How do sponsors evaluate whether these Combo Plans are a good deal on a numbers basis?

Some owners and their advisors use a “tax equation.” Let me give a simple example. A company has a plan with a $100,000 deductible contribution. Let’s assume $86,000 goes to the owner and $14,000 to the others and the company is at a 30% marginal tax rate. An administrative cost is $3,000. Under this approach the $30,000 in tax savings (30% times $100,000) is more than the $17,000 in non-owner contributions and administrative costs. This is a good first start but it does not account for the value of money paid to the non-owners. Let’s take this same example, but assume the amount that the owner wants to pay to favor certain key employees and to take care of long service employees is $8,000. Then the “extra employee costs” to have the plan work are $9,000 (=$17,000 - $8,000), which is much less than the $30,000 in tax savings. There are, of course, other factors to take into account, such as the time value of money accumulating tax-free, diversification with the business, and future taxation, but this gives you some idea of how to begin to evaluate the situation.