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Cash balance plans for business owners.

We want to let you in on a little secret. It could even be worth millions…

Cash balance plans.

As business owners, inflation has created a unique opportunity for you to save large sums of money and reduce your taxable income with CBPs.

Cash balance plans are the often forgotten cousin of traditional employer sponsored retirement plans and offer some serious benefits to entrepreneurs and business owners in today’s market.

With a CBP, owners can potentially stash away as much as 4x the dollar amount limited by a traditional 401(k) plan, allowing you to accelerate retirement savings and keep more of your hard-earned money working for you.

Plus, contributions are deductible as business expenses and can serve to reduce your taxable income and tax liability by tens of thousands of dollars. Yes, tens of thousands! They’re also an appealing way to attract and reward key talent for future growth.

We want to help you leverage your business and significantly reduce your taxes! See how a cash balance plan can work for your business and retirement goals.

Grow your nest egg. Slash your taxes.

Cash balance plans have substantial contribution limits because of their structure, and instead regulate the potential ‘defined-benefit’ payable from the plan. As a result, CBPs are an attractive vehicle to build tax-deferred retirement wealth for the benefit of owners, executives, or selected key talent at a business.

The real magic starts to happen for business owners when CBPs are layered over an existing 401(k) or profit-sharing plan. Owners are then able to maximize retirement contributions and reap potentially huge tax savings.

In addition to deductible expenses and contributions associated with the plan, the government is offering two new tax credits for cash balance plans:

  • A 3-year tax credit for covering 50% of the startup cost of the plan, or a credit per employee, whichever is the lower amount up to $5,000.

  • The other depends on how much you contribute to each employee and will credit you the full dollar amount up to $1,000 per employee. This credit lasts 5 years and reduces by 25% each year.

A CBP might be ideal for you if:

You own a small to medium
sized business.

Retail groups, small or specialized manufacturing groups, restauranteurs, & jewelers, to name a few.

You’re a partner or owner of a professional services practice or group.

Attorneys, architects, physicians and medical groups, dentists, IT & tech services groups, digital design groups.

You’re an entrepreneurial consultant
or high-income gig contractor.

Designers, coders, niche specialists, business consultants, tech freelancers, videographers, editors.

You already have a 401(k)s or PSP.

CBPs often work best for business owners when layered on top of a 401(k) or PSP to maximize retirement and tax savings opportunities.

You’re looking to
accelerate retirement savings.

CBPs are a great strategy for those looking to catch up or double down on retirement savings during their highest earning years.

Your business generates high
income & you want to build wealth.

CBPs can be structured to primarily benefit the owners of the plan, making them powerful retirement savings vehicles.

Sample illustration*

Dental Practice - Spouse Business Partners
One Key Employee

Annual CBP Contribution Limits
Age 30 - $85,000
Age 50 - $188,000
Age 70 - $398,000

Breakdown of benefits for business owners.*
Combining a cash balance plan with a 401(k) or PSP:

  1. Accelerated Retirement Savings: These plans have significantly higher contribution limits compared to traditional 401(k) and profit-sharing plans, allowing for faster accumulation of retirement assets. By combining a 401(k) with a cash balance plan, business owners can maximize their retirement savings. This dual approach is especially powerful for business owners who want to accelerate saving as they approach retirement.

  2. Tax Advantages: Cash balance plans offer attractive tax advantages for business owners. Contributions to cash balance plans are tax-deductible, meaning business owners can reduce their taxable income while saving for retirement. Additionally, the investment earnings grow on a tax-deferred basis.

  3. Flexibility and Control: Business owners can design their cash balance plans to suit their specific needs, determining contribution levels, investment strategies, and retirement age targets. This flexibility allows for customization and optimization of retirement savings based on individual circumstances and goals.

  4. Enhanced Retirement Benefits for Key Employees: Cash balance plans can also benefit key employees within the business. These plans provide a more predictable retirement benefit structure, which can be highly attractive to top-performing employees. By offering a cash balance plan in addition to a 401(k), business owners can provide a comprehensive retirement package to attract, retain, and reward valuable talent.

  5. Asset Protection and Creditor Protection: Cash balance plans may offer increased asset protection benefits for business owners. Depending on the legal structure and state laws, these plans may provide protection from creditors and potential legal claims. This aspect can be particularly valuable for business owners seeking to safeguard their retirement assets in case of unforeseen financial challenges or business-related liabilities.

Double down on retirement savings & take a bite out of taxes. See if a cash balance plan is right for your business.

Additional services for business owners

  • Creative Retirement & Investing Strategies

  • Business Continuity Planning

  • Key Person Policies & Risk Management

Our Services

This information is not intended as authoritative guidance or tax or legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation. In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.

*Sample plan design for illustration purposes only. Assumes a 45% tax rate, taxes are deferred only.
Results shown may require plan amendments to the 401(k) or profit sharing plan before the plan year ends.

*It is important to note that implementing and managing a cash balance plan requires careful consideration and professional guidance from retirement plan experts, as they can be more complex and involve actuarial calculations. Business owners should consult with qualified financial advisors and tax professionals to ensure that a cash balance plan aligns with their specific circumstances and retirement goals.