In this strategic episode, Matt Ruttenberg, Co-Owner of Life, Inc. Retirement Services, shares how to customize retirement plans to slash taxes and favor founders. If you struggle with one-size-fits-all 401ks that hurt your bottom line, you won’t want to miss it.
You will discover:
– What deadlines let you backdate 2025 contributions until 2026
– How to stack cash balance plans with 401ks for massive deductions
– Why founder-centric designs beat employee-focused defaults
Episode Transcript
Scott Ritzheimer
Scott, hello, hello and welcome. Welcome once again to the start, scale and succeed podcast. It’s the only podcast that grows with you through all seven stages of your journey. As a founder, I’m your host, Scott Ritzheimer, and today I want to talk to founders who’ve built a real company. They’ve got a real team. You’ve got your executives around you, and somewhere along the way, you picked up a retirement plan that feels like it’s working harder for everyone except you. I know. You know the feeling you’re, if you’re listening right now, you know the feeling you’re the one taking all the risk. You’re the one who’s built the thing, yet, the 401, K, or whatever it is that you’re using, you don’t even know some combination of letters and numbers seems like it’s benefiting everyone else, or just feels really expensive, or even worse, it feels like it’s actually penalizing you because of your success. And so what we want to do is take a look at retirement plans through the lens of what are the most founder friendly retirement plans. And to be honest, I have no idea, which is why we’re in luck that Matt Ruttenberg is here because Matt’s a 401 K expert who partners with driven entrepreneurs and business leaders to design custom retirement plan stacks that reduce taxes and boost financial freedom. With over 20 years in the industry, he’s on a mission to replace one size fits all plans with strategic tools that actually work for the people building the business. Matt so excited to have you here. Welcome to the show. I’m wondering if we could just jump in with maybe a couple of the basics. What are the big, kind of main options for retirement plans for a founder and their organization?
Matt Ruttenberg
Yeah, and thanks for having me on. Scott. I really appreciate it. You know, that’s a it’s 401, k, right? That’s kind of the topic of conversation today, but it’s, there’s, there’s so much more to it. There’s foreign K is about as basic of a term as you can get. It’s a tax code, right? And but there’s a lot of ways to mold and create that plan based on your business instead of everybody else’s. And that’s kind of what we’re going to talk about today. But we got, you know, 401, you know, 401, K, profit sharing, defined benefit plan, executive benefits for those who want to just target individuals and only focus on certain leadership or mission critical employees that you have in the in the company. So yeah, we’re going to kind of cover the gamut today. Of all, fantastic.
Scott Ritzheimer
Okay, great. So there’s a couple of reasons why I think this is important. One is that most of the founders I know are notorious for investing very heavily in themselves, but at the risk of and sometimes at the cost of what happens after the organization’s done. And so I think it’s really important that founders pay attention to this more than most of them do. Secondarily, it’s pretty hard to compete in the labor market without a competitive 401, K plan or some type of retirement so it’s a big deal for a couple of different reasons. Again, I want to look at this through the lens of what makes sense for founders. And you use a very interesting word in your title, but you talk about a stack, a retirement plan stack, if I remember correctly, what does that mean?
Matt Ruttenberg
Yeah, so a retirement plan stack is, is where you’re layering different plans on top of itself to to build out this custom approach for everybody. So we call it a retirement plan stack. It’s basically, you know, for those listening, it’s an upside down three tiered wedding cake or pyramid. So the bottom layer is now the lowest or smallest middle layer, and then the biggest is on top now and and we’re building these layers as profitability scales. And you know, you mentioned a minute ago where, you know, you we get a lot of founders and employers and business owners who have been looking down for years and focusing on their business and really investing time, sweat, blood, tears, money, everything into their business, and they look up and they’re like, oh, I have a profit. I have employees, and now I have to implement something. And I’ll be honest with you, I bet half of our clients that come in the door do that. Are there. They’re waiting until maybe their 40s, on average. I’d say, you know, a lot of people say, start early, start early, but they have been starting early. They’ve just been putting all their investment time and everything into that business, and now this is allows them to scale out, diversify, if you will, and take that approach using that stack as you increase your profitability or increase your your need to catch up for retirement.
Scott Ritzheimer
Fantastic. So walk us through this stack. What’s the most founder friendly way that a founder can set up their retirement stack?
