Most retirement plans leave high earners confused when it comes to tax planning and contribution limits. As a contingency fee attorney, you have an opportunity that is not available to most taxpayers. Attorney fee deferrals are a flexible, tax-advantaged solution for substantially increasing your existing retirement portfolio.
Deferred Income Tax Liability
If you take your contingency fees up front in cash, then you’ll be liable for income taxes on the entire lump sum. A banner year could bump you up to a higher tax bracket.
Attorney fee structures provide periodic payments, thus spreading out your fees and corresponding tax liability over time. Structured attorney fees grow tax-deferred, with a 1099-MISC issued only for funds received within a given year.
The proactive planning nature of attorney fee structures keeps more fees in your pocket, offering a simpler solution for deferring fees in much larger amounts and even better, without the administrative headaches of setting up a 401(k) or a defined benefit plan.
Distributions on Your Schedule
Unlike IRAs and 401(k)s, attorney fee deferrals do not have a required minimum distribution, nor do they have an age restriction for when you begin receiving payments. Instead, you have the power to design a payment schedule that works best for your personal circumstances. You may receive monthly, quarterly, semi-annual, or annual distributions, or even a series of future lump sums.
Unlimited Savings Potential While Stabilizing the Firm’s Income
One of the greatest financial hurdles contingency fee attorneys face is unpredictable income. Case volume ebbs and flows, and with that, so do anticipated contingency fees. With that in mind, structuring your attorney fees can provide you with a dependable, fixed future income. Being able to secure a predictable income can take care of routine expenses such as fixed overhead or funding for lengthy cases. Best of all, it provides peace of mind that a steady flow of cash will be available – regardless of market conditions.
Attorney Fee Deferral Options
You have several options for structuring your fees, including structured settlement annuities, market-based structured settlements, and U.S. Treasury Bonds:
- Structured settlement annuities offer a guaranteed1 rate of return and no overhead fees, allowing them to remain competitive with traditional bank investments. Backed by highly-rated life insurance companies, fixed annuities are a secure choice for fee deferrals. Additionally, fixed index annuities can now be used within a structured settlement to provide additional upside market-based performance based upon an index like the S&P 500.
- Market-based structured settlements provide an even greater opportunity for growth. Rather than placing the contingency fees into an annuity, the funds are directed into an investment account on a pre-tax basis. Market-based structured settlements can be managed by a professional fund manager or the attorney’s financial advisor.
- Treasury Funded Structured Settlements™ (TFSS) utilizes U.S. Treasury Bonds as the underlying investment. TFSS payments are held in a trust, with the attorney listed as the trustee. The bonds are backed by the full faith and credit of the U.S. government, making them a safe, reliable addition to an attorney’s retirement portfolio.
Contact Kimberly Overby for Attorney Contingency Fee Deferrals
Sage Settlement Consulting provides the most innovative attorney fee deferral solutions. Contact me today to create a flexible, tax-advantaged plan for your contingency fees.