Risk & Business Magazine Spectrum Insurance Fall 2016 | Page 28

RETIREMENT SAVINGS

Looking for Additional Tax
Deductions While Significantly
Increasing Your Retirement Savings?
Don’t Overlook The Advantages Of A Cash Balance Plan

A

s a successful business owner,
you may find yourself in any of
the following situations:

1.

Searching for additional tax savings

2.

Looking for ways to save more of
your income for retirement

3.

Looking for ways to “catch up” from
financial hits your retirement assets
may have taken in recent years, or
from delaying the start of your
saving for retirement

Chances are that you already have a 401(k)
plan that, depending upon your age,
allows you to defer as much as $24,000
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FALL 2016

annually, and, when combined with a
profit sharing contribution, can give you
the opportunity to shelter as much as
$59,000 each year.

that has characteristics of both defined
contribution (DC) plans and defined
benefit (DB) plans. As such, it is often
referred to as a hybrid plan. Because it
is a DB plan, benefits are defined by the
plan document as a monthly benefit at
retirement; the employer retains the risk
for providing these benefit commitments
and makes, in accordance with actuarial
assumptions, contributions that are
required to fund the benefits promised;
and the plan may be subject to PBGC
coverage.

CASH BALANCE PLAN BASICS
Developed in the mid-1980s based on
existing defined benefit plan rules, a cash
balance plan is a type of retirement plan

Similar to a DC plan, which has actual
individual accounts, cash balance plans
have hypothetical individual accounts
that are increased by annual company

If so, don’t neglect taking a closer look at
your retirement plan design strategy, and
in particular, whether a cash balance plan
might provide you with the opportunity
to shelter two-to-four times that amount
annually, on your way to accumulating as
much as $2.5 million in additional money
for retirement..1