{"id":75782,"date":"2020-05-25t12:30:41","date_gmt":"2020-05-25t16:30:41","guid":{"rendered":"https:\/\/48e130086c.nxcli.net\/?p=75782"},"modified":"2024-08-14t09:34:52","modified_gmt":"2024-08-14t13:34:52","slug":"retired-cpa-partners-face-cuts-from-covid","status":"publish","type":"post","link":"\/\/www.g005e.com\/2020\/05\/25\/retired-cpa-partners-face-cuts-from-covid\/","title":{"rendered":"retired cpa partners face pay cuts from covid"},"content":{"rendered":"
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facing the fallout from the covid crisis, 10 percent of small and midsized firms are already trimming compensation for retired partners.<\/strong><\/figcaption><\/figure>\n

firms target annual net profit caps, early retirement provisions, and mandatory retirement ages.<\/strong><\/p>\n

by domenick esposito<\/em><\/p>\n

with profits likely to take a short-term hit, retired partners at many cpa firms are facing cuts to their payouts, according to our straw poll of 30 leading firms.<\/p>\n

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coronavirus crisis updates: <\/strong>start here for a guide to all our coverage.<\/a><\/p><\/blockquote>\n

with covid-19 hurting revenues and bottom lines, firms of all sizes are reconfiguring their staff loads and renegotiating their space requirements.<\/p>\n

but we haven’t heard much about what firms are doing about their obligations for deferred compensation partner retirement plans. until now.<\/p>\n

<\/p>\n

so we asked managing partners at leading cpa firms of all sizes, \u201care you thinking about changing your partner retirement benefits post covid-19?\u201d<\/p>\n

their answers provide a glimpse into the current thinking about post-covid partner retirement benefits across the united states.<\/p>\n

we collected data from 30 managing partners, representing small firms, with less than $12 million in annual revenues; midsized firms, with up to about $40 million; and larger firms, with more than $40 million.<\/p>\n

the firms are seriously contemplating changes to annual net profit caps, early retirement provisions, and mandatory retirement ages.<\/p>\n

we’ve found, for instance, that one in 10 small and midsized firms have already “deferred” at least 25% of benefit pay-outs for retired partner benefits. none of the largest firms, however, have yet taken this action.<\/p>\n

partner deferred compensation for retirement benefit plans is usually the third-largest expense on a firm\u2019s income statement, following employee compensation and rent. upon retirement, full equity partners typically earn a deferred compensation retirement benefit, plush a return of cash capital contributions. in many firms, equity partners also earn a share of a firm\u2019s accrued capital.<\/p>\n

when added to the retirement benefit, an additional distribution of a firm\u2019s accrual capital can be crippling to firms. when offering this additional pay-out, firms do so with caution.<\/p>\n

other key takeaways:<\/strong><\/p>\n