Hamilton Capital Partners | Atlanta, GA — Hamilton Capital Partners

What is a Cash Balance Plan?

In 2006, the IRS approved an ERISA qualified retirement plan known as the Cash Balance Plan.

The Cash Balance was designed to modernize traditional Defined Benefit pension plans and allow small businesses to sock away extra retirement savings. It is often combined with the employer 401(k) to maximize impact for both owners and employees.

Key Features:

1) Cost and Tax Efficiency: CB plans allow significant tax deductions and large contributions for owners.

2) Employee Benefit Package Appeal: CB plans can help retain talent and streamline business operations.

3) Legal Protection: CB Plans are IRS qualified plans and plan assets are protected from bankruptcy and lawsuits.

Notable Highlights:

1) Annual Employer Contributions: Actuarial calculations help determine a minimum and a maximum contribution that an employer can make to the Plan. This contribution is then deducted on a companies tax return as an expense and each employee (including owners) is “credited” a hypothetical account balance.

2) Investment Flexibility: Plan assets are invested collectively by the Plan Trustee and an appointed fiduciary in one pooled account.

In summary, the CB Plan allows small-mid sized business owners the flexibility to maximize retirement benefits while taking a generous deduction on an annual basis.

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