Top U.S. Tax Firms Carry Wealthy 401(k) Plans on Their Books

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By Carmen Castro-Pagan and Jasmine Ye Han

The top 10 largest accounting firms in the U.S. know how to work numbers for their clients, and it turns out these firms also know how to work the numbers for their employees’ retirement savings.

Retirement savings in 401(k) plans among the nation’s 10 top-grossing accounting firms range from $439 million to $5.47 billion, according to a Bloomberg BNA analysis of the firms’ filings with the Labor Department’s Employee Benefits Security Administration.

Ernst & Young LLP offers its employees two 401(k) plans: one for partners and one for employees. In terms of sheer asset size, E&Y’s 401(k) plan for employees is the largest in the industry. The plan has more than $5.47 billion in assets and over 60,411 participants.

PricewaterhouseCoopers LLP also sponsors three 401(k) plans. One of those plans has $4.94 billion in assets and over 56,015 participants, making it the second largest 401(k) plan in the industry.

Deloitte LLP, which ranks first in per revenue among the top 10 accounting firms, has two retirement plans with more than $4 billion in assets each.

Other high-ranking firms, including KPMG US LLP and RSM US LLP, also have billion-dollar retirement plans. KPMG has $3.54 billion in assets in its 401(k) plan, while RSM’s plan has accumulated over $1 billion.

Average Accounts

The top three firms by revenue—Deloitte, PwC and E&Y—have established more than one retirement plan for their employees. Both Deloitte and E&Y have 401(k) plans specifically for partners and other highly compensated employees.

For these two companies, if the 401(k) plans of partners are compared with the 401(k) of rank-and-file employees, the numbers are staggering. The average account in Deloitte’s plan for partners is $781,416—this is more than 10 times the average account of those participants in the other plan, which is $73,723.

E&Y adopted a similar practice by creating a separate plan in which only partners are allowed to participate. The average account in the partners’ 401(k) plan is $349,400. This amount contrast with the $90,557 average account of E&Y plan for employees. E&Y closed participation in the partners-only plan in July 2016.

Separate Plans, Common Practice

The practice of creating separate plans to cover employees and partners is common among some professional firms.

Accounting firms and law firms fall into a category called “professional service firms,” which are set up in a way in which employees are classified as partners and non-partners, John Lowell of October Three Consulting, who advises employers on plan design, told Bloomberg BNA.

Professional organizations use separate plans to allow older business owners to accumulate some additional assets to fund their retirement, Greta Cowart, a shareholder at Winstead PC, who focuses on fixing employee benefit plan issues, told Bloomberg BNA.

Because partners make more than other employees, the appetite to defer income increases, Lowell said. A person who makes $1 million a year probably won’t need a million to live, so he would take a large portion, defer the taxation, let it grow and not pay tax until it is distributed, Lowell said. The scenario is different for individuals making between $50,000 to $100,000 a year, Lowell said.

To cater to different needs, the cleanest way is to create separate plans rather than establishing one plan with different formulas, Lowell said.

Key Features

The 401(k) plans of the top 10 accounting firms have a number of similar features, but there are some features that set them apart. One unique characteristic that distinguishes the plans is employee eligibility.

Another distinguishing feature is the way these plans handle employer and employee contributions. Two of the three PwC plans, along with one of E&Y's plans, don't allow for employee contributions. All contributions to these plans are made by the firms.

To contact the reporter on this story: Carmen Castro-Pagan in Washington at, Jasmine Ye Han in Washington at

To contact the editor responsible for this story: Jo-el J. Meyer at

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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