Cash Balance Plan
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Many older business owners, partners, sole proprietors and independent contractors are seeking ways to supercharge their retirement contributions and increase their tax deductions. PlanPerfect has the answer: Cash Balance Plans.

Cash Balance Plans are a type of defined benefit pension plan that combine high contribution limits together with a 401(k) style account balance.

Cash Balance Pros & Cons

The Pros of Cash Balance Plans

The following are some pros of adopting a Cash Balance Plan:

  1. Tax Advantageous: Contributions are fully tax-deductible and benefits accrue on a tax-deferred basis.
  2. Contribution Amounts – High contribution levels increase as you get older. Depending on compensation, people 50 and older can contribute well over $200,000 versus a 401(k) Profit Sharing Plan which is limited to $61,000* (*as set by COLA standards by the IRS)
  3. Can combine with other types of retirement plans e.g. 401(k) Profit Sharing Plan
  4. Excellent for highly profitable companies which include:
    • Closely held businesses
    • “Family” offices
    • CPA firms
    • Medical Groups
    • Professional Service Organizations

Cons of Cash Balance Plans

  1. Contributions are Required – this is similar to traditional defined benefit plans
  2. Must budget 5-8% employee cost
  3. Actuarial certification required
  4. Expensive to set up and maintain
  5. Not advantageous for young business owners


Third Party Administrators: PlanPerfect

PlanPerfect knows how it important it is to have a great retirement plan like a Cash Balance Plan. Explore our services and contact us today for a complimentary consultation!