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Myths: Fee- Based...EJones

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Jan 5, 2007 8:21 pm

10-12K is much less relevant than 3-12K.  At 3K, you really cut down on FICA.  At 10K or 12K, either way, you’re going to max out FICA…just not medicare…and that savings is much smaller.  The problem with taking your salary down to say $36,000/year is that it may be judged unreasonably low in comparison to your company’s net earnings and congress is looking at all sorts of ways to play Robin Hood and shore up the social security system…

Jan 5, 2007 11:11 pm


I guess I was just wondering about paying myself $200,000/yr or should I keep it low around $120,000.  My goal is to max out my 401k/profit sharing and pay the least amount of taxes.  I have set up an S-Corp.

Jan 5, 2007 11:40 pm


Oh Contrar Mr. Rank,

What I guess I left out was, 401k/profit sharing.  I am now able to put $15,000 into my 401k and another $27,000 into my PS.  I am also able to pay my wife $15,000 and put the entire amount in her 401k.  I am also able to make a profit sharing contribution for her of $2250. 

So the scoreboard reads:

Edward Jones Savings

$15,000 401k and $6000-$8000 PS contribution total= $21,000-$23,000 deferred.

LPL (Independent Savings)

$15,000 401k me, $15,000 my wife plus $29250 Profit Sharing Contribution.


The difference is $36,250 more into "my 401" now than at EDJ.  I don't know if that constitutes lieing in your eyes but in most people's eyes it's pretty simple math. 


So Rankstocks,

Did learning something new offset the pain of having your a$$ handed to you?

How did you no know about this? Dont you guys still have Lord Abbett wholesalers that run around like mad pitching their "super cheap" owner only and safe harbor 401(k)'s?

Jan 8, 2007 4:29 am

I just have to say I think it’s hilarious how Ranky rank shut his mouth after being slammed every which way but loose.  He obviously has no clue how to relate to a business owner, and I doubt he will be in the business in a year with his intelligence level

Jan 8, 2007 5:37 am

Spiked, sorry, your numbers don'e add up:

you wrote,

I had about $120,000 gross in MAP that only paid out 35% at the time.  I was instrumental in having the GP's change the payout to 40% right before I left.  It took 3 years of writing wires (emails) and being a squeeky wheel.

Jones tells you it's a 40% payout but it actually works out to about 38% after national advertising, and some products that don't pay 40%.  So you take 38% of $415,000 that equals about $157,700 and then you add my MAP and   $42,000.  My total was 199,000 net.

So then you break it down from their.  $16,666/month

$1500/month 401k deferral

   I didn't realize you could put 18k away a year, especially since the max was 14k/year when you left Jones.

$1000 medical benefits premium for family of four

   Seems very high, I pay $259/month for my wife and I.

$450 flex spending deferral (medical)

$450 flex spending deferral (childcare)

$200 disability insurance premium

$2500 flex spending business expenses (seminars, advertising, bonus to my assistant because Jones' didn't pay a living wage in CA)

   I call B.S. on $2500.  you get 1/2 of your seminars and advertising expenses reimbursed and 20% of your bonus can go to your assistant.

$6000 State (CA)/ Federal taxes

   Let's see, 36% combined state and federal tax.  What is California state income tax? 8.3% or so.  That means 28% federal?  Either you are a moron and file your own taxes.  Or you are not factoring in deductions, and are paying only on your marginal rate.

$100   Error/ Branch Loss

Total $12200

So Net/Net/Net  is approx. $4466.

I hope that helps you realize where the money goes.

As far as 401k's are concerned, I didn't realize you wanted to add in profit sharing and consider it a 401k contribution.  That being said, at 5% profit sharing, your Edward Jones profit sharing this your would have been over 10k last year.  Maybe not as much as you can add to an ownerK, but still nothing to sneeze at.  Just one question though Spiked, now that you pay ALL of your assistant's salary instead of just bonuses, do you have the same complaint about a living wage?

Jan 8, 2007 4:53 pm


guess you told him.

Jan 8, 2007 5:11 pm


I was answering your questions off the top of my head.  Those numbers were as close to actual as I can remember.  I guess you realize that I'm not a liar anymore.  I feel that this forum is one place I can be upfront with how my independant life is so much more fruitful than my w-2 life at Jones. 

A couple of responses.  The $2500 flex spending is exactly what I used to have withdrawn.  This was the one perk that EDJ tried to implement so that high producing IR's could reduce their taxable income so they didn't hit the AMT.  The problem is they just reduced it down to 10% of your previous net. 

As for the living wage, I have no problem attracting and retaining the best and brightest sales assistant.  I pay her $48,000 and then I give her a 15% profit sharing contribution.  That's $60,000/year.  As for paying her salary and profit sharing, she's worth about $100,000/year.  I feel like I'm getting a discount. 

If you would like me to breakdown my indy numbers for you, I can.

$500,000 Gross

92% payout= $460,000

$100,000 Assistant Salary/Rent/Copier/Stamps/Advertising/Etc.

$360,000/Net to Me!

I don't mind paying her at all!!!!!!