Payouts | When Retiring Partners Take a Specialty With Them | If Clients Leave, Do You Reduce Retirement Benefits? | The Multiple of Compensation Method, Fully Explained | The Ins and Outs of […]

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Teamwork: Room for Improvement

You may believe you have a great team in place. But does your team agree? A new set of CPA Trendlines Research findings shows room for improvement.

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You Want Goodwill Payments? Give Proper Retirement Notice

No transition – no goodwill. By Marc Rosenberg Retirements & Buyouts If there is one takeaway in retirement planning, it would be this: “No transition – no goodwill.” Here’s what I mean. MORE ON RETIREMENT: Retirement Plan Funding? What Funding? | Vesting Can Cover Part-Timers, Too | Compromise Is In Order for Some Goodwill Payouts | When Retiring Partners Take a Specialty With Them | If Clients Leave, Do You Reduce Retirement Benefits? | Three Ways to Calculate Goodwill Payable in Partner Buyouts, None of Them Great | Eat What You Kill? Then Maybe ‘Book of Business’ Is for You | The Ins and Outs of AAV for Goodwill | 5 Points to Consider When Paying Out Goodwill | Clients […]

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Compromise Is In Order for Some Goodwill Payouts

Two ways to deal with the loss of a major client. By Marc Rosenberg Retirements & Buyouts Sometimes you need a creative compromise for dealing with the issue of linking client retention with goodwill benefits. Situations that could cause a firm to factor in lost clients in calculating goodwill benefits include: Client loss, regardless of who is at fault. Non-traditional services that were not institutionalized and hence, left the firm with the lead partner. Loss of a significant client.

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When Retiring Partners Take a Specialty With Them

Non-traditional services must be ‘institutionalized’ to be valuable. By Marc Rosenberg Retirements & Buyouts The only reason firms pay goodwill-based retirement benefits is to retain the clients managed by the retiring partner. MORE ON PARTNER BUYOUTS: If Clients Leave, Do You Reduce Retirement Benefits? | Why You’ll Get Less from Your Partners in a Buyout than You Might by Selling the Whole Firm | Eat What You Kill? Then Maybe ‘Book of Business’ Is for You | The Multiple of Compensation Method, Fully Explained | 5 Points to Consider When Paying Out Goodwill | Clients Leaving? Time to Reduce Retirement Benefits | Partners May Balk at Guaranteeing Retirement Obligations If a firm were 100 percent certain that all of a […]

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If Clients Leave, Do You Reduce Retirement Benefits?

Why today 1 in 5 firms links client loss with payout reductions. By Marc Rosenberg Retirements & Buyouts Many things have changed during the history of the CPA profession. Twenty or more years ago, the majority of firms valued their goodwill at one times fees and at the same time, had a provision in their retirement plan to reduce the goodwill benefits of a retiring partner if her clients left when she exited the firm. By contrast, today the average goodwill valuation is roughly 80 percent of fees, and only 20 percent of firms have a provision that links client loss with benefits. Let’s analyze each of these two changes.

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