Reward Workers and Fund Retirement with a Cash Balance Plan

Cash balance plans are technically defined benefit plans that share some key characteristics with defined contribution plans. IRS regulations finalized in 2010 and 2014 clarified some legal issues and made these plans more flexible and appealing to employers. As a result, there was a 152% increase in new cash balance plans between 2010 and 2015.1

These hybrid plans have generous contribution limits that increase with age, and are often stacked on top of a 401(k) and/or profit-sharing plan. This might allow partners in professional service firms and other high-income business owners to maximize or catch up on retirement savings and reduce their taxable incomes.

In 2017, a 65-year-old could save as much as $251,000 in a cash balance plan, while a 55-year-old could save $184