Making a Cash Balance Plan Part of Your Retirement Plan Strategy

Published: Aug 4, 2023
By: Jeremy D. Palm
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Whether you’re a business owner looking for additional tax deductions and/or starting to think about preparing for your own retirement, there are several types of plans of which to take advantage. A cash balance plan is one of them -- they can be a great solution for many businesses, whether they are corporations, sole proprietorships or partnerships. EisnerAmper Partner Jeremy Palm highlights the path one client took toward success, and the importance of business owners understanding the options available and their potential impact on the company and its employees.

Transcript

Hi. I'm Jeremy Palm, partner at EisnerAmper. Today I'm going to highlight the benefits of a cash balance plan by sharing the story of a company our team recently worked with. A financial advisor we work with introduced us to one of his clients who owned a business. The business had two owners and three employees. Both owners were in their late fifties and the three employees were in their twenties. Historically, the business sponsored a simple IRA but the simple IRA contribution limits are pretty low. We presented the idea of replacing their simple IRA with a 401k plan and a cash balance plan. We started by collecting census information for the owners and their employees. Then, we prepared an illustration that showed the owners how much they could contribute to the plans for themselves and how much they would need to contribute for their employees to make the plans work.

This ended up being a great solution for the client. Putting a 401k plan and a cash balance plan in place allowed them to increase their tax deductions and retirement savings and also help retain their employees. The retirement plans are a win for everyone. If you have any questions about retirement plans for your company or if you have clients who may need some guidance, EisnerAmper can help. We can review the plan you have in place and design an approach that meets your contribution and deduction goals. If you don't currently sponsor retirement plans, we can also recommend a path that's right for you and your specific situation. Our team would love to hear from you. Feel free to reach out to us directly or check out our website at eisneramper.com.