When it comes to retirement planning, options like 401(k)s and IRAs are popular, but business owners and high-income earners often seek more robust solutions. Cash Balance Plans offer a compelling alternative, blending the benefits of a traditional defined benefit pension plan with the flexibility of a defined contribution plan. Additionally, these plans offer significant advantages for these clients looking to maximize retirement savings and reduce tax burdens. For financial advisors, Cash Balance plans offer a strategic tool to deliver tailored, high-impact advice to clients seeking more than traditional 401(k)s or IRAs.

Key Benefits of Cash Balance Plans

• Higher Contribution Limits: Cash Balance Plans allow contributions well above those of traditional retirement accounts, often permitting hundreds of thousands of dollars annually for older participants. Advisors can help clients make significant progress on retirement savings, especially valuable for those who may be catching up on contributions.
• Tax Efficiency: Contributions are tax-deductible, lowering taxable income and providing substantial tax savings—a key benefit for high earners or business owners.
• Competitive Advantage for Advisors: Offering Cash Balance Plans sets advisors apart, helping them meet complex client needs and deepening loyalty through personalized strategies.
• Enhanced Benefits for Employee Retention: Advisors working with business owners can show how Cash Balance Plans serve as attractive employee benefits, aiding in talent retention and recruitment.

Ideal Clients for Cash Balance Plans

While not for every client, Cash Balance Plans are best suited for:

• High-Income Earners such as doctors, lawyers and consultants who need higher contribution limits to boost retirement savings.
• Small to Mid-Sized Business Owners looking to reward themselves and key employees while reducing tax liabilities.
• Self-Employed Individuals and Partners in Firms who lack employer-sponsored plans and need flexible retirement savings solutions.
• Clients with High Tax Exposure who can benefit from the tax-deductible contributions these plans allow, reducing taxable income.

Cash Balance Plans enable advisors to offer clients a unique retirement strategy that delivers on savings potential, tax efficiency and personalized retirement security. By incorporating these plans into their advice, advisors can deliver a valuable, customized service that supports clients’ financial security and strengthens client-advisor relationships.

Reach out to see how American Trust Retirement can help financial advisors implement these powerful solutions. We’re here to guide you and you deliver personalized retirement strategies that drive success for your clients.