Cash Balance Plans

  • Annual retirement funding can range up to $250,000 per plan participant

  • A hybrid plan that has the look and feel of a defined contribution plan with the high funding limits of a defined benefit plan

  • The contribution amounts within the Cash Balance plan can be custom-tailored for each owner, employee, or group of employees

  • Generates significant federal and state tax savings which offset the overall cost of the plan

  • Usually works best when designed with a companion 401(k)/profit sharing plan

  • Distributions can be rolled to a personal IRA or any other qualified retirement plan such as a 401(k) plan
Cash Balance

A Cash Balance plan is a hybrid form of a defined benefit plan whose level of employer funding from year to year is quite predictable.  Further, the participant statements are easy to understand since they resemble a traditional profit-sharing or defined contribution statement.  

Initially, RPS will gather the needed employee census data from the client who also identifies funding priorities.  Using this data, RPS prepares a complimentary, custom-designed Cash Balance analysis that is reviewed with the client, and the client’s investment advisor, CPA, or attorney, and modified if necessary. 

  • All funding for this retirement plan comes from the employer; employees cannot make personal contributions
  • Usually, annual funding is required and RPS will calculate a minimum/maximum range of funding
  • The federal and state tax savings derived from the Cash Balance plan usually more than funds contributions to the rank and file employees and the administrative cost of the plan

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