Cash Balance plans · for advisors, CPAs, and owners
How much can a business owner actually put away?
A 401(k) tops out near $80,000 a year. A Cash Balance plan can take an owner's tax-deferred savings into the millions, up to a lifetime limit set by IRS Code section 415(b). This guide explains how the plan works. We also include a live calculator so you can see a potential pattern of contributions for a specific business. Our three branded design styles are noted in the guide as well, with each plan custom designed for your specific needs.
The lifetime cap for one owner
ExampleOwner born 1970, paid $300,000, in a new plan.
Is it a fit?
Who a Cash Balance plan works best for
These are the patterns we see most often. None is a hard rule; the calculator, followed by a formal proposal, will show what is possible.
Age
Owners in their 40s, 50s, and 60s
The older the owner, the faster the 415(b) limit allows the account to grow, so contributions can be larger.
Income
High, steady profits
The plan needs a contribution every year. It suits businesses that reliably earn well above what the owners spend. Our Flex Plan™ design works for businesses where this isn't the case.
Already saving
401(k) is already maxed
Owners who hit the 401(k) limit every year and want a bigger deduction get the most from adding a Cash Balance plan.
Staff
No employees, or a small team
Owner-only plans are simplest. With staff, the plan must also provide meaningful benefits to them, and the design determines that cost. Typically an owner will receive 90+% of the total benefits.
The guide
Read it in order, or jump to a question
Each page takes just a few minutes to review and ends with a link to the next.
- 1How it worksPay credits, interest credits, and why an account-style plan is legally a defined benefit plan.
- 2Interest creditsFixed, Treasury-based, or actual return. How the choice affects owners and staff.
- 3The contribution rangeThe minimum required and maximum deductible contribution, and why there is a range.
- 4Timing and changesDeposit deadlines, quarterly contributions, plan amendments, and the expectation that the plan is permanent.
- 5Our custom designsEvery plan is built around the deduction target, how stable contributions need to be, and how much flexibility the business needs. Pro, Flex, and Max designs.
- 6Lifetime limitThe cap on what a Cash Balance account can pay out, and the four things that set it.
- 7Lifetime limit calculatorProject the maximum Cash Balance lump sum an owner can accumulate under IRC 415(b), year by year for the next 10–15 years.
- 8Investments and riskWhat investment results do to participants, to the owner's contributions, and to the plan at the finish line.
- 9In-service and RMDsIn-service distributions at 59½, and required minimum distributions for 5% owners.
- 10Leaving and plan terminationLump sums, annuities, rollovers, spousal consent, and what happens when the plan itself terminates.
- 11Adding employeesWhy staff must share in the plan, the main tests, and what staff typically receive.
- 12Pairing with a 401(k)Why the combination is the standard design, and how the pieces stack up for an owner.
- 13FAQShort answers to the questions advisors and owners ask most.
- 14Getting startedWhat we need from you, the deadlines, and what the first year looks like.
