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Maximum Contributions: "Everybody Wants Some"

DWC 09/17/20
Let’s do a little recap. In the last two installments, we discussed what Robert is required to contribute (the Minimum) to his cash balance plan and what he should contribute (the Recommended). Now, we will talk about what he can contribute (the Maximum).
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"Complete Control" with Recommended Contributions

DWC 09/3/20
Congratulations on making it through our last installment and to this one. We typically do not like to get that deep into the weeds, but hey, this is actuarial stuff after all, and you can’t always get what you want. To make up for the complexity of determining the Minimum Required Contribution (MRC), we are going to discuss Recommended ...
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One and One Makes Five: Calculating the Minimum Required Contribution

DWC 08/20/20
  In our last episode, we showed how the cash balance benefit for our owner, Robert Smith, accumulates over time. In our Perfect World (no offense Huey!), Robert contributes exactly $100,000 to the plan each year, and the investment return is exactly 3% to match the interest crediting rate. When Robert is ready to retire at the end of ten years, ...
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Which Common Plan Fees Can (and Should) We Pay from Plan Assets?

DWC 08/18/20
Facts We are reviewing our company expense budget to identify any that we can eliminate or reduce. We’ve read that it is possible to pay expenses related to maintaining company retirement plans out of plan assets. We sponsor both a 401(k) plan and cash balance plan for our employees, so shifting some of those fees from the company to the plan ...
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What Are My Options (and Deadlines) for Implementing a Retirement Plan This Year?

DWC 08/11/20
Facts We’ve been debating implementing a 401(k) plan for 2020. After much back and forth, we’ve decided its “a go!” for this year. Since we are still in a more relaxed summer vacation mode, we’d like to wait until sometime this fall to really get rolling on implementation.
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Cash Balance Contributions: Definitely Not "Money for Nothing"

DWC 08/6/20
  In our last installment, we took a look at the different ways to define the contribution credits in a cash balance plan. For Robert Smith, the owner and only employee of Robert Smith, Inc., the contribution credit is set at $100,000 or 66.67% of W-2 pay, if lower. Now it’s time to start learning about the actual contribution amounts. As a ...
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Just Can't Get Enough...Savings from your 401(k) Plan

DWC 07/23/20
  Now that we know the basics, we can apply our knowledge to (almost) real life scenarios. We will follow our fictitious company: Robert Smith, Inc., an S-corporation with no employees other than the owner. Robert is an accomplished song writer who is currently living off royalties from his hits. Robert sponsored a SEP for many years, then at the ...
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Defined Benefit vs. Defined Contribution: A Cash Balance Plan Primer

DWC 07/9/20
  Welcome to Cash Balance Corner! We've created this bi-monthly column to teach you everything you need to know about defined benefit and cash balance plans in order to help you make the best possible decisions about your company retirement plan. Because a cash balance plan is a type of defined benefit (DB) plan, we'll start with a primer on the ...
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DWC News Update | The CARES Act: Federal Coronavirus Relief

DWC 03/30/20
On Friday afternoon, March 27th, Congress passed, and the President signed, the Coronavirus Aid, Relief, and Economic Security (CARES) Act - sweeping legislation intended to provide much-needed relief due to the coronavirus public health emergency.  At nearly 1,000 pages in total, the legislation covers a lot of ground in a many areas.  With ...
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How Can We Create More Flexibility in our Cash Balance Plan Contributions?

DWC 03/17/20
Facts We are considering adopting a new cash balance plan.  We really like the higher contribution amounts, but we keep hearing that the contributions are fairly rigid and inflexible.
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The views expressed in this blog are those of the authors and do not necessarily represent the views of any other person or organization. All content is provided for informational purposes only and is not intended to be tax or legal advice.