Day: August 23, 2024

Small business owners are often ideal candidates for one of the best kept secrets in retirement savings: the Cash Balance Plan. Not only does this allow you to reduce your taxes significantly, but it better prepares you for those very expensive retirement years. In fact, as of 2024, you could save up to an additional $275k a year, tax deferred, positioning yourself for a retirement benefit of up to $3.5 million! Recognize that each situation is unique, however, and it may or may not make sense for you to use a Cash Balance Plan. The value of implementing a plan like this can be measured, usually at no cost. Ask your financial advisor to help you locate a resource for this analysis. Generally, Cash Balance Plans are worth considering for sole proprietorships, corporations, partnership of corporations, partnerships, closely held businesses etc., if the following apply: What are Cash Balance Plans? Cash Balance Plans are a type of defined benefit pension plan. That is, they provide for a predetermined retirement benefit, either in the form of a stream of income or as a lump sum. This is distinct from the more common defined contribution plans—for instance, your 401(k), where only the