Featured Design

Cash Balance Plans

Great for those that are already maximizing their 401(k) plan contributions and still want to save more.

LARGER TAX DEDUCTIONS

The higher the contributions, the higher the tax deduction.

POWERFUL YET SIMPLE

No contribution or investment decisions for employees.

GREATER BENEFIT PAYOUT

Higher contributions lead to higher payouts at retirement.

Maximum Tax-Deferred Growth

Today

Thousand

Pre-Tax Cash Balance Contributions

Per Person for 2020

After 15 Years

Million

Accumulated Retirement Savings

Assumes 6% Annual Return & $0 Starting Balance

Accelerate your savings.

 

Cash balance plans are the modern evolution of traditional defined benefit plans. But unlike defined benefit plans, cash balance plans promise a certain account balance in the future instead of a monthly benefit payout. Each eligible employee’s account is credited based on pay and an indexed interest rate, which helps reduce risk for the business by eliminating the impact of investment fluctuations.

Contributions are employer-funded and are held in a pooled trust account, which keeps it simple for employees because they don’t have to decide how much to save or how to invest.

And just like a traditional defined benefit plan, cash balance plan contributions are also protected by the Pension Benefit Guaranty Corporation (PBGC). So employees can rest assured that their benefits are protected.

Cash Balance Plan Example

How Cash Balance Plans Work

Age Salary 401(k) Deferral Profit Sharing Cash Balance Total
Owner 1 55 $285,000 $26,000 $37,500 $247,950 $311,450
Owner 2 50 $285,000 $26,000 $37,500 $210,900 $274,400
Employee 1 45 $50,000 $5,000 $2,500 $700 $8,200
Employee 2 40 $45,000 $3,000 $3,700 $700 $7,400
Employee 3 35 $40,000 $1,500 $3,330 $700 $5,530
Employee 4 30 $35,000 $500 $3,590 $700 $4,790
Employee 5 25 $30,000 $0 $2,220 $700 $2,920
% to Owner 83.5% 99.2%

 

Hypothetical illustration only.  Actual results may differ.

IS A CASH BALANCE PLAN RIGHT FOR YOUR COMPANY?

Cash balance plans are ideal in a number of situations, but they’re most effective in smaller companies with a large age disparity between owners and the rest of the staff. Here are some other things your business will need to make a great fit…

LARGE CONTRIBUTIONS

You’re seeking contributions over the 401(k) and profit sharing limits.

STEADY CASH FLOW

Your business has steady cash flow and is able to meet funding requirements.

IDEAL DEMOGRAPHICS

Your company’s owners are older than your company’s staff.

SEEKING DEDUCTIONS

You’re looking for large tax deductions that preserve assets.

Ready for a more effective retirement plan?

Let’s chat about cash balance plans today.

Explore your possibilities.