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

RPS Blog

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