Business Owners and Key Employees

Business Owners and Key Employees, its time to put a plan in place. A Cash Balance Plan could enable you to accumulate Millions in retirement with huge potential tax savings!

Business Owners and Key Employees did you know that the maximum contribution to a Cash Balance plan depends on your age, ranging from $50k if you are in your thirties to $250k a year for someone in their early sixties. This cap makes a Cash Balance plan ideal for high earners and for those who need to catch up on their retirement savings.

Once you decide on how much you’d like to contribute. Every year you’ll be given a range that depends on your prior contributions and investment return. So if you want to contribute $100k, you might be allowed a range from $80k to $120k.

Business Owners and Key Employees if you consistently contribute on the higher end of this range, your subsequent contributions would have to be lower than your target contribution ($100k).

Fact Sheet: Cash Balance Pension

For solo practices, these plans usually exist for a relatively short period (typically for 10 years or less). At maximum contribution, a plan would be ‘maxed out’ after 10 years.

An owner/partner can no longer make contributions into a CB plan once they reach the lifetime maximum amount (currently around $2.8M at age 62 and adjusted annually for inflation).

But with a group practice, this does not impact the other partners who can still make their own contributions independently. For group practices, Cash Balance plans can be adjusted indefinitely as new partners join the practice and older ones retire.

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