Cash Balance Plan Features


1. Niche Retirement Plan  Cash Balance Plans are a great     
    retirement plan fit and solution for physician groups, dental    
    groups, and other professional practices.They also work
    well for other small business owners or self employed individuals.
2. Tax Deductible Contributions  A Cash Balance Plan is a
    tax qualified retirementplan like 401(k) Plans. That means that the
    contributions made to a Cash Balance Plans are tax deductible
    and the investment earnings are tax deferred. Cash Balance Plan
    assets are not subject to income tax until withdrawn from the
    Cash Balance Plan or a rollover IRA.

3. Higher Contribution Limits – A Cash Balance Plan provides
    for much higher tax 
deductible contributions than a 401(k) Profit 

    Sharing Plan alone can provide. The maximum contribution
    amount is dependent upon an individuals age and generally

    increases the older the individual, but at all ages the total
    maximum contribution 
available is always higher with a Cash
    Balance Plan than with a 401(k) Plan alone.


4. Creditor Protection – The Plan assets in a Cash Balance Plan
    are ERISA creditor protected.


5. Flexible Design – A Cash Balance Plan can easily provide for
    different levels of benefit and contributions for owners, physicians,
    partners, and other key individuals. If a plan sponsor wants to
    contribute a higher amount for one partner than another, that is
    easy to accommodate in a Cash Balance Plan.


6. Supplement to 401(k) Plan – A Cash Balance Plan can be
    maintained along withand as a companion to a 401(k) Profit
    Sharing Plan.


7. Benefit defined in Plan Document


a. Plan document provides for annual allocation & interest credit


b. Interest crediting rate is usually a fixed rate between 3%    
    and 5%. Some Cash Balance Plans now utilize a return
    based or market based index. However, a low fixed
    interesting crediting rate is much preferred due to concerns
    with reducing the maximum lump sum benefit limit and
    employee contribution cost increases based upon the use
    of market based interest crediting rates.


c. Total value of plan assets are usually different than total
    value of Cash Balance benefits


8. A Smarter Defined Benefit Plan  Cash Balance Plans are a type
    of a Defined Benefit Pension Plan, but are an improved version
    of Defined Benefit Plans and are preferable to traditional Defined
    Benefit Pension Plans because:
a. Communication – The benefits are communicated as an
    account balance that equates to what a participant could
    receive in a lump sum if eligible for distribution. This is much
    easier for all to understand than traditional Defined Benefit
    Plan benefits.

b. Age Neutral for Staff – It is possible and common for a
    Cash Balance Plan to provide for the same contribution rate
    amongst staff. This was not possible with older traditional
    Defined Benefit Pension Plans and often resulted in    
    unfavorable contribution cost amounts for certain employees.
c. Increased Flexibility – Cash Balance Plans are inherently
    more flexible than traditional Defined Benefit Plans when it
    comes to allocation and contribution amounts and ranges.
d. Consistent Benefit Growth – The benefits provided by
    Cash Balance Plans grow at a plan defined interest rates
    and are not subject to volatile changes in the value of the
    benefits based upon changes in interest rate environments
    like traditional Defined Benefit Plans.



9. ...But still a Defined Benefit Pension Plan 

a. Subject to Annual Actuarial Valuation and Certification
    by Enrolled Actuary.
b. Subject to minimum funding requirements. This does not
    mean that contributions are necessarily required each year,
    but Cash Balance Plans do not have the absolute
    contribution flexibility inherent in Profit Sharing Plans.
c. Range of available contributions each year from minimum
    funding to maximum deductible.
10. Pooled (Trustee Directed) Investment Account  Since a
      Cash Balance Plan is atype of a Defined Benefit Pension Plan
      and since the benefit amount provided to anon owner participant
      is defined in the plan document and is not dependent upon the
      plan asset return, it only makes sense for the Cash Balance Plan
      to utilize trustee directed instead of individually directed
      investment platform.
11. Optionally can provide for additional insured death benefits: 
a. In addition to normal retirement benefit

b. Increased deductible contributions

c. Death benefit funded by deductible contributions

d. Can ultimately provide for tax free retirement income
    or estate tax free insurance proceeds
12. Contribution Flexibility provided by:   
a. An annual range of available contributions from minimum
    required tomaximum deductible

b. Can amend plan up until 2.5 months after year end to
    increase benefits and funding range

c. Can freeze plan or amend to lower allocation before 1000
    hour point in year (i.e. can lower contribution requirement
    on a prospective basis only).
d. Note, a plan sponsor is never required to fully fund a
    Cash Balance Plan. Upon Plan Termination, the non owner
    participants must receive the full value oftheir benefits.
    However an owner of the plan sponsor can receive a lower
    distribution amount based upon remaining plan asset
    amounts in lieu of full funding their benefit amount.





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New Albany, Ohio 43054

Phone and Fax: (800) 805-9538



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