Cash Balance Design :: Are You a Good Candidate for Cash Balance?

Cash Balance 101

How Does a Plan Work?

Are You a Good Candidate?

Can Cash Balance Plans Be Offered with Other Plans?

How Much Can I Contribute?

Can Plan Contributions Change?

Is This a Qualified Plan?

Deductions & Allocations
for Partners

Tax Deductions

Creditor Protection

Are you a Good Candidate for Cash Balance?

Many partners and professionals find Cash Balance an excellent way to increase contributions to their retirement accounts. After designing over 300 Cash Balance plans, we have found the following people benefit from a Cash Balance plan…

Partners or owners who desire to contribute more than $45,000 / year to their retirement account.

Many professionals and entrepreneurs neglect their personal retirement savings when they are building their practice or their company. Consequently they needed to catch-up on their retirement savings. Adding a Cash Balance plan allows for acceleration of savings. Pre-tax contributions of $100,000 to $200,000 annually are not unheard of.

Companies already contributing 3-4% to employees, or at least willing to do so.

While Cash Balance plans are often established for the benefit of key executives and other highly compensated employees, other employees will also benefit. The plan normally provides a minimum contribution of between 5% and 7.5% of pay for staff in the Cash Balance plan or a separate profit sharing 401(k) plan.

Companies which have demonstrated consistent profit patterns.

Because a Cash Balance Plan is a pension plan, with required contributions, a consistent cash flow and profit is very important.

Partners or owners over 40 years of age who desire to "catch-up" or accelerate their pension savings.

Maximum amounts allowed in Cash Balance plans are age-dependent. Therefore the older the participant, the faster they can accelerate their savings.

Top 10 Candidates
A Cash Balance plan may be ideal for your company or firm if it falls into any of the following categories:

1. Highly profitable companies of all types and sizes
• Usually indicated by the owner's desire for a larger tax deduction.
• Principals earning more than $250,000 per year.

2. Family businesses
• The plan can be used as a component of succession planning.

3. Closely-held businesses
• Several owners want a greatly enhanced retirement plan.

4. Law firms of all sizes
• Tax deferral and asset protection are often very important to this profession.

5. Medical groups of all sizes
• Tax deferral and asset protection are often very important to this profession.

6. Professional firms of all types
• CPAs, engineers, architects...

7. Older owners who have delayed saving for retirement
• They need to squeeze 20 years of saving into 10.

8. Those who highly value asset protection
• ERISA protects all qualified plan assets from creditors in the event of bankruptcy or lawsuit.

9. Those who want an enhanced benefits package for executives
• They want to attract and retain high caliber employees.

10. Sole proprietors with income exceeding $250,000 per year
• All entity-types apply.

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Offered with Other Plans?»

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