We are happy to share Agili’s latest video, Cash Balance Plans for Business Owners. A full transcript of the video, featuring Michael Joyce, is below in italics.


Video Transcript: Cash Balance Plans for Business Owners

Hi. This is Michael Joyce with Agili, your Personal CFO. Sole proprietors, doctors in private practice, partners in law firms, and other entrepreneurs would be well to consider cash balance plans as a qualified retirement plan which can reduce both their personal and business income tax burdens and provide for substantial retirement savings for the future.


Cash Balance Plans Feature #1: Higher Contribution Limits

Cash balance plans have significantly higher contribution limits* than other types of retirement plans. For business owners who have spent years building up their practice – they may have fallen behind a little bit on their retirement savings – and establishing a cash balance, in essence, gives them a chance to catch up on their retirement savings through the higher contribution limits that are allowed with a cash balance plan.


Cash Balance Plans Feature #2: Recruitment Tool and Reward

Cash balance plans can reward employees at different and varying levels in your organization. You can use this as a recruitment tool. You can use it to reward employees because of the higher contribution limits that are allowed in a cash balance plan.

Cash Balance Plans Feature #3: Contributions are Tax Deferred and Protected

Contributions to a cash balance plan are both tax deferred and are protected from creditors. A cash balance plan is a qualified plan under the IRS and offers protection from creditors under ERISA.


Cash Balance Plans Feature #4: Utilize Stable Cash Flow

You have to have stable cash flows for a cash balance plan, and they can have some higher expenses than a traditional retirement plan. Because cash balance plans are technically a defined benefit plan, you have to have stable cash flows so that you can put money into the cash balance plan each and every year that you have it established.

Also, cash balance plans tend to have higher costs than other types of retirement plans because of some of the actuarial expenses that are involved.


Cash Balance Plans Feature #5: Turbocharge Retirement Savings

By making high contributions into a cash balance plan, business owners and entrepreneurs can really turbocharge their retirement savings.


*Contribution limits for defined benefits plans, such as cash balance plans, can be found at this IRS link.

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