Is a Cash Balance Plan a Good Fit for My Client?

Missing puzzle piece

A cash balance plan can be a helpful tool for business owners to significantly increase their retirement savings and generate large tax deductions for their businesses.

Key Questions

How do you tell if this plan type is a good fit for your clients? The following questions can help you decide.

  • Do the business owners want to contribute more than the annual 401(k) plan maximum for themselves?

    Cash Balance Annual Limit Per Participant (Rounded)*

    The dollar values shown above are based on the Section 415 defined benefit plan dollar limit for 2018 and actuarial assumptions prescribed in the Section 415 regulations. The values have been rounded down to the next lower $100.

  • Are the business owners making more than $250,000 per year?
  • Does the business have relatively consistent cash flow or profits from year to year?
  • Are the business owners willing to contribute 5 to 7.5 percent of pay annually for the full-time rank-and-file employees in order to maximize their own contributions?
  • Are the owners, in general, older than the rank-and-file employees?

Call a retirement plan consultant at 844.239.3561 if you’d like to learn more about how cash balance plans may be a good fit your clients.