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Who Should Consider a Cash Balance Plan?

The content below was originally posted 06/02/2015 and has since been updated. Click here to read the updated information. 

Cash balance plans allow high-income earners to save more towards retirement than a defined contribution plan. Unlike a defined contribution plan where the maximum annual additions are limited to $53,000 per year (as indexed), the annual allocation limit in a cash balance plan depends on age. For example, the maximum annual allocation for someone age 50 is more than $140,000. 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.

Watkins Ross has been designing and administering cash balance plans to provide strategically targeted benefits and increased tax deferred savings since 1999. If you have additional questions or would like help determining if you should implement a cash balance plan, please call David Paauwe, MSPA, EA at 616.742.9211.

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