Defined Contribution Plans

Quick Overview: How EP Wealth Helps You Plan for Retirement

How you manage a defined contribution plan can significantly shape your retirement outcome. At EP Wealth, our experienced advisors bring clarity to complex plan rules and investment choices, connecting them to the bigger picture of your financial life. Here’s what we do:

• Review contribution options and plan types based on retirement timelines and income patterns
• Compare potential advantages of Roth and Traditional contributions in different scenarios
• Explore advanced savings methods that may increase long-term tax efficiencies
• Align plan investments with your overall asset mix and risk tolerance
• Coordinate contributions and withdrawals to support lifetime income planning
• Provide rollover guidance to preserve plan value during career or business transitions
  
  

What Are Defined Contribution Plans?

Defined contribution plans are retirement savings accounts funded primarily by employee contributions, often with employer contributions as well. The account’s value depends on the amount contributed and investment performance. These plans differ from defined benefit plans, which promise a specific payout in retirement.

Common defined contribution plan types we help clients evaluate and manage include:

• 401(k) plans – Employer-sponsored retirement accounts where contributions are typically made on a pre-tax basis. These plans often include employer matching or profit-sharing, while Roth 401(k)s allow after-tax contributions whose qualified withdrawals in retirement are tax-free. Some also permit contributions beyond the standard limits, which can be used for advanced strategies such as the ‘mega backdoor’ Roth.
• 403(b) plans – Available to employees of public schools, certain nonprofits, and some healthcare organizations. While similar to 401(k) plans, investment menus may be more limited and can include annuity contracts as well as mutual funds.
• 457(b) plans – Designed for state and local government employees and certain nonprofit workers. These plans have the same annual contribution limits as 401(k)s but may allow penalty-free withdrawals upon separation from service, regardless of age.
• Profit-sharing plans – Typically used by small and mid-sized businesses to share profits with employees through discretionary employer contributions. Can be paired with a 401(k) to increase total retirement savings potential.
• Thrift Savings Plan (TSP) – The retirement plan for federal employees and members of the uniformed services, known for its low administrative costs and index-based investment options. TSP typically offers both Traditional and Roth contribution choices.

Benefits of Defined Contribution Plans

Defined contribution plans offer features that can be valuable for building retirement wealth and managing tax exposure over time:

Tax Advantages

Contributions are generally made on a pre-tax basis, reducing taxable income in the year they are made. Investment growth is tax-deferred until withdrawals begin, which may allow for greater compounding potential. Roth contribution options, where available, can provide the opportunity for tax-free withdrawals in retirement.

Higher Contribution Limits

Annual contribution limits for defined contribution plans are often higher than for IRAs. In 2025, the employee contribution limit for a 401(k), 403(b), or most 457(b) plans is $23,500. The combined employee and employer contribution limit is $70,000. These higher thresholds may be especially useful for those seeking to accelerate retirement savings during high-earning years.

Catch-Up Contributions

For individuals age 50 and older, an additional $7,500 catch-up contribution is permitted, allowing total employee contributions of up to $31,000 in 2025. Employees age 60 to 63 may qualify for a higher catch-up limit of $11,250—when available in the plan—which can increase total employee contributions to $34,750. This added flexibility can be valuable for those boosting savings in the years leading up to retirement.

Employer Contributions

Some employers match a portion of employee contributions. Employer matching can significantly increase the amount saved each year, enhancing long-term accumulation potential.

Investment Options

Plans typically offer a range of investments, including mutual funds, target-date funds, stocks, and bonds. This allows participants to select an allocation that aligns with their risk tolerance and retirement objectives.

Loan Provisions

Some plans allow participants to borrow from their account balance. While borrowing should be approached cautiously, it can provide liquidity in certain situations.

Portability

When changing jobs, account balances can often be rolled over into another employer plan or an IRA without triggering taxes or penalties, helping preserve the value of accumulated savings.

Creditor Protection

In most cases, assets held in defined contribution plans are protected from creditors under federal law.

Who May Benefit from EP Wealth’s Defined Contribution Plan Services?

EP Wealth’s services are well-suited for clients who want guidance at key decision points affecting how retirement savings are built and later accessed:

• Professionals with complex compensation – We determine an appropriate mix of pre-tax and Roth deferrals, assess after-tax funding opportunities, and coordinate with equity or deferred compensation plans.
• Individuals nearing retirement – We help make use of catch-up contributions, evaluate Roth conversion opportunities, and plan withdrawal timing and required distributions.
• Business owners – We review plan design options, integrate with cash balance plans when appropriate, and align contributions with annual tax planning.
• Executives – We coordinate defined contribution savings with Non-Qualified Deferred Compensation, ESPPs, RSUs, and option exercises.
• Those managing multiple accounts – We consolidate or coordinate legacy balances, streamline investments, and address redundancy across holdings.
• Job changers – We evaluate new employer plan features, matching formulas, and rollover options to preserve and grow retirement savings.

EP Wealth Helps High Earners Pursue Strategic Opportunities

For clients in higher income brackets, defined contribution plans can be structured to address complex tax considerations, complement other retirement income sources, and support long-term investment objectives. We help identify and implement advanced strategies that may improve tax efficiency and coordinate with other wealth-building tools:

• Maximizing annual and catch-up contributions – Taking full advantage of IRS limits, including enhanced catch-up provisions for those age 60–63 where available, to accelerate savings during peak earning years.
• Evaluating Roth 401(k) contributions – Assessing whether paying taxes now in exchange for potential tax-free withdrawals in retirement aligns with long-term objectives and projected income.
• Implementing “mega backdoor” Roth funding – Where plan rules allow, using after-tax contributions and in-plan or IRA conversions to channel additional savings into Roth accounts.
• Coordinating with Non-Qualified Deferred Compensation (NQDC) plans – Balancing deferrals across multiple vehicles to manage cash flow, contribution caps, and timing of taxable income.
• Exploring hybrid or cash balance plans – For eligible clients, layering these with a defined contribution plan to allow substantially higher annual contributions and potential tax deferrals.
  
  

  Retirement Plan Solutions for Business Owners

EP Wealth works with business owners to design, implement, and manage defined contribution plans that serve both ownership and employee objectives. Our role can include:

• Advising on plan types and structures that align with business goals, workforce demographics, and cash flow considerations
• Evaluating contribution formulas and funding schedules in coordination with overall business and personal tax planning
• Pairing a defined contribution plan with a cash balance or defined benefit plan to expand contribution potential where appropriate
• Assisting with plan administration, compliance oversight, and investment selection
• Providing education and guidance to participants to help improve understanding and engagement with the plan

Integrating Defined Contribution Plans into Your Overall Retirement Strategy

Defined contribution plans are most effective when coordinated with other investment accounts, real estate holdings, and retirement income sources. EP Wealth retirement planning advisors work with clients to align plan contributions, asset allocation, and withdrawal strategies with broader financial objectives. Contact an advisor near you and schedule a conversation to review your current plan and explore opportunities to strengthen your retirement approach.