Combining a Cash Balance Plan with a 401(k) provides exceptional leverage for the highly compensated to accelerate retirement contributions while enhancing retirement savings for their employees. The level of tax-deductible contributions is based on several factors including age, income, and company census. In most cases the benefits can be significantly higher than a 401(k) profit sharing plan alone. While a large portion of these benefits may be dedicated to business owners and the highly compensated, all employees will enjoy enhanced retirement savings making the Cash Balance Plan an attractive addition to a benefit package.
If you are frustrated by the deductible caps of a standard 401(k) then Cash Balance may be an attractive alternative.