A Small Business
After 15 years of growing a small business from a garage to a sophisticated operation exporting internationally, four partners set their sights on getting prepared for retirement. All had invested heavily in growing the firm and felt significantly behind in their retirement savings goals.
Kravitz added a Cash Balance plan to the 401(k) Profit-sharing plan currently in place. This action allowed the partners significiantly higher contribution limits and the opportunity to squeeze 20 years of savings into 10.
With these new limits, the partners could contribute 75% to 150% more to their savings plans. (e.g. $194,000/year for a 55 year old). Now, all four partners have the reassurance of knowing they can retire very comfortably by age 65 or sooner.
Retirement Plan Illustration – Small Business
Year Ending December 31, 2018
| Name | Age | Compensation (IRS Testing) | 401(k) | Profit Sharing | Cash Balance | Total Contribution |
| Partner 1 | 62 | $275,000 | $24,500 | $36,500 | $283,000 | $344,000 |
| Partner 2 | 52 | $275,000 | $24,500 | $36,500 | $165,000 | $226,000 |
| Partner 3 | 47 | $275,000 | $18,500 | $36,500 | $126,000 | $181,000 |
| Partner 4 | 39 | $275,000 | $18,500 | $36,500 | $82,000 | $137,000 |
| Subtotals | $1,100,000 | $86,000 | $146,000 | $656,000 | $888,000 | |
| 8 Associates | $920,000 | n/a* | $27,600 | $0 | $27,600 | |
| 34 Other Employees | $1,360,000 | n/a* | $102,000 | $34,000 | $136,000 | |
| Total | $3,380,000 | $86,000 | $275,600 | $690,000 | $1,051,600 |
Percent to Shareholders: 84%
*This exhibit shows only the cost to the company Staff employees and associates pay for their own 401(k) contributions.