Defined Benefit (Cash Balance) Plan: Who Qualifies and What You Get
Learn how this retirement plan allows private practice owners to significantly reduce their taxable income through large annual contributions.
A Defined Benefit (Cash Balance) Plan is a type of retirement vehicle designed to allow high-earning business owners to set aside large amounts of money for their future while reducing their current tax burden.
Who it's for
This plan is designed for owners of private practices who are looking for ways to make significant tax deductions.
What you get
It provides the ability to shelter large amounts of income—potentially hundreds of thousands of dollars—from taxes on an annual basis.
What it costs you
Setting up this plan involves high costs related to professional administrative services and actuarial calculations.
The catch to know
Once the plan is established, you are required to make mandatory annual contributions, even in years when your practice revenue might be low.
How to apply
- Consult with a financial or tax professional to determine if the plan fits your business structure.
- Work with an actuary to calculate the necessary contribution levels.
- Complete the necessary administrative setup for your practice.