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Cash Balance Plans: There's Still Time

Which of your clients could benefit from adding a Cash Balance Plan?

A Cash Balance Plan, a type of defined benefit plan, is an incredible way to supercharge your client's retirement plan contributions beyond what they can save in their 401(k) plan alone. While a 401(k) plan limits an individual to $57,000 ($63,500 age 50+) in total contributions in 2020, it's not uncommon to see scenarios where an owner can receive over $200,000 in employer contributions into a Cash Balance Plan. Consider helping your clients add one now, before the "crush" during tax-filing season in 2021!

As you are probably aware, the deadline for establishing a new retirement plan has been extended to the tax filing deadline, the same as establishing an IRA. Establishing a qualified plan, however, is a much more complex decision and process than opening an IRA account. Encourage your clients to plan ahead and consider whether or not a Cash Balance and/or a 401(k) Profit Sharing Plan is an effective tax solution on top of an ideal retirement savings option. We can help! Taking steps now can help you get through your tax season easier!

A Cash Balance Plan might make sense for business-owner clients who meet the following profile:
- The owner is over 40 years old and wants to accelerate their retirement savings.
- The owner wants to save more than $50,000 per year for retirement.
- Their company has demonstrated consistent profits.
- Their company is willing to contribute at least 5% to employees.
- Or the owner of a specified service business needs help reducing income to qualify for the 20% QBI deduction. Please review the attached article, Too Much Income to Take Advantage of the 20% QBI Pass-Through Deduction? Maybe a Retirement Plan Can Help!

Did you know?
Tycor specializes in the design and administration of Cash Balance Plans. Please contact me at 610-251-0670 or by EMAIL to discuss how this can work for your clients!

J. Timothy Corle, CPC, CPFA, CFP®
President, CEO
Tycor Benefit Administrators, Inc.®