Law Firm Retirement Plan: 6 Things to Settle Before You Open One

Law Firm Retirement Plan: 6 Things to Settle Before You Open One

A law firm retirement plan is not just a benefits decision. It decides who gets paid what, which account the money leaves from and how the books carry a liability between payroll runs. Firms that skip those questions tend to find out in the first quarter, when a contribution is due and nobody knows where it should come from.

Legal Ease Bookkeeping, a Fort Worth bookkeeping firm with a law firm specialty, is the firm written up here, as one that may fit when a plan needs a clean place in the books. It is a vetted Sam's List member and a paying member of our featured program; payment does not buy the language we use or its reviews. the methodology at the end of this post is at the end.

The six items are a checklist, not a ranking. None of them is plan design or investment advice, and the contribution limits are not here on purpose, because they change every year and your plan administrator sets what applies.

1. Settle Who Your Law Firm Retirement Plan Covers

Start with the list of people. Partners, associates and staff may be treated differently, and the rules on who must be included are technical. Eligibility can turn on age, length of service and hours, and some plan types have their own coverage tests. A plan that looks right for the two owners can create obligations to everyone else.

Write down every person on the roster with their role, start date and status, because the bookkeeper will need that list to record contributions correctly. Part-time staff and anyone who joins mid-year are the usual gaps.

The limitation: coverage and nondiscrimination rules belong to the plan document and the plan administrator, not the bookkeeper. Ask them before you promise anything to staff.

2. Partner vs Employee Contributions Are Treated Differently

An employee's contribution comes out of wages and is generally handled through payroll. An owner's is different. A partner in a partnership is generally not an employee on payroll, so the contribution is typically based on the partner's share of net earnings from the firm, and that figure is not final until the books are. A sole owner or an owner of an entity taxed another way has other mechanics again.

That is why owner compensation drives the numbers. How a partner is paid, whether through draws, guaranteed payments or W-2 wages, can change what counts as compensation for the plan. A rough draw schedule is not the same as the year-end figure.

The limitation: which pay counts, and how much can go in, depends on your entity type, the plan and current limits. Your CPA works out the figure, and the books supply the inputs.

3. Fund It From the Operating Account, Never the Trust Account

Retirement plan money comes from the firm's operating account, or from the owner's own pay. It never comes from client trust funds, which belong to clients until earned and properly transferred. This is the item that matters most for a law firm.

Treat the retirement plan and the trust account as separate on paper too. A contribution should not be paid from the trust account, even for a day, on the plan to repay it when a fee is earned. That kind of timing shortcut is how a retirement plan and a trust account end up in the same problem. If operating cash is thin, the answer is to fund less or later, not to borrow from the wrong account.

The limitation: the exact trust account rules are set by your state bar, and the books can only follow them. Questions about a specific transfer belong to your counsel and the bar.

4. Book the Law Firm Retirement Plan Contribution and Liability

A promised employer contribution is a cost of the period it relates to, and it is often a liability until it is paid. If the firm owes a match for December payroll and funds it in January, the books generally need an accrued expense and a payable in between. Without that entry, profit looks higher than it is, and a partner distribution may go out against money that is already spoken for.

Employee deferrals work the same way. They are withheld from pay and owed to the plan, so they sit as a liability until deposited. Set the account structure up before the first payroll with the plan, not after.

Legal Ease Bookkeeping may fit here, since its profile has a law firm bookkeeping specialty.

The limitation: the profile does not mention retirement plan accounting by name, so ask whether the firm records plan liabilities, and how it reconciles them to the plan statements.

5. Leave Plan Deadlines to the CPA and Plan Administrator

A plan has filings, notices and contribution deadlines, and some depend on the plan type, the year and the entity's tax filing date. Contributions for an owner may have a different deadline from deferrals taken from wages. We are not listing dates here, because a wrong date costs more than no date.

What a firm can do is own the calendar. Ask the CPA and the plan administrator for a written list of what is due and when, and put each item on a shared calendar with a named owner. The bookkeeper should know which items need numbers from the books.

Legal Ease Bookkeeping may fit again, as a firm that lists Solo and small law firms among its specialties.

