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Cash Balance Plan

Business Planning
Income Planning
Retirement Planning
Wealth Management
​College Funding
Social Security Maximization
Joseph Pizzolato
"Leadership is an action, not a position." Donald McGannon

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A Cash Balance plan is a type of retirement plan that belongs to the same general class of plans known as “Qualified Plans.” A 401(k) is a qualified plan. 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.

Age
401(k)
​only
401(k) with
Profit
​Sharing
Cash Balance*
Total
70
$26,000
$63,500
$343,000
$406,500
69
$26,000
$63,500
$328,000
$391,500
68
$26,000
$63,500
$315,000
$378,500
67
$26,000
$63,500
$301,000
$364,500
66
$26,000
$63,500
$289,000
$352,500
65
$26,000
$63,500
$277,000
$340,500
64
$26,000
$63,500
$283,000
$346,500
63
$26,000
$63,500
$289,000
$352,500
62
$26,000
$63,500
$294,000
$357,500
61
$26,000
$63,500
$280,000
$343,500
60
$26,000
$63,500
$266,000
$329,500
59
$26,000
$63,500
$253,000
$316,500
58
$26,000
$63,500
$241,000
$304,500
57
$26,000
$63,500
$229,000
$292,500
56
$26,000
$63,500
$218,000
$281,500
55
$26,000
$63,500
$207,000
$270,500
54
$26,000
$63,500
$197,000
$260,500
53
$26,000
$63,500
$188,000
$251,500
52
$26,000
$63,500
$179,000
$242,500
51
$26,000
$63,500
$170,000
$233,500
50
$26,000
$63,500
$162,000
$225,500
49
$19,500
$57,000
$154,000
$211,000
48
$19,500
$57,000
$146,000
$203,000
47
$19,500
$57,000
$139,000
$196,000
46
$19,500
$57,000
$132,000
$189,000
45
$19,500
$57,000
$126,000
$183,000
44
$19,500
$57,000
$120,000
$177,000
43
$19,500
$57,000
$114,000
$171,000
42
$19,500
$57,000
$108,000
$165,000
41
$19,500
$57,000
$103,000
$160,000
40
$19,500
$57,000
$98,000
$155,000
39
$19,500
$57,000
$93,000
$150,000
38
$19,500
$57,000
$89,000
$146,000
37
$19,500
$57,000
$85,000
$142,000
36
$19,500
$57,000
$80,000
$137,000
YEAR
2020
2019
2018
Cash Balance Maximum Lump Sum1
$3,000,000
$2,900,000
$2,800,000
Cash Balance/Defined Benefit Annuity2
$230,000
$225,000
$220,000
Defined Contribution2
$57,000
$56,000
$55,000
401(k) & 403(b) Deferrals3
$19,500
$19,000
$18,500
Catch-Up Limit3
$6,500
$6,000
$6,000
Maximum Compensation4
$285,000
$280,000
$275,000
Highly Compensated Employee5
$130,000
$125,000
$120,000
Social Security Taxable Wage Base3
$137,700
$132,900
$128,400