Cash Balance Plan

Cash Balance Plan

| April 28, 2021
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In my recent Educational Video Series, I discuss the advantages of a Cash Balance Plan vs traditional retirement plans. A Cash Balance plan is a type of IRS-qualified retirement plan known as a “hybrid” plan. In a Cash Balance Plan, each participant has an account that grows annually in two ways: first, an employer contribution, and second, an interest credit, which is guaranteed rather than dependent on the plan’s investment performance.

Cash Balance Plans are an innovative way to help successful business owners to save as much as $2.9 million tax-deferred for retirement, help reduce their annual tax burden and accelerate their savings rate dramatically.

Because of the legal contribution limits imposed on 401(k) Profit Sharing plans combined with fees to cover the high cost of plan administration, 401(k) plans are a more costly way to deliver retirement savings. Cash Balance plans ultimately help employers and participants save more with significantly higher tax-deferred contribution limits and major tax deductions.

If you are a business owner or a CPA that has clients that are business owners, then you should consider having my case design team run a Retirement Plan Comparison Report using our software to see if a cash balance plan makes sense.  

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