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Supercharge your retirement savings

Cash Balance Plans are the best-kept secret in the retirement plan space.  When paired with a 401(k) and profit sharing plan, they can vastly expand the amount of pre-tax money a business owner can save for retirement.  For example, a 60-year old owner can put a max of $60,000 (as of 2017) in their 401(k) through deferrals, catch up, and profit sharing.  By adding a Cash Balance Plan, they could save up to an additional $241,000 tax-deferred.*  At a combined federal and state income tax rate of 45%, this results in $108,000 in extra tax deferral.  What follows is an overview of these retirement savings accelerators.

What is a Cash Balance Plan?

  • A defined benefit plan that is qualified and creditor protected
  • Most effective when paired with a 401(k) and profit sharing plan
  • Contributions are tax-deductible expenses for the business

How do Cash Balance Plans work?

  • Employer contributions based on participants’ age, compensation, & employee class
  • Actuarial calculations determine contributions for each participant
  • Annual interest credit at a fixed rate
  • Benefits are stated in terms of a projected account balance

Who should be interested in a Cash Balance Plan?

  • Medical groups, professional firms, and highly profitable companies of any kind
  • Companies with relatively stable earnings and cash flow
  • Those wanting to defer more income than 401(k) plan limits allow
  • Those looking for larger tax deductions & asset protection
  • Highly compensated employees over the age of 40

Why Cash Balance Plans?

  • Heavily favors company owners
  • Owners and employees can have different contribution rates
  • Contributions are not subject to Social Security or Medicare taxes
  • Vested portion is portable and can be rolled over to an IRA
  • Actual benefits aren’t dependent on investment performance

Has your plan provider had the Cash Balance Plan conversation with you?  If not, it’s time to enlist our help in doing a 360-degree review of your retirement plan.  There’s no cost and no obligation.  To begin the process, please fill out the contact information below.  We will follow up shortly.



*Cash Balance Plan contributions are based on actuarial calculations that consider a participant’s age, compensation, and classification.  This example is hypothetical and based on the maximum allowable contribution for the age shown as of 2017.  Each employer and plan is unique and you should consult your accountant and other professionals before embarking on a Cash Balance Plan.

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