1. Cash Balance Plan Cheat Sheet
A cash balanceplan is an IRS tax qualified retirement programclassified asa “hybrid”pension plan since
it is technically a defined benefitplan buthasthe look and feel of a defined contribution plans
Key Advantages over DefinedContributionPlans:
 Opportunity for much higher level of deductible contributions
 Works well as an “add-on” to existing defined contribution plans
Retirement Vehicle Age 45 Age 50 Age 55 Age 60 Age 62
401(k) Plan $18,000 $18,000 $18,000 $18,000 $18,000
Catch-up (if 50 or older) n/a $6,000 $6,000 $6,000 $6,000
Total 401(k) $18,000 $24,000 $24,000 $24,000 $24,000
Add - ProfitSharing Plan $35,000 $35,000 $35,000 $35,000 $35,000
Total Defined Contribution $53,000 $59,000 $59,000 $59,000 $59,000
Add - Cash Balance $105,000 $138,000 $180,000 $235,000 $262,000
Grand Total $158,000 $197,000 $239,000 $294,000 $321,000
Key Advantages over Traditional PensionPlans:
 Ability to provide equal contribution amounts to participants with different ages
 Account balances can be paid as a lump sum and are not impacted by volatility of
interest rates
Ideal Candidates
 Mid/late career
 Significant and consistent levels of income or profits
 Behind on retirement savings with the ability and desire to contribute amounts in excess
of defined contribution plan levels
 Anyone that recently sent a six-figure check to the Department of the Treasury
 Partnerships, Medical Groups, Professional Corporations
 Successful businesses of any kind
Important Deadlines and Considerations
 Need to adopt plan by December 31 (assuming calendar fiscal year) for 2016 deduction
 No guarantees on how long this opportunity will be available (take it while you can)
 Caution – If considering a cash balance plan, hold off on funding current profit sharing
plan (if applicable and not too late)
o Can limitoverall opportunityif planisexcludedfromPBGCcoverage
 Should commit to annual funding for at least 3-years
o However,there isflexibilityif businessconditionschange