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 1,000 Cash Balance Plans, we have found that the following are typically good candidates:

Partners or owners who desire to contribute more than $50,000 a year to their retirement accounts.

Many professionals and entrepreneurs neglect their personal retirement savings while they're building their practice or their company. They often have a need to catch up on years of retirement savings. Adding a Cash Balance plan allows them to rapidly accelerate savings with pre-tax contributions as high as $100,000 to $220,000, depending on their age.

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 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 annual 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. 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
• A Cash Balance 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, along with a highly competitive retirement package to help attract and retain top talent.

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, financial services firms, management consultants and others.

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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