Cash balance plans are retirement accounts that combine features of a traditional pension and a 401(k), allowing high-income earners – like business owners and professionals – to save significantly more for retirement while lowering their tax bill.
In his recent article, Jerry explains how cash balance plans can be a powerful retirement savings tool, especially for high-income earners like business owners, doctors, and lawyers. These plans let you put away much more money than a 401(k) and lower your taxes at the same time. He elaborates that the account works kind of like a pension but looks and feels like a 401(k), with a visible balance that grows every year.
Jerry points out that while these plans have some rules and complexity – like needing an actuary, regular contributions, and compliance testing – they can be a huge financial win when designed and managed properly. He recommends them for people making $500,000+ per year who want to save aggressively for retirement and reduce taxes.
"Beyond the tax advantages, these plans are a powerful way to attract, retain and reward key employees, especially in professional services firms such as law, accounting and medical groups."
Interested in learning more? Check out Jerry's full article on Kiplinger.
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