Which plan, and for how long?
Daniel Bennett owns 100 percent of Bennett Commercial Services: five technicians, a dispatcher and an office manager, and no retirement plan. He wanted to save more for himself and give the team something worth staying for, and he’s planning to hire. His advisor started with a conversation in Helmsted, walking through the business, Daniel’s salary and profits, and what he wanted a plan to do. Together they worked through the field: a SEP IRA, a solo 401(k), a SIMPLE IRA, a safe harbor 401(k) and a cash balance plan. Two made the cut. Then the advisor asked:
“Give me a clear breakdown of the SIMPLE and the safe harbor 401(k) side by side. Show what happens if he adds employees, where the break-even is that would change the answer, and a short explanation of the options we’re not recommending.”
The two plans, side by side. A safe harbor 401(k) with owner-weighted profit sharing puts $72,000 a year into Daniel’s account, against $23,500 in a SIMPLE, 3.1 times as much. It costs more: the team receives $21,000 a year instead of $7,560, and after tax and credits the 401(k) runs $10,304 a year more to operate. Net of that cost, Daniel comes out $38,196 a year ahead. Every control is live: profit sharing on or off, a 3% safe harbor or a 4% match, the SIMPLE’s 3% match or 2% for everyone, payroll, Daniel’s salary, fees, and the plan year, so the startup credits show up in years one through five.
Growing the team. The growth chart answers the hiring question. The 3% safe harbor counts toward the minimum staff must receive when profit sharing is weighted toward the owner, so today profit sharing pays for itself: the $15,998 of tax Daniel saves on his $42,100 covers $5,828 of after-tax cost for the team, a $10,170 cushion. Each hire at $55,000 wears that down. Profit sharing pays for itself up to about 21 employees and turns negative at 22. A second line on the chart answers the plan-versus-plan question: on net benefit, the 401(k) stays ahead of the SIMPLE (+$13,342 a year at 30 employees) and the SIMPLE doesn’t pull ahead until about 42. So between 22 and 42 the move is to trim that year’s profit sharing, which is decided after the year closes, not to switch plans.
The options set aside. A SEP gives every eligible employee the same percentage as Daniel: 25 percent of his salary means about $105,000 a year for staff alone. A solo 401(k) is closed to anyone with employees. A cash balance plan could take Daniel well past $72,000, but it needs steady profits and a firm funding commitment every year, so it’s parked for his early 50s or ahead of a sale.
So the conversation with the client: a safe harbor 401(k) starting January 1, 2027, with 3 percent to everyone, discretionary owner-weighted profit sharing, six-year graded vesting, and one year of service before new hires join. Proposals from plan administrators are requested in October, documents are signed in November, and staff notices go out in early December. Each year after the books close, the profit-sharing amount gets set and headcount gets checked against the break-even.
Getting creative with materials with Helmsted
Three moves made the explorer useful rather than just accurate. Turn the design choices into switches. “3% to everyone or a 4% match” sounds like a detail. Flip it and the break-even falls from 22 employees to 8, because a match doesn’t count toward the staff minimum and the team still needs the full 5 percent on top. Price the growth, not just today. One headcount answers today’s question. A curve across 7 to 50 employees answers the one the owner will ask next year, and gives the annual review a line to check against. Show the plan year. Startup credits make year one look almost free (the SIMPLE’s after-tax cost is $347). Defaulting to year six shows the cost Daniel lives with, and the slider still shows what the credits are worth.
One thing makes all of it work: context. Helmsted needs the owner’s W-2 salary (not distributions), the staff payroll and headcount, the entity type and state for the tax rate, and what the owner is trying to do with the plan. 2026 limits and the SECURE 2.0 credit schedules are built in, and every other assumption sits in an editable panel on the page, from fees to how many staff save enough for a match.