WealthPRIME Advanced Retirement Planning

