Should You Contribute to a Cash Balance Plan?
Thinking about your retirement plan? A Cash Balance Plan could be your game-changer! They are perfect if you are a business owner looking to make substantial contributions, have extra cash sitting around, or foresee a large tax bill this year. Ready to explore if it’s right for you? Let’s talk!
“A cash balance plan is a type of retirement plan. It’s a defined benefit plan that qualifies for tax exempt status. Cash balance plans don’t make sense for everybody but for those who they do make sense for they can be really powerful.
Who is a good fit?
Business owners who want to make a large contribution into a retirement plan are the perfect fit, specifically if you’re wanting to get more into the account than traditional plans allow, such as a 401(k) or IRAs. So if you have a lot of cash sitting on the sidelines that you want to get put away for retirement, this could be a really good fit for you. Also if you’re expecting an extremely large tax bill in any given year, getting money put into this account will decrease that tax impact. And then thirdly, if you are getting close to retirement or starting to prioritize retirement more and are really looking to catch up this is a great way to get large lump sums into a plan.
How much can I contribute?
So there is no contribution amount for a cash balance plan that applies to everybody. These plans are age dependent so that means that you’re going to need an actuary to calculate how much you can contribute into a plan in any given year. But that being said it is quite flexible from year to year and so as cash flow changes, we’ll be able to change the plan contribution limits with you. A cash balance plan is an extremely powerful account for those who are wanting to prioritize retirement who have extra cash on the side or who want to decrease their tax bill in a given year. It doesn’t work for everybody but if it does work for you it could make make a huge difference in your plan so if you think that this might be a good fit, please don’t hesitate to reach out ”
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