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TYPES OF PLANS
Qualified Plans
Defined Benefit Pension Plan
Defined Contribution Plan
Our firm services qualified retirement plans. These Plans must meet the rules and regulations of the Internal Revenue Code in a multitude of areas. We don't expect you to know which Plan to choose, so let us help!
The advantages of these plans are:
- Tax Deductions
- Tax deferred contributions and earnings
- Pre-tax & Roth contributions
- Attract and retain employees in a competitive field
- All encompassing benefits package for salary consideration
- Supplement/replace future Social Security Benefits
Defined Contribution Plan
Defined Benefit Pension Plan
Defined Contribution Plan
Commonly referred to as Profit Sharing Plans.
2025 Maximum Annual Addition of $70,000
A Defined Contribution Plan allows an employer to make tax deductible contributions up to the lesser of 100% of pay for an individual or 25% of compensation for all eligible participants. The amounts are allocated using our New Comparability method and are typically subject to a 6-Year graded vesting (ownership) schedule to promote longevity within your business.
Defined Benefit Pension Plan
Defined Benefit Pension Plan
Defined Benefit Pension Plan
An Actuary is required for a Defined Benefit Pension Plan to certify the required Schedule SB compliance by the IRS.
This plan works well for those individuals who are looking to increase their contribution over the DC limit above, may previously had or have high historical income, and are looking to accumulate retirement funds at a more rapid rate. This Plan promises to pay a specific determined monthly benefit at Normal Retirement Age based on the employee's age, years of service, and future years. The 6-Year graded vesting schedule also applies.
401(k) Plan
Cash Balance Defined Benefit Plan
Defined Benefit Pension Plan
2025 Maximum Annual Addition of $23,500 and if over age 50, an additional $7,500 Catch-Up which is guaranteed rather than being dependent on the plan’s investment performance. Enhanced Catch-Up limit beginning in 2025 for participants age 60-63.
A 401(k) Profit Sharing Plan is essentially one Plan which functions in two components. Those are the Profit Sharing Plan component (company funded) and the 401(k) feature (employee funded). The 401(k) feature permits a participant to defer income from his/her salary up to the limitations indicated above. This is a voluntary election and allows pre-tax and Roth after tax money to be contributed to a retirement savings account of their choice even if there is no employer contribution. The 401(k) may provide for a Match, Discretionary Match, or Safe Harbor where deemed necessary.
2025 Maximum Annual Addition for a Defined Contribution Plan has increased to $70,000. This maximum includes Employee 401(k) deferrals in this limit. For example, if you defer the maximum of $23,500, your maximum Employer Defined Contribution amount is $46,500, assuming you have Gross W2 wages of at least $186,000.
Cash Balance Defined Benefit Plan
Cash Balance Defined Benefit Plan
Cash Balance Defined Benefit Plan
A Cash Balance plan is a type of retirement plan that belongs to the same general class of plans known as “Qualified Plans.” These plans “qualify” for tax deferral and creditor protection under ERISA.
In a Cash Balance Plan each participant has an account. The account grows annually in two ways: first, a contribution and second, an interest credit, which is guaranteed rather than being dependent on the plan’s investment performance.
Many owners and partners are looking for larger tax deductions and accelerated retirement savings. Cash Balance Plans may be the perfect solution for them. The 2006 Pension Protection Act (PPA) and the Cash Balance regulations issued in 2010 and 2014 have made these plans even more flexible and easier to administer, making them increasingly popular choice for successful business owners.
A Cash Balance plan is a defined benefit plan that specifies both the contribution to be credited to each participant and the investment earnings to be credited based on those contributions. Each participant has an account that resembles those in a 401(k) or profit sharing plan. These accounts are maintained by the plan actuary, who generates annual participant statements.
Participant accounts grow annually in two ways:
The company contribution – a percentage of pay or a flat dollar amount – is determined by a formula specified in the plan document, and;
An annual interest credit. The rate of return is guaranteed and is independent of the plan’s investment performance. That rate changes each year but usually is equal to the yield on 30-year Treasury bonds, which has hovered around 5 percent in recent years.
When participants terminate employment, they are eligible to receive the vested portion of their account balances.
DB/DC Combo Plans
Cash Balance Defined Benefit Plan
Cash Balance Defined Benefit Plan
A floor-offset arrangement is the Defined Benefit part of a pair of Plans whose benefits are coordinated. The secondary Plan is a Profit Sharing Plan (may include a 401(k) feature). The floor-offset plan provides a minimum guaranteed benefit from both plans combined. A total benefit based on compensation and service is described in the floor-offset and is reduced or "offset" by a benefit that is equivalent to the account accumulated from Employer contributions to the Profit Sharing Plan. After this reduction, the floor-offset plan pays what is left and the total benefit from both plans adds up to the total benefit described in the floor-offset plan. When the benefit equivalent in the Profit Sharing Plan is larger than the guaranteed minimum benefit, no benefit will be paid by the floor-offset plan.
These paired plans are tailored towards the Owners receiving the maximum Defined Benefit contributions while the Employees/NHCEs receive what resembles a Defined Contribution plan contribution. Typically the NHCEs receive a safe harbor contribution of 7.5% of compensation, which may include a partial 401(k) Safe Harbor contribution if this is a feature of the DC Plan. This plan has become the most popular of our clients with their increase in retirement savings and NHCE contributions aligned with retirement savings.
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