Matt Ruttenberg
Yeah, and most, most of the time we are brought into the situation when we’re looking at this like we want to take care of the founders, like you just said. You can look at this two different ways. You can look at a 401 K, or, let’s just say, let’s just use the word 401 k as an overall term for retirement plan. But people look at 401 K’s is either an employee benefit. Or a tax strategy. We tend to lean towards the latter. We look at it as a tax strategy. And the goal for us is, when we’re designing the stack, is to to try to get most of those dollars to the founders, or to the to the business owners, the leaders of the company, and then, because it’s a it’s a qualified retirement plan from the IRS. We were going to take care of those employees, but at a minimal level, okay? And bottom layer 401, k, right? Second layer profit sharing. And top of that, we go into defined benefit plans where we’re getting into six digits of contributions. And then we can even add a fourth layer, or replace the top layer with an executive benefit where we’re really targeting those mission critical we need to hold on to those folks. We cannot let those folks go. We need them to be a part of our organization. So we want to take special care of them. Now, every layer is designed a very specific way to maximize a layer above that, there’s there’s there’s there’s thresholds, there’s gateways on every layer to make sure that we can maximize the layer above it and make sure we’re minimizing what we are ultimately giving to employees. So for example, if we choose the wrong match program or contribution level at the bottoms, 401, K level, you’re going to be giving too much in profit sharing. You’re stacking on top of profit sharing where we instead, we want to put those dollars towards profit sharing, right? We want to do something on the layer above that, so, so and so forth. But it gets, it gets very connected, and it’s all very connected to make sure that we are taking care of the owners.
Scott Ritzheimer
Right. It sounds really complicated, and for some folks, especially when it comes to money, type stuff and personal monies type stuff and their employees, money type stuff, it can be paralyzing. How do you help folks to simplify how they understand these different layers and what purpose they serve?
Matt Ruttenberg
Yeah, great, great question. And there’s a lot of there’s a lot of content out there, there’s a lot of articles and resources, but nothing really scratches the surface or goes past the surface. So it’s all about I look at this two ways. And you know, business owners care about or they prioritize two things in their financial world, it’s taxes or growing their business. They put their own personal retirement in the back burner because they’re trying to take care of this business. So my first question we ask everybody is, what’s the priority? What is your absolute number one goal of implementing this? Is it you? Is it taxes? You know, it’s, is it for you as a founder, you’re getting hit with taxes, and you need to, you need to get that down quite a bit. Or is it because you, maybe you live in a state with a mandated 401, K plan, you have to have a retirement plan in place. Your employees are bugging me and saying, I want to do that. What is the priority? Is it you or is it the employees? Or is it or is it both? And then the second question we ask is, How much is it do you want to earmark towards your retirement, or this plan in general. And when we ask those two questions, we go down the path of design. And design is always first, how do we design this plan for you? And then the second question is, we start talking about the investments inside of it, because there’s a lot of things that you can do on the second hit. So we do one step at a time, understanding what it is why we’re designing this plan for you. And then we go down that path and say, what do we need to do to take care of these employees? Right? You walk you. It’s a vast world. 401, K, simple. Ira Sep, Ira, do I do the state mandate? There’s too many options. So the goal is to really narrow it down and go down one path.
Scott Ritzheimer
Yeah. So as we’re doing that, one of the things that I’ve experienced as I’ve worked with this in the past is it can be a little bit of a headache to set up. It can be a little overwhelming, but it can be pretty easy to automate after you have after you’ve done so how do you help folks to ease the ongoing reporting burden and make it as seamless as possible?
Matt Ruttenberg
Yeah, and I want to kind of take a step back to explain something why we’re going into this. There’s two kinds of plans out there. There’s prototype and non prototype. Prototype is the mass majority of those plans out there that you can plug into, like, maybe your payroll provider has a 401, K option. Or they’re the the turnkey plans that you might see that are kind of more on the plug and play method. Those are boilerplate, right? They produce one adoption agreement or plan document is they create one document for your for all their clients, and then you plug your name in, not as much customization there. Or you go to the non prototype, which is like, instead of going, let’s say, to LegalZoom to download your legal documents, you’re hiring the attorney to customize that document for your exact situation. And that’s where we come in. Now the Easy, easy button, if you will, is to go plug into whoever is cross selling you this. 401, K plan, or this retirement plan. So that could be a number of softwares that are already using, like your maybe bookkeeping software, your your your payroll software, things like that. Because they’re easier, they feel easy to plug in. You’re like, do they have all my info? Let’s just go. They tend to be a little bit more expensive a lot of times. But then it’s easier to set up, but then it takes a little bit more effort on your end of the back end, and it tends to be a little bit more cumbersome. But the number one thing here is payroll integration. Payroll integration is extremely important when you are trying, when you’re wearing multiple hats as a business owner. This is, this is one of the biggest complaints we hear when they when we get connected with a client who already has a plan in place. So what I mean by that is, there’s ways to connect your payroll with your 401, K. And what I mean by that there’s two different kinds of integrations. There’s 360 degree and there’s 180 degree. So 360 is pretty straightforward. If you update one side one system, it updates the other system and vice versa. If you for if you only have a 180 degree, you have to update everything on one of the ends, and then it feeds over to the other one. So it’s one less or two or three less steps that you have to do every single payroll cycle, which is making sure that everyone’s doing the same contributions that they did before, making sure that it’s been updated if anyone changed it, making sure the funds are sent over to the 401 K platform. These are different things that you do with payroll integration, and that is a big deal for business owners. Is it the most important piece of the plan? No, I would say the design is more important, because if the design is incorrect, you’re going to be giving too many, too many dollars to the employees because the design is incorrect, versus having to pay that a little extra to have that payroll integration involved. And by the way, it’s 2025 going on to 2026 payroll integration is not is not unheard of it. Most of these companies are integrating with other 401, K platforms. So you can say, I have a foreign I have a payroll company that has a foreign K plan built into it. However, I want to use this foreign K A lot of them connect. Most of them connect still. So you’re not stuck inside this small, you know, scope of what’s available. Just to get the payroll integration technology’s there, it’s not difficult to find which ones connect with each other, right, right?
Scott Ritzheimer
So there’s a ton of customization in this, and there’s a, you know, a couple right ways, a lot of wrong ways to do it. If you were to say to kind of that average person listening today, that average founder when a typical situation, what would you say are the things that they should be looking for and asking for in finding the most founder friendly plan for them?
Matt Ruttenberg
Yeah, and founder friendly is the, is the key word there, right? So we get a lot of phone calls from staff, HR reps, you know, for those who have, you know, larger employee pools, the HR reps. So when we get those phone calls, a lot of it’s based around, it’s shopping, it’s price shopping, it’s what kind of plans you have available. Who do you work with? Things like that. Whereas when it’s founder friendly, the entire design is built around the founder, not the employee, not the HR rep, not the manager. So when we’re having these conversations, we really try to end up having the conversation with the owner, not because they’re the final word, it’s because we really need to know what they want and what they need. They’re the ones stroking the check for the taxes, not the HR rep. Right. Right. For larger companies, several 100 to several 1000, it’s a little bit different, because that is the mass majority. That’s usually the priority. But when you have 50 below, you know, under 50, under 100 you can get more creative and gear it around the ownership and the founders side of it. So it’s, it’s all about, you know, we like to know what is, what is your pain point? What is, where are you hurting? Are you getting these big tax bills? Like I said, we try to build these around taxes, not an employee benefit, and we need to know that. That information.
Scott Ritzheimer
Yeah, Matt, that’s so good. There’s this question that I have ask them. I guess I’m interested to see what you’d have to say, especially with your perspective here. And the question is this, what is the biggest secret you wish? Wasn’t a secret at all. What’s that one thing you wish everybody watching or listening today knew?
Matt Ruttenberg
Not all 401K’s are created equal, that everybody, there’s a lot of people, a lot of tax specialists, financial advisors, think all 401k’s are created equal, and a 401K is a 401k is a 401K, and they can only do the 23,500 and that’s the max. And that is far, far, far, far from the truth. I’ll have conversations with the gamut everybody I just mentioned, and they get wide eyed and say, really, I didn’t know you could do that. We’re able to get millions of dollars. For for companies with under 50 employees into a plan with their owners pre tax contributions. You’re not stuck. You’re not stuck at the 23,500. You’re doing, you’re doing, implementing all these layers, and you’re able to add these different things, and we’re talking several six digits per founder into the plan that we’re able to get this into so and again, the goal is to get them the money, not the employees. We take care of them. We make sure they’re taken care of and they’re on the right path for retirement. But this is their baby. This is their business. We need to take care of the founders.
Scott Ritzheimer
Yeah, Matt, there’s some folks listening today, and they’re like, shoot, that’s exactly what I did. I handed it off to my HR person. We thought we were doing right by our employees, but I don’t know if this is working for me, and I’m wondering if there’s a better way to help everyone out. How can they reach out to you? How can they find out more about the work that you and your team do?
Matt Ruttenberg
Yeah, please head over to 401k.expert. That’s the URL. It takes you to the landing page, where you can kind of see some case studies in there connects to want someone on our team to go over and educate. We educate, we don’t sell. We are trying to make sure that everybody knows what’s available is our number one goal. And then deadlines. What are the deadlines for all this? What can we do for 2025 you can do stuff for 2025 all the way out until September, or Yeah, September 15 of 2026 to write off 2025 so reach out and we can educate you on that.
Scott Ritzheimer
Despite what the calendar says, 2025 is far from over. That’s great news for folks looking at their potential tax bills this time of year, Matt, it was really a privilege and honor having you on. Thanks for being with us. Those of you who are watching and listening probably don’t know this, but Matt is doing this completely blind, and he’s an absolute champ. He’s done a fantastic job. So thank you, Matt. Appreciate you being here and and for those of you who are watching and listening, you know your time and attention mean the world to us. I hope you got as much out of this conversation as I know I did and I cannot wait to see you next time. Take care.
Contact Matt Ruttenberg
Matt is a 401(k) expert who partners with driven entrepreneurs and business leaders to design custom retirement plan stacks that reduce taxes and boost financial freedom. With 20+ years in the industry, he’s on a mission to replace one-size-fits-all plans with strategic tools that actually work for the people building the business.
Want to learn more about Matt Ruttenberg’s work at Life, Inc. Retirement Services? Check out his website at https://lifeincrs.com/
Connect with a 401k expert at https://lifeincrs.com/401k-expert/