The Retirement Plan Proposal Process: How Plan Design Becomes a Strategic Decision
Author
Mike Lee | CPC, QPA, CBS, ERPA, Partner | Mike joined the firm in 2014 and now leads as Partner, bringing deep expertise in Defined Benefit, Cash Balance, and Combination Plans. His leadership of the actuarial department and commitment to client service have positioned him as a trusted advisor to both clients and their financial partners.
When business owners start thinking about setting up a retirement plan, they often assume the process moves in a straight line: ask a question, get a plan, sign some documents. In practice, the retirement plan proposal process is far more dynamic than that. It is a conversation that evolves alongside your business, your income projections, and your team.
Mike Lee, Partner at Nydia Retirement Solutions, works through this process with business owners regularly. What he describes is a fluid, iterative dialogue designed to land on a solution that actually fits.
The Proposal Process Starts with the Right Questions
Before any numbers get run or illustrations get built, the first step is understanding the business itself. That means gathering information about how income flows through the company. Is the owner taking a W-2 salary? Is income coming in on a Schedule C as self-employment income? Does it flow through a partnership on a Schedule K-1?
The answers to those questions shape everything that follows, because the type and amount of compensation on record determines how contributions to a retirement plan get calculated. From there, the conversation moves to employee headcount and structure, since the presence of employees directly affects plan design options and the associated costs.
Only after that foundation is in place does the discussion turn to funding goals. How much does the owner want to set aside? Are they looking to maximize contributions aggressively, or are they starting at a more conservative level? These early conversations inform the illustrations that come next. You can explore how self-employment income affects 401(k) contribution calculations and review our plan design and implementation services to understand the full scope of what goes into this stage.
Illustrations Are a Starting Point, Not a Final Answer
Once the initial information is gathered, the team at Nydia builds out plan illustrations that show what a given contribution level would look like, including applicable employee costs. This is where the proposal process opens up into a real dialogue.
As Mike explains: “Sometimes that’ll shift into, okay, well what if I do this amount? And then we go back in and we kind of rerun the numbers.”
That back-and-forth is expected and built into the process. Business owners often want to see multiple scenarios side by side before committing to a direction. Running different funding levels, testing different contribution structures, and comparing outcomes across plan types is part of arriving at something that makes sense. If you are exploring startup plan costs, our tax credit calculator can give you a useful starting point.
Real Business Conditions Change the Numbers
One of the most important things business owners need to understand is that the proposal process frequently runs on projected, not finalized, data. A conversation that begins in February may be working off estimates for income, employee headcount, and compensation that will look different by fall.
That is entirely normal, and it is exactly why the process is designed to stay flexible.
“We might be in February going, here’s what I project out my 2026 wages are going to be and who my employees are going to be,” Mike notes. “We might get into September and October and now we’ve got a different demographic, or we’ve got a different level of income because maybe we got a new contract in there and now the client does have an extra hundred thousand dollars to fund.”
The inverse is true as well. Employee turnover, a slower quarter, or a shift in business structure can all move the numbers in the other direction, and the right plan accounts for that possibility too. This is particularly relevant for businesses experiencing ownership transitions or staffing changes. Our blog on why business changes often create retirement plan challenges covers this dynamic in depth.
Why Flexibility Before the Plan Document Matters
The plan document is the formal legal instrument that locks in the terms of the retirement plan. Until that document is written and executed, there is significant room to keep adjusting. That window of flexibility is one of the most valuable parts of the process.
Business owners who understand this tend to get more out of the proposal stage. Rather than rushing to a decision, they use the time to pressure-test different scenarios, revisit assumptions as real numbers come in, and refine their goals before anything is set in stone.
Customized Plan Design Is What Distinguishes a Retirement Plan Consultant
The retirement plan proposal process is not a product selection exercise. It is a design process. As Mike frames it: “We’re not sticking them in a cookie-cutter solution where this is what you get and you just grab it off the shelf. That’s really what helps us distinguish ourselves as retirement plan consultants versus just a regular third party administrator.”
That distinction is meaningful. A retirement plan consultant brings strategy to the table alongside administration. The goal is a plan that serves the owner’s retirement objectives, works within the business’s financial reality, and remains compliant over time. Those three things rarely align perfectly with any off-the-shelf solution.
For business owners who want to understand how different plan structures can support those goals, our combination DB/DC plans page and our overview of cash balance and defined benefit plans are good places to continue the exploration. You can also dig into the question of what it really means to pay yourself instead of the IRS through a well-structured retirement plan.
Starting the Conversation
For business owners who have been putting off the retirement plan conversation because it seemed complicated or premature, the proposal process itself is the place to start. It is designed to meet you where you are, work with the information available, and build toward a solution that fits your goals as they become clearer.
The earlier that conversation begins, the more time there is to run scenarios, adjust assumptions, and land on a plan design that works for your business today and scales with you as your business grows. Schedule a consultation with the Nydia Retirement Solutions team to get started.
