Help your business owner clients redirect a sizable portion of their taxes into their retirement savings.
Inflation has created a unique opportunity for your clients who own businesses to save large sums of money and reduce their taxable income with CBPs.
Cash-Balance Plans
Let us show you how to leverage CBPs and recent government credits to help your entrepreneurial clients build wealth for retirement. We can even help you earn CE credits in the process.
Cash balance plans are gaining popularity as part of a well-structured retirement plan for business owners and entrepreneurs - and with good reason.
With a CBP, plan owners can potentially stash away as much as 4x the dollar amount limited by a traditional 401(k) plan, allowing them to accelerate retirement savings and keep more of their money invested, tax-deferred.
Contributions are deductible as business expenses, and, on top of tax credits, can potentially reduce your client’s taxable income and tax liabilities by tens, even hundreds of thousands of dollars. They can also be applied in partnerships or with highly-compensated employees as an appealing way to reward and retain key talent.
Why we’re excited to share this with you.
Help your clients take advantage of recent tax credits and generate thousands of dollars in tax savings.
Create a strategic alliance with a trusted investment and financial planning partner.
New tax credits available for business owners opening cash balance plans:
A 3-year tax credit for covering 50% of the startup cost of the plan, or a credit per employee, whichever is lower up to $5,000.
A credit to match the full dollar amount of the employer’s contribution, per employee, up to $1,000 each. This credit lasts five years and reduces by 25% annually.
Win credibility with your clients by introducing strategic and potentially gamechanging retirement solutions.
Earn continuing education credits just for learning how CBPs can work for your clients.
The clients CBPs are ideal for:
Small to medium-sized
independent business owners
Retail groups, small or specialized manufacturing groups, restauranteurs, & jewelers, to name a few.
Professional services,
practices, & groups
Attorneys, architects, physicians and medical groups, dentists, IT & tech services groups, digital design groups.
Entrepreneurial consultants &
high-income gig contractors
Designers, coders, niche specialists, business consultants, tech freelancers, videographers, editors.
Owners of existing 401(k)s or PSPs
CBPs often work best for business owners when layered on top of a 401(k) or PSP to maximize retirement and tax savings opportunities.
Those over 50 or looking to
accelerate retirement savings
CBPs are a great strategy for those looking to catch up or double down on retirement savings during their highest earning years.
Business owners with high income wanting to create wealth for retirement
CBPs can be structured to primarily benefit the owners of the plan, making them powerful retirement savings vehicles.
Sample illustration*
Dental Practice - Spouse Business Partners
One Key Employee
Annual CBP Contribution Limits
Age 30 - $85,000
Age 50 - $188,000
Age 70 - $398,000
Breakdown of benefits for business owners.*
Combining a cash balance plan with a 401(k) or PSP:
Accelerated Retirement Savings: These plans have significantly higher contribution limits compared to traditional 401(k) and profit-sharing plans, allowing for faster accumulation of retirement assets. By combining a 401(k) with a cash balance plan, business owners can maximize their retirement savings. This dual approach is especially powerful for business owners who want to accelerate saving as they approach retirement.
Tax Advantages: Cash balance plans offer attractive tax advantages for business owners. Contributions to cash balance plans are tax-deductible, meaning business owners can reduce their taxable income while saving for retirement. Additionally, the investment earnings grow on a tax-deferred basis.
Flexibility and Control: Business owners can design their cash balance plans to suit their specific needs, determining contribution levels, investment strategies, and retirement age targets. This flexibility allows for customization and optimization of retirement savings based on individual circumstances and goals.
Enhanced Retirement Benefits for Key Employees: Cash balance plans can also benefit key employees within the business. These plans provide a more predictable retirement benefit structure, which can be highly attractive to top-performing employees. By offering a cash balance plan in addition to a 401(k), business owners can provide a comprehensive retirement package to attract, retain, and reward valuable talent.
Asset Protection and Creditor Protection: Cash balance plans may offer increased asset protection benefits for business owners. Depending on the legal structure and state laws, these plans may provide protection from creditors and potential legal claims. This aspect can be particularly valuable for business owners seeking to safeguard their retirement assets in case of unforeseen financial challenges or business-related liabilities.
Help your clients build their retirement wealth and generate significant tax savings.
Talk to us today.
This information is not intended as authoritative guidance or tax or legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation. In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.
*Sample plan design for illustration purposes only. Assumes a 45% tax rate, taxes are deferred only.
Results shown may require plan amendments to the 401(k) or profit sharing plan before the plan year ends.
*It is important to note that implementing and managing a cash balance plan requires careful consideration and professional guidance from retirement plan experts, as they can be more complex and involve actuarial calculations. Business owners should consult with qualified financial advisors and tax professionals to ensure that a cash balance plan aligns with their specific circumstances and retirement goals.