When to Consider a Cash Balance Plan
If your business is seeking an opportunity for a greater tax deduction and a way to help key employees maximize benefits, especially over a short period of time, consider a cash balance plan. Cash Balance plans generally work best for professional groups of closely held family corporations with strong profit margins. Because of their unique plan design features, these plans enable key employees to save more than they can under the current defined contribution plan limits, while still enjoying the ERISA protections that come with a qualified retirement plan.
An Ideal Solution For: • • • • •
Business with strong profit margins and reliable earnings stream Closely held family businesses or corporations with fewer than 25 employees Employers seeking to offer a plan with contribution limits over and above current defined contribution plan limits Businesses looking for a larger tax deduction than a 401(k) or other defined contribution plan can offer on its own Employers looking for greater plan design and contribution flexibility to provide different benefits for different employees
401(k) Profit Sharing and Cash Balance Plans Age
401(k) with Profit Sharing*
Cash Balance
Total
Tax Savings**
Above 65
$64,500
$284,000+
$348,500+
$139,400+
65
$64,500
$271,000
$335,500
$134,200
60
$64,500
$265,000
$329,500
$131,800
55
$64,500
$205,000
$269,500
$109,000
50
$64,500
$158,000
$222,500
$89,000
45
$58,000
$123,000
$181,000
$72,400
40
$58,000
$95,000
$153,000
$61,200
35
$58,000
$74,000
$132,000
$ 52,400
Under 35
$58,000
$70,000
Up to $128,000
Up to $51,200
*401(k): $19,500; $6,500 catch-up (50+); $38,500 Profit Sharing **Assuming 40% tax, varies by state. Taxes are deferred
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Pentegra Retirement Services 2 Enterprise Drive, Suite 408 Shelton, CT 06484 800.872.3473 www.pentegra.com