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Maximizing Your Wealth Potential: Cash Balance Plans for Business Owners

Unlock Tax Efficiency and Accelerated Retirement Savings While Growing Your Business


As a busy business owner, your focus is on growing your company and achieving operational success—but are you optimizing your personal financial outcomes?


Many entrepreneurs have implemented 401(k) plans, enjoying the dual benefits of retirement savings and tax deductions. However, just as you continuously improve operations and drive success, there are opportunities to enhance your financial strategy.


A 401(k) plan is a great starting point but has its limitations. For 2025, the maximum contribution to a 401(k) is $70,000 ($77,500 if you’re age 50 or older and $81,250 if you’re between 60 and 63). But what if you could amplify the benefits of your current 401(k)?

Enter the cash balance plan, a powerful addition to your retirement and tax planning strategy.


What Is a Cash Balance Plan?

A cash balance plan is a fully IRS-qualified retirement plan that allows high-earning business owners—those with annual earnings exceeding $350,000—to accumulate over $3 million in just 10 years. This strategy can dramatically enhance your retirement savings while providing substantial tax savings.


How Does It Work?

A cash balance plan works similarly to a 401(k) but on a much larger scale. Contributions to the plan are:


  • Tax-deductible: Reduce your taxable income significantly.

  • Tax-deferred: Contributions grow without being taxed until you withdraw them.

  • Rollable into an IRA: Upon retirement or plan termination, you can roll over your balance for continued tax-deferred growth.


For 2025, your tax-deductible contributions could increase from $70,000 (under a 401(k)) to as much as $452,500 annually with a cash balance plan. The contributions grow each year through employer contributions and interest credits, creating a scalable and robust retirement benefit.


Table showing maximum contribution limits to a cash balance plan by age for 2025. Contributions range from $242,500 at age 40 to $452,500 at age 70, illustrating significant savings potential for business owners.

Why Consider a Cash Balance Plan?

Cash balance plans offer key advantages for high-earning business owners:


  1. Enhanced Tax Efficiency:

    • Shift taxable income into retirement savings.

    • Reduce current tax liability significantly.

  2. Accelerated Savings Potential:

    • Build retirement wealth rapidly, with the possibility of amassing over $3 million in just a decade.

  3. Attract and Retain Talent:

    • Offer competitive retirement benefits to employees, fostering loyalty and retention.

  4. Scalability for Growing Businesses:

    • Ideal for businesses with multiple owners or larger teams, offering flexibility in benefit design.


Is a Cash Balance Plan Right for You?

Just as you take a proactive approach to growing your business, it’s important to apply that same strategy to your financial future. While a cash balance plan isn’t a one-size-fits-all solution, it’s a compelling option for high-earning business owners seeking tax-efficient retirement savings.


By combining a cash balance plan with your existing 401(k), you can leverage these tools to create a retirement strategy as tailored and effective as your business plan.


Take the Next Step

If you’re ready to explore how a cash balance plan could fit into your financial strategy, reach out for a consultation. Together, we’ll design a plan that aligns with your goals, minimizes your tax burden, and maximizes your retirement savings.


Optimize your financial outcomes with the same precision you apply to your business. A cash balance plan could be the key to unlocking your wealth potential.




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