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With so many business owners and partners looking for larger tax deductions and accelerated retirement savings, the TAG Retirement Program | Cash Balance Solution may be the best option for them; and by adding this offering to a defined contribution plan, a more robust overall retirement package is created.

The growth of Cash Balance plans is driving today’s workforce to encourage more retirement savings. Current trends show that 91% of Cash Balance plans are in place at firms with fewer than 100 employees. Firms with 1 to 9 employees now account for 57% of all Cash Balance plans.

Fact Sheet: Cash Balance Pension Plans

U.S. Department of Labor
Employee Benefits Security Administration
November 2011

Click here for the Fact Sheet PDF

What makes Cash Balance plans so attractive to business owners?

• Tax Advantages: Cash Balance Plans are part of a group of plans called “qualified plans,” because of their tax-favored status with the IRS. After staff costs, taxes are traditionally the largest expenditure for businesses. Cash Balance plans help business owners with a significant tax deduction for employee contributions, plus generous tax-deferred retirement contributions for themselves

• Asset Protection: Cash Balance assets are protected in the event of a lawsuit or bankruptcy.

• Accelerated Retirement Savings: By combining a 401(k) plan with a Cash Balance Plan, a participant can typically double or triple their deferrals making this retirement solution an ideal plan-design for many companies and partnerships. Cash Balance participant accounts grow annually through two methods, which are; the company contribution – a percentage of pay or a flat dollar amount, and an annual interest credit. Age-weighted contribution limits allow older business owners and participants to squeeze 20 years of savings into 10 years of savings.

• Ease of Administration: With federal assistance from the 2006 Pension Protection Act (PPA) and Cash Balance regulations issued in 2010 and 2014, Cash Balance plans are more flexible and easier to administer. As such, this allows successful business owners to allocate their time to developing and running their business, not administering a retirement program.


Cash Balance Plans are sophisticated and complex retirement plans that require a superior level of actuarial expertise. With major tax deductions and IRS compliance issues at stake, it is important to choose an experienced Cash Balance specialist with a record of long-term success.

 

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