Employer-funded plans are governed by Internal Revenue Service. Section 401(a) of the Internal Revenue Code provides a guaranteed retirement benefit per year, generally paid in the form of annuity payments after retirement. The benefit is defined in advance by the plan’s benefit formula. Cash Balance is a type of Defined Benefit plan.
Ideal for:
- Professionals with significant amounts of disposable income and consistent annual revenue
- Companies wanting to maximize benefits for employees closer to retirement age, as long as businesses have stable profits or cash flow
EZ Online Service will assist in preparing a plan that can make an excellent investment and retirement option.
Advantages
- Employer contributions are tax-deductible for the company
- Employee contributions are 100% vested with vesting schedules allowed on employer contributions
- Participation restricted to eligible employees
- May permit pre-tax salary deferral and may include Roth 401(k) salary deferral contributions
- Bankruptcy and creditor protection
Disadvantages
- Mandatory annual employer contributions (calculated based on age, benefit desired, investment earnings, and estimated mortality) which must be certified by an actuary or Third-Party Administrator
- Loans not permitted
- Administration and recordkeeping expenses
- Mandatory withholding on plan distributions
Let EZ Online Service help you choose a policy that will fit your needs. Protecting all your assets, whether business, personal or both, is our primary goal. A well crafted plan designed by an expert can lessen the impact of some of life’s most common, yet unforeseen accidents.
