I’ve taken up a few pages in recent blog posts and other marketing messages discussing the advantages and other very cool aspects of Cash Balance Plans for business owners.
• Do they provide those owners with another tax deduction off their taxable income? Yep, they sure do
• Are they a vehicle which can allow those owners to receive annual retirement plan contributions that are much larger than the 401(k) maximums? They definitely can be
So, the next logical question is: Will a Cash Balance Plan work for every business owner? The answer to that question unfortunately is…No.
There are many variables that factor into the benefit calculations for this type of plan, and whether it will be a valuable plan for a business owner to establish; far too many to detail in this post. So, here’s a short list of the things to look for in your clients and prospects to determine if a Cash Balance Plan might be good for them:
• Business owners & principals making $250,000+ in annual compensation
• The business has consistent annual cash flows and profitability
• Owners at least age 35 with most of their employees being much younger
• Older owners who need to squeeze 20 years of retirement savings into 10 years
• The owners are willing to contribute roughly 5-7.5% compensation annually to their employees
If some, or all, of these describe a client or prospect of yours; they may be an awesome candidate for a Cash Balance Plan. At Actuaries Unlimited, Inc. we are always happy to discuss the possibilities with you. Please feel free to contact me to start a conversation.
Brian Flynn
Director of Business Development
(818) 804-3571 | (503) 329-1521