We customize on pension design to meet small business owners’ specific needs on retirement plans such as Defined Benefits and Profit Sharing Plans.
Some examples are as below.
A. For Favoring an older Business owner – New Comparability Profit Sharing Plans
The plan works best when the business owner is older than most of the other employees. See chart below to compare with traditional profit share plan
B. For Favoring the Business Owner – Defined Benefit Plans
Traditional defined benefit pension plans may be attractive to employers when:
- There is a significant age and income disparity between the business owner and their employees.
- The employer desires to make contributions greater than would be allowed in a defined contribution plan.
- Contribution flexibility is desired.
C. Cash Balance Plan
A Cash Balance Pension Plan can be described as a “hybrid” plan because it has both defined benefit and defined contribution features. This type of plan can be the best of both worlds – higher defined benefit limits plus the flexibility to allow higher contributions to the business owner.
The following contribution comparison chart shows how the owner of a small business with four employees benefits from a cash balance plan design over a new comparability profit sharing plan
