Gain a Competitive Advantage with Cash Balance Plans
The Cash Balance Coach® Training provides retirement plan professionals with strategies for incorporating cash balance into their practices while outlining how to leverage FuturePlan’s Cash Balance Center of Excellence.
Maximize growth potential
Learn how to take advantage of the fastest growing sector of the retirement plan market.
Differentiate your practice
Stand out as a retirement plan advisor who can offer tax reducing benefits with a cash balance solution.
Diversify your AUM
Cash balance plans can add significant AUM to your practice, create stickier assets, and deliver access to the C-suite.
How did a family-owned business practice accelerate their retirement savings?
Featured Case Study
Cash balance plans can be a win-win retirement solution for small business owners. By combining a cash balance plan with an existing 401(k) profit-sharing plan, small business owners have the potential to make large, deductible contributions for themselves—in many scenarios upwards of $100,000 annually depending on compensation—while limiting the total cost of offering a plan to employees.
WHY CASH BALANCE PLANS MAY BE IDEAL FOR SMALL BUSINESSES
Cash balance plans can:
Reduce taxable income
Are a powerful tool for recruiting and retaining top talent
Help owners catch up on delayed retirement savings
Fully protect assets from creditors
Are portable and allow lump-sum rollovers into an IRA
BUSINESS OVERVIEW
Two owners, a married couple
Four staff members
The small business currently maintains a 401(k) profit-sharing plan
CHALLENGES
Owners are older (ages 68 and 58) and need to accelerate their retirement savings
Owners have a profitable business and want to minimize their taxes
The couple was reaching contribution restrictions with a traditional 401(k) profit-sharing plan
PLAN DESIGN SOLUTION
FuturePlan designed a cash balance plan allowing the below contribution amounts for the owners.
The couple was able to make the maximum allowable cash balance contribution for their respective ages, resulting in a total contribution of $603,139 for both owners.1
The couple can save over $240,000 in taxes.
The cash balance contribution largely depends on profitability—and only a profit-sharing contribution of 7.5% of pay is required for all other employees.
Name | Age | Annual Salary | 401(k) | Profit Sharing | Cash Balance | Total Contribution | Tax Savings³ |
|---|---|---|---|---|---|---|---|
2 Owners | |||||||
Owner 1 | 68 | $360,000 | $32,500 | $47,500 | $397,038 | $477,038 | $190,815 |
Owner 2 | 58 | $65,000 | $32,500 | $3,900 | $89,701 | $126,101 | $50,440 |
Subtotals | $425,000 | $65,000 | $51,400 | $486,739 | $603,139 | $241,256 | |
4 Staff | 7.5% of pay | ||||||
Employee 1 | 40 | $51,000 | $3,825 | $700 | $4,525 | ||
Employee 2 | 33 | $41,000 | $3,075 | $700 | $3,775 | ||
Employee 3 | 26 | $34,000 | $2,550 | $700 | $3,250 | ||
Employee 4 | 43 | $21,000 | $1,575 | $700 | $2,275 | ||
Subtotals | $147,000 | $0 | $11,025 | $2,800 | $13,825 | $5,530 | |
Grand Totals | $572,000 | $65,000 | $62,425 | $489,539 | $616,964 | $246,786 | |
Percent of Contribution to Owners | 97.8% | ||||||
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During our most recent event, we explored why cash balance plans have outgrown 401(k) plans by nearly 8x in 20 years—and provided eight sales tips so you can start prospecting today.2
Complimentary Product Illustration
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By signing up you will receive a complimentary Cash Balance Illustration Overview and one of our dedicated FuturePlan cash balance experts will reach out to you.
Training and Educational Resources
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Additional Case Studies
Advisor Growth Strategy
Learn how a wealth manager leveraged customized illustrations for several key business owners with what started as short conversations and evolved into comprehensive discussions about cash balance plans and their businesses.
Medical Group
Catching up on delayed retirement savings and reducing tax liabilities are the two biggest financial challenges facing many physicians today.
Learn how FuturePlan has helped solve for these challenges.
Law Firm
Cash Balance plans allow lawyers to accelerate retirement savings in a tax-favored fashion. Understand how FuturePlan has delivered tailored outcomes for the needs of executives.
1Important: Amounts shown in the chart do not include the additional catch-up contributions for participants aged 60-63. This is a hypothetical example. If you want to obtain your own, or your client’s personalized scenario, please provide FuturePlan with a full, up-to-date owner and employee census in order to receive a customized plan design illustration. FuturePlan by Ascensus does not provide tax, legal, or accounting advice. This material has been prepared for informational and illustrative purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You or your client should consult your/their own tax, legal, and accounting advisors before engaging in any transaction. FuturePlan by Ascensus provides plan design, administration, and compliance services. It is not a broker-dealer or an investment advisor and does not provide tax, legal, or accounting services.
(Plan Limits) $24,500 for 401(k) plan; $8,000 catch-up (age 50 or older); $47,500 profit sharing. Amounts shown in the chart do not include the additional catch-up contributions for participants age 60-63. This hypothetical chart assumes a 45% tax bracket of combined federal and state taxes and taxes are deferred. The following assumptions also apply:
• Maximum annual contribution amounts for the cash balance/defined benefit plan are calculated using 4% interest rates and assuming no pre-retirement mortality and using the latest available applicable mortality tables.
• The maximum cash balance amounts assume a 3-year average compensation of at least $290,000 (the maximum annuity limit for 2026), and prior years of service.
• The amounts needed to fund the cash balance/defined benefit plan may be reduced by a participant’s prior highest 3-year salary history if it is less than the IRS maximum annuity limit (as shown above) or below the IRS maximum compensation limits under 401(a)(17) (e.g., $360,000 for 2026, $350,000 for 2025, etc.) and other deduction limits may apply.
• The amounts needed to fund in the cash balance/defined benefit plan will also be reduced if a participant participated in any prior cash balance/defined benefit plan of the employer or a related employer.
• Further, amounts shown may be reduced if the cash balance/defined benefit plan is not covered by the Pension Benefit Guaranty Corporation (PBGC), which may limit the amount available to fund in any paired 401(k) profit sharing plan of the employer. (Plans typically not covered by the PBGC are professional service businesses with fewer than 26 active participants.)
• It is also important to note that amounts shown are estimates and will vary depending on an employer’s demographics of owners and employees along with a myriad of other factors and considerations.
Important: if you want to obtain your own, or your client’s personalized scenario, please provide FuturePlan with a full, up-to-date owner and employee census in order to receive a customized plan design illustration. FuturePlan by Ascensus does not provide tax, legal, or accounting advice. This material has been prepared for informational and illustrative purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You or your client should consult your/their own tax, legal, and accounting advisors before engaging in any transaction. FuturePlan by Ascensus provides plan design, administration, and compliance services. It is not a broker-dealer or an investment advisor and does not provide tax, legal, or accounting services.
2Source: Analysis performed by FuturePlan, using 2023 data from IRS Form 5500 filings via the BrightScope database. Additional data on defined contribution and defined benefit plans comes from the Private Pension Plan Bulletin Abstracts by the U.S. Department of Labor and FuturePlan’s own book of business. Some of the analysis compares 2020 (the last year FuturePlan formally reported findings) and 2023, which is the primary year that this report is based on.