Cash Balance Plans: $100K to $300K in Pre-tax Contributions Each Year

A Cash Balance Plan for small business owners can be one the best ways to shelter large amounts of income from taxation each year. Most small business owners are familiar with 401(K) plans, SEP IRA’s, Solo(k) Plans, and Simple IRA’s, but these “DB/DC Combo” plans bring the tax savings for business owners to a whole new level. DB/DC combo plans can allow business owners to contribute $100,000 to $300,000 pre-tax EACH YEAR which can save them tens of thousands of dollars in taxes. In this article I’m going to walk you through:

• How cash balance plans and DB/DC combo plans work
• Which companies are the best fit for these plans
• How the contribution amount is calculated each year
• Why an actuary is involved
• How long should these plans be in place for?
• The cost of maintaining these plans
• How they differ from 401(k) plans, SEP IRA, Solo(k), and Simple IRA plans

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