Is Cash Balance the Right Fit? | Pinnacle Plan Design

Does the employer already maximize their contributions to a defined contribution plan?

Yes
No

The defined contribution limits for 2023 are as follows: 401(k) elective deferrals up to $22,500, profit sharing and matching contributions up to $66,000 (including elective deferrals), and catch-up contributions up to $7,500 for participants 50 and older.

Do the highly compensated employees (HCEs) wish to contribute far more than the defined contribution limits will allow?

Yes
No

Is there a low ratio of non-highly compensated employees to highly compensated employees?

Yes
No

In other words, is there only a handful of employees for every owner?

Are the highly compensated employees older than the non-highly compensated employees, on average?

Yes
No

Will the employer have significant and consistent cash flow moving forward?

Yes
No

With a cash balance plan, profit sharing contributions in the defined contribution plan are no longer discretionary. Employers in non-cyclical industries are better cash balance candidates.

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