Attractive Benefit of the Cash Balance Plan

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Many business owners wish they could have the best of both worlds with their retirement plan, combining the large benefit and tax deduction provided by a defined benefit plan with the flexibility of a defined contribution plan.  The solution may be a type of defined benefit plan referred to as a cash balance plan. 

A cash balance plan is a hybrid plan that allows greater contributions than a 401 (k) or profit sharing plan while still maintaining the look of a defined contribution plan.

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An Attractive Benefit

A cash balance plan can be a centerpiece for attracting and retaining employees, while providing a large contribution for the owner and a sizable tax deduction for the business.  Since benefits are expressed as a hypothetical account balance, it’s easier for employees to understand the true value of the benefit being provided.  The cash balance plan provides an attractive benefit to owners in a mobile workforce, encouraging stability in a business’s workforce.