Sharon Amity Rd #163,
The IRS calls the Cash Balance plan a “Hybrid Plan” due to the nature of the plan being a cross of a 401k and Define Benefit plan. A Cash Balance plan is qualified retirement plan that can be implemented along with a 401k/Profit Sharing plan that can provide huge tax savings for partners/business owners. In a Cash Balance plan, the contributions are all employer funded in to a single account. These contributions are tax-deductible. Due to the PPA (Pension Protection Act of 2006), the IRS reaffirmed these plans were valid and that the contributions could be “age-weighted” to provide more flexibility in the design and administration of the plan.
Many partners and professionals find Cash Balance an excellent way to increase contributions to their retirement accounts. We have found that the following are typically good candidates: