Cash balance plans allow high-income earners to save more towards retirement than a defined contribution plan. For example, in a defined contribution plan, the maximum annual additions are limited to $56,000 per year (as indexed). However, since the annual allocation limit in a cash balance plan depends on age, the maximum annual allocation for someone age 50 is more than $150,000. So, who should consider implementing a cash balance plan? High-income earners that have been maxing out their profit sharing/401(k) contributions but would like to save more for retirement. Download the Cash Balance Plan Checklist to help you determine if a cash balance plan may be right for your business.
Contact David Paauwe, MSPA, EA to discuss your completed checklist or answer any questions.
