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Cash Balance Plans

What is a Cash Balance plan?

  • A Cash Balance plan is a type of retirement plan that allows business owners to contribute in many cases over $200,000 per year. Contribution limits are based on the age of the owner.  
  • The plan is entirely employer-funded and the contribution/benefit formula for participants is clearly defined by the plan.
  • A Cash Balance Plan takes advantage of a business expense that an owner can keep, deduct from profits, and let grow tax-deferred.  Owners can fund a sizable portion of retirement savings using money they would have paid in taxes.

Who are Cash Balance Plans best suited for?

  • Companies who expect to consistently show a profit in the next 3-5 years.
  • Business owners looking to reduce their tax burden.
  • An average age spread of around 10 years between the group of employees (owners and officers) and everyone else.
  • Companies currently utilizing a safe harbor 401(k).
  • Willing to provide a 8-10% of pay  benefit to their employees.

Maximum Individual Funding (Updated February 2022)