Why offer cash balance and traditional defined benefit plans?



Why offer cash balance and traditional defined benefit plans?
Why offer cash balance and
traditional defined benefit plans?
Cash balance (CB) and traditional defined benefit plans (DB) should
be considered by high-net-worth business owners seeking ways
to maximize retirement plan contributions in conjunction with
tax deduction benefits. These types of plans can be paired with
401(k) defined contribution (DC) plans to achieve maximum wealth
accumulation and tax deferral opportunities for your clients.
Increased contributions mean increased assets under management
(AUM) for you—the financial professional recommending investment
Ascensus Consulting’s platform-neutral services allow you to offer
clients investment fund or platform options from thousands of
available choices.
Defined benefit plans overview: CB or traditional DB
Demographic of
targeted principals
Ideal for employers
with employees
looking to control
costs while still
Lower and more controlled costs to employees
• Large tax benefits:
Functionally tied to a 401(k) or profit sharing plan to
maximize efficiency
Ideal for companies with employees (particularly if a limited
number of employees the same age or older than targeted
– Owners can
potentially contribute
substantial amounts of
their earned income
Ideal for 100%
owners with no
employees who want
to defer all or most of
their earnings.
Benefits for owners with
CB or traditional DB
– Can be paired with
a DC plan to
increase retirement
savings and tax
Lower administrative costs
Can produce higher maximum contribution numbers by
leveraging prior service
Can use prior earning history to maximize current
contributions (potentially lowering current income to zero)
Ideal for sole practitioners (corporate or sole proprietor)
• Flexible benefit design
• Plan design works well for
owners age 35 and over
Key prospects
•Business owners with zero to 25 employees
•Already have a 401(k) plus a new comparability plan or are already maximizing contributions
•Owners 35+ years of age
•Wish to contribute more than $50,000 annually
•Typical occupations:
Construction Trades
Independent Corporate
Financial Advisor
Insurance Agent
Sales Representative
Graphic Designer
Mortgage Broker
Software Developer
Real Estate Agent
Next steps for offering CB, traditional DB, or
DB/DC combo plans
Ascensus Consulting’s actuaries and consultants will
prepare strategic plan design illustrations based on your
client’s corporate objectives and demographics. The
illustrations will be based on specific census data you
gather from your client.
Collect census data for the principal
target(s) and employees (if applicable)
•Date of birth
•Date of hire
Step 1. Contact Ascensus Consulting
•Annual compensation
Step 2. Collect census data.
•Identify all family relationships (e.g., spouse of
owner, etc.)
Step 3. We can schedule a conference call or meeting that includes you, the targeted principals, and professionals from Ascensus Consulting.
Step 4.
Your Ascensus Consulting team will review the findings, explain the options, and, if needed, will
modify the illustrations based upon an interest in contributing more or less.
Plans can be set up within four to six weeks,
sometimes quicker.
Gather specific information
•Identify preferred group
•Provide details on any existing plans
•Provide anticipated 401(k) deferrals
Contact Ascensus Consulting for assistance, to
request a pricing schedule, or set up a meeting.
About Ascensus Consulting
With more than 30 years of industry experience,
Ascensus Consulting provides retirement plan consulting
services for over 4,000 plans serviced from four
locations. Our compliance expertise includes defined
contribution, defined benefit, cash balance, and specialty
administration. Ascensus Consulting is built on the
extensive resources of Ascensus—the largest retirement
plan and college savings service provider in the United
Ascensus Consulting
Sales Desk
[email protected]
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