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Partner Parity Plan

A unique deferral opportunity for law firms and other professional service organizations.

Recent changes to the income tax code now permit partners and other high income professionals to accumulate nearly $2 million in a defined benefit plan, in addition to their defined contribution accumulations. This means the annual deferral opportunity available to these individuals can range between $50,000 to more than $175,000 - significantly higher than the annual limit ($45,000 in 2007)permitted for a defined contribution plan alone.

But many firms reject this opportunity because they can't resolve the serious problems that traditional defined benefit plans create in the context of a large partnership.

Partnerships have several problems with defined benefit plans, including:

• individual accounts are not maintained;
• market returns are not provided;
• contributions are not tied to benefit accruals;
• expense allocations result in undesirable subsidies of different partner groups.

Some of these negatives are addressed by the use of cash balance plans. But problems remain. Even with the so-called "professional service firm" cash balance approach, firms have to make enormous compromises. Account balances are credited with ficticious returns and various inter-partner inequities remain. It's no wonder so many firms have opted to stay with only their Defined Contribution arrangements - as low as they are.

The Solution: JPMorgan's innovative Partner Parity Plan

The Partner Parity Plan solves these deficiencies by delivering all the benefits of a defined benefit plan with the look and feel of a defined contribution plan.