and two common methods fully illustrated.
by marc rosenberg
retirements & buyouts
vesting of retirement benefits is not unique to cpa firms. but vesting concepts for accounting firms are somewhat unique and are important to understand.
more on buyouts: compromise is in order for some goodwill payouts | when retiring partners take a specialty with them | if clients leave, do you reduce retirement benefits? | why you’ll get less from your partners in a buyout than you might by selling the whole firm | three ways to calculate goodwill payable in partner buyouts, none of them great | eat what you kill? then maybe ‘book of business’ is for you | the multiple of compensation method, fully explained | the ins and outs of aav for goodwill | 5 points to consider when paying out goodwill | clients leaving? time to reduce retirement benefits | how to set terms and limits for goodwill payouts | 4 ways to decide how to pay out capital | partners may balk at guaranteeing retirement obligations
employee retirement plans are intended essentially as “savings programs” that people can take with them when they leave the firm, even if they depart well in advance of a normal retirement age. when there is employer matching, vesting provisions are common, and vesting is fairly rapid. in contrast, vesting in partner retirement plans is intentionally slow.
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