Often times we encounter retirement plan sponsors who either want to defer more into their retirement plans or who could be getting more out of their current retirement plan.
Enter Cash Balance Plans:
A Cash Balance Plan, is a type of retirement plan that belongs to the same general class of plans known as “Qualified Plans.” A 401(k) is a qualified plan. These plans “qualify” for tax deferral and creditor preferred treatment under ERISA.
In a Cash Balance Plan each participant has an account. The account grows annually in two ways: first, as a contribution and second, an interest credit, which is guaranteed rather than being dependent on the plan’s investment performance. Any guarantees are based on the claims paying ability of the insurance company.
Many owners and partners are looking for larger tax deductions and accelerated retirement savings. Cash Balance Plans may be the perfect solution for them. The 2006 Pension Protection Act (PPA) and the Cash Balance regulations issued in 2010 and 2014 have made these plans even more flexible and easier to administer, making them an increasingly popular choice for successful business owners.
Cash Balance Plans are more complex than most traditional employer sponsored retirement plans. However, they can provide significant benefits to both the employer and the employee when used in the right situations.
For more information on cash balance plans please contact us or visit https://www.cashbalancedesign.com/resources/cash-balance-101/
2016 Contribution Limit Table
| Age | 401(k) | Profit Sharing | Cash Balance | Total |
|---|---|---|---|---|
| 65 | 24,000 | 35,000 | 245,000 | 304,000 |
| 64 | 24,000 | 35,000 | 250,000 | 309,000 |
| 63 | 24,000 | 35,000 | 256,000 | 315,000 |
| 62 | 24,000 | 35,000 | 262,000 | 321,000 |
| 61 | 24,000 | 35,000 | 248,000 | 307,000 |
| 60 | 24,000 | 35,000 | 235,000 | 294,000 |
| 59 | 24,000 | 35,000 | 223,000 | 282,000 |
| 58 | 24,000 | 35,000 | 211,000 | 270,000 |
| 57 | 24,000 | 35,000 | 200,000 | 259,000 |
| 56 | 24,000 | 35,000 | 190,000 | 249,000 |
| 55 | 24,000 | 35,000 | 180,000 | 239,000 |
| 54 | 24,000 | 35,000 | 170,000 | 229,000 |
| 53 | 24,000 | 35,000 | 161,000 | 220,000 |
| 52 | 24,000 | 35,000 | 153,000 | 212,000 |
| 51 | 24,000 | 35,000 | 145,000 | 204,000 |
| 50 | 18,000 | 35,000 | 137,000 | 190,000 |
| 49 | 18,000 | 35,000 | 130,000 | 183,000 |
| 48 | 18,000 | 35,000 | 123,000 | 176,000 |
| 47 | 18,000 | 35,000 | 117,000 | 170,000 |
| 46 | 18,000 | 35,000 | 111,000 | 164,000 |
| 45 | 18,000 | 35,000 | 105,000 | 158,000 |
| 44 | 18,000 | 35,000 | 100,000 | 153,000 |
| 43 | 18,000 | 35,000 | 94,000 | 147,000 |
| 42 | 18,000 | 35,000 | 89,000 | 142,000 |
| 41 | 18,000 | 35,000 | 85,000 | 138,000 |
| 40 | 18,000 | 35,000 | 80,000 | 133,000 |
