How October Three Reduced Retirement Plan Volatility for a Private Medical Practice
Situation
A small medical practice with four doctors and eight staff sponsored both a 401(k) plan and a fixed-rate cash balance plan. After seven years, the cash balance plan’s funding became volatile, a situation worsened by investment losses in 2022. As plan assets grew, contribution swings intensified due to a mismatch between the plan’s fixed crediting rates and actual investment returns.
The doctors sought a more predictable and stable funding strategy to reduce the risk of underfunding.
Approach
By partnering with October Three, the practice shifted to an interest crediting rate tied to actual investment returns, effectively reducing funding volatility. This adjustment helped manage the prior funding shortfall and stabilize future contributions.
Results
This proactive funding strategy enhanced the plan’s reliability and strengthened the practice’s financial footing. Key outcomes included:
Reduced funding volatility, resulting in consistent contributions and aligning liabilities with actual investment returns
Minimized the need for additional cash injections to cover past losses
Increased doctor confidence in the plan’s sustainability and long-term financial stability
Start Designing Your Plan Today
Whether you want to reward key executives, reduce tax exposure, or boost retention with long-term wealth-building benefits, a cash balance plan can help. Reach out to our team to request your free cash balance illustration today.