Find Financial Advisors for Cleveland Clinic Employees: Q&A Insights from the Experts

Cleveland Clinic Retirement Plans Vary by Location, Hire Date, and Role

Because Cleveland Clinic has grown by building and acquiring organizations, employees may have access to 401(k), 403(b), 457(b), and 401(a) plans with different rules. The two most common are the SIP 403(b), which includes a match, and the IPP 401(a), which is funded only by Cleveland Clinic but invested by the employee.

Custom Investment Sub-Accounts Are Cleveland Clinic’s Least Known Retirement Benefit

Several Cleveland Clinic plans allow sub-accounts with investment choices beyond the core menu of target-date and index funds. The advisor below also warns that employees who set up only one sub-account can leave others unfunded or uninvested.

Roth, After-Tax, and 457(b) Options Give High Earners More Ways to Save

Some Cleveland Clinic plans offer Roth and after-tax sub-accounts, and a 457(b) plan is available to some employees. Coordinating these choices with investment accounts held outside the workplace plan keeps the household tax plan working as one.

The two biggest questions I ask Cleveland Clinic employees are about their family goals and career goals. These two questions drive how we structure the setup of Cleveland Clinic employee benefits. Cleveland Clinic benefits can include everything from pet insurance to disability insurance to customized investment portfolios within their retirement plans. The catch is that some of these benefits have additional costs, and some require a sign-up in order to utilize the benefits, even if they are prepaid by the Cleveland Clinic. So it’s important to structure the benefits as a total package, taking into account the tax planning for the household and how the benefit selections will affect both the retirement plan and tax filing each spring.  

The biggest unknown benefits to employees are the sub-accounts available within some of the Cleveland Clinic retirement plans. Many companies do not allow these sub-accounts, let alone allow freedom of investment choice. A number of Cleveland Clinic retirement plans allow for both. This is significant because it can result in a 6- or 7-figure difference in tax planning and retirement savings if managed properly by selecting more appropriate investments and or account types aligned with the client’s goals, rather than relying on the cookie-cutter list of investments or standard account types on the core plan. While the cookie-cutter list of Target Date funds from BlackRock and the short list of index funds have their place, they are designed to be easy one-size-fits-most options, not to be a fit for each employee’s goals. By customizing the investments, we often can help Cleveland Clinic employees reach their goals, including retirement, faster. Another key detail is that various plans offer Roth, Post-tax, and pre-tax account options. These need to be planned for in order to ensure they help each Cleveland Clinic employee’s tax plan, rather than harm it. 

The biggest challenge for Cleveland Clinic employees is structuring the vast array of benefits options available to fit the employees’ family goals. Many of these benefits require finding benefits details that require years to accumulate. In one case, I had to drive to the company headquarters of the benefit provider company in another state. Over the course of multiple trips, I worked my way through the offices, offering free coffee to find the details of the insurance offerings. Ironically, that insurance offering changed the next year, and our search for information started again. The real challenge is in the fact that HR employees often aren’t provided with all the details they need, and as a result, employees just ignore the benefits.  

The Cleveland Clinic retirement plans have a number of unique benefits for highly compensated employees, including a 457(b) plan, and unique Roth rollover options that allow for unique ways to increase the percentage of income going toward Roth and after-tax accounts. The key here is that it all has to be tied together with the investment and retirement and tax plans outside of the workplace accounts, so that all employee investment accounts work together in unison. When we look at the tax and retirement plan in the big picture, it allows us to structure the employee benefits to fit a client’s investment accounts held outside of the Cleveland Clinic plan, as well as those inside the Cleveland Clinic plan. The two sides of the table have to work together for the tax plan to work.  

Multiple Cleveland Clinic plans offer Roth and after-tax sub-account options. The key is to understand how they will affect youre broader retirement plan including your outside investment accounts, as well as your near-term, and long-term retirement tax filings.  

The Cleveland Clinic offers a wide array of plan types depending on your specific work location, hire date, and other factors. This includes 401k’s, 401a’s, 403b’s, 457b’s, and the two primary plans, the Cleveland Clinic SIP 403(b) Plan and the Cleveland Clinic IPP 401(a) plan.  

The Cleveland Clinic offers a 457b plan for some employees, in addition to plan rules within other plans that provide significant help to high-earners in their tax and investment planning. The key is to make sure the retirement plan decisions fit with the broader investment and retirement plans for the household, and the tax planning are coordinated with your financial advisor and tax accountant.  

Multiple Cleveland Clinic plans offer specialty investment sub-account types that allow for custom investment management and matching the tax implications of the investment to your broader tax plan. Make sure you speak with an advisor about the available investment managers and types available in these accounts, and coordinate the planning with your financial team.

While the Cleveland Clinic does offer a 401 (k) plan, most employees will actually have the Cleveland Clinic SIP 403(b) Plan, which can be thought of as a non-profit side answer to a 401 (k) plan in many ways. The key is to make sure that all sub-accounts, contributions, beneficiaries, and other Cleveland Clinic plans available in the Fidelity NetBenefits portal are also set up. Many employees set up one sub-account, but forget to set the settings for the others, and they go unfunded or uninvested.  

Most Cleveland Clinic plans allow for matching of employee contributions. The biggest exception is the Cleveland Clinic IPP 401(a) plan. This plan behaves as a pension plan in some ways and is only funded by the Cleveland Clinic. The key, however, is that the investment options are still up to the employee.