The limitation: a bookkeeper does not set or file plan deadlines. The CPA and plan administrator make those calls, and the requirements change.

6. Test the Cash Flow Impact of a Required Match

A match or a required employer contribution is a fixed cost that arrives whether or not the month was good. For a firm with lumpy collections, it can land in a thin month. Before you open a plan, run the contribution against a few months of payroll and collections, and see what happens to operating cash.

Compare plans with discretionary contributions against ones with required ones. A discretionary design gives room to skip a year, though the details depend on the plan type. A required match gives staff certainty and the firm a commitment. Decide which you can carry before the announcement, because reversing it is harder than starting it.

The limitation: plan design is for your administrator, advisor and CPA to settle. This is only a check on whether the cash is there.

Where Legal Ease Bookkeeping Fits

Legal Ease Bookkeeping is based in Fort Worth, Texas, and was founded in 2016. It has 12 employees and serves clients nationwide. Its live profile has a law firm bookkeeping specialty and lists SMB Owners, Solo and small law firms and Solopreneurs as specialties.

Legal Ease has 9 verified client reviews on Sam's List as of 2026-11-02. Each review is submitted by an individual who identifies as a client of the firm and rates it on communication, subject-matter knowledge, and overall satisfaction. Reviews reflect those individual experiences and do not represent an endorsement by Sam's List. Legal Ease is a paying member of our featured program, and payment does not buy its reviews. Ratings and rankings are not indicative of future performance or results. Legal Ease is a paying member of our featured program, and payment does not buy its reviews.

The limitation, plainly: the profile does not name retirement plans, payroll deferrals or trust account reconciliation, so ask what is included. Ask how the firm records employer contributions and the liability, how it keeps the operating and trust accounts apart, and what monthly report you would receive. It lists a $500,000 revenue minimum, so a smaller firm may fall outside what it takes on.

Frequently Asked Questions

What should a law firm settle before opening a retirement plan?

Who is covered, how owner pay feeds contributions, which account funds the plan, how the books record it, who owns the deadlines and whether the cash flow can carry a match. Your CPA and plan administrator settle the technical parts, such as limits and testing.

Do partners and employees contribute the same way?

Not usually. Employee deferrals come out of wages through payroll. A partner's contribution is generally based on the partner's share of the firm's earnings and is worked out at year end. The rules depend on your entity type, so your CPA decides.

Can a law firm pay retirement contributions from the trust account?

No. Client trust funds belong to clients until earned and properly transferred, so retirement contributions should come from the operating account or the owner's own pay. Your state bar sets the rules, so confirm with your counsel before moving any money.

Who handles retirement plan deadlines at a law firm?

The CPA and plan administrator set and file them, and the firm should keep a calendar with a named owner for each item. A bookkeeper supplies the numbers from the books but does not decide what is due.

If you are weighing a plan, start by listing who is covered and how each owner is paid, then ask your CPA and plan administrator what the plan will require. You can browse bookkeepers on Sam's List, including the firm above, and ask each how it records plan contributions and keeps trust funds separate.

How We Picked This Firm

You should be able to check our work, so here is how this post was built.

The pool. The pool is the one firm written up here, a vetted Sam's List member in our featured program with a law firm bookkeeping specialty. This is not a survey of every firm that does law firm bookkeeping, and many Sam's List members and other firms not written up here could fit.

How it is organized. The six items are a checklist, not a ranking. The firm is placed where its profile appears to fit the work, and the profile does not name retirement plans, so we say so.

What review counts mean here. We cite the firm's verified review count and its date from its profile. A count shows how many clients wrote something down. It does not measure technical quality.

What payment does and does not buy. Listing on Sam's List is free, and so is being named in this article. The firm written up here is a paying member of our featured program, which is why it gets a write-up. What payment does not buy is the language we use about a firm, its review count, or a promise that it fits you.

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About the author: Kimberly Green is the cofounder of Sam's List, where business owners and high earners find vetted CPAs, financial advisors, and fractional CFOs. She's met one-on-one with 400+ financial professionals and writes from the real data behind thousands of client-advisor matches. Ask her anything about finding an accountant - she's heard it all, including the questions people are afraid to ask.