Cash Balance Plan Successes

Many owners desire larger tax deductions and accelerated retirement savings. Implementing a cash balance plan may be the best solution for such owners. Read below for just a few examples of successful cash balance plan designs.

Bell, Inc.

Bell, Inc. is a small professional firm that has a 401(k) profit sharing plan. Tim, the owner, was able to maximize his benefit at $52,000 with a cost for his six employees of $15,500. Celebrating his 50th birthday in 2014, Tim looked forward to retirement but understood that he needed to put away more than $52,000 per year to have the retirement of his dreams. We implemented a cash balance plan in 2014. The design enabled Tim to contribute $154,500 toward his own retirement with a cost for his employees of $28,000. So, while his employee costs almost doubled, Tim’s contributions almost tripled.

Dr. Tony

Dr. Tony just brought a new, younger partner, Dr. Greg, on board. The discussions regarding the addition of a cash balance plan were difficult at first because Dr. Greg was not ready to seriously save for retirement (he was worried about paying back medical school loans). We designed a plan that allowed Dr. Tony to put $180,000 in the cash balance plan while Dr. Greg’s contribution was $60,000 (a number in his comfort range). Their defined contribution plan contributions were maximized and the cost for their 14 employees was 10.5% of compensation. Eighty-eight percent (88%) of the contributions to the plan were for the benefit of Dr. Tony and Dr. Greg. This was the exact plan design they had hoped for.

A Larger Firm

Cash balance plans are not just for small companies. One medical association has 74 physicians and over 400 employees. The plan design calls for various levels of cash balance contributions to the doctors and a de minimis contribution for the employees. Combined contributions to the defined contribution plan and the cash balance plan are over $9 million with 80% “allocated” to the principals.

These are just a few examples of the versatility of cash balance plan design. Also, read the tale of two dentists which shows how using a combination of plans can benefit a business. If this sounds interesting to you, please fill out the form below. Let us build a retirement plan that is as unique as you are!


Contact Our Cash Balance Plan Team

Pinnacle Plan Design is a third-party administrator (TPA) for employer-sponsored qualified retirement plans. We specialize in retirement plan design, administration and actuarial consulting. Pinnacle has a local presence in Tucson and Phoenix, Arizona (AZ), Houston, Texas (TX), and Denver, Colorado (CO), and we proudly serve clients nationwide.

  • This field is for validation purposes and should be left unchanged.