Features

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.

Big Savings.

 Small Risk.

 

Cash balance plans are the modern evolvement of traditional defined benefit plans. But unlike defined benefit plans, cash balance plans promise a certain account balance instead of a monthly benefit payout. Each eligible employee’s account is credited based on pay and an indexed interest rate. Contributions are employer-funded and are held in a pooled trust account.  

And just like a traditional defined benefit plan, cash balance plan contributions are also protected by the Pension Benefit Guarantee Corporation (PBGC).

Today

Thousand

Pre-Tax Contributions

Per Person for 2020

After 15 Years

Million

Retirement Savings

Assumes 6% Annual Return & $0 Starting Balance

Cash Balance Plan Example

How it works.

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.

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.

DEMOGRAPHICS

Your employees’ demographics are favorable for this design.

RETIREMENT BENEFIT

Both lump-sum and annuity payment options are available.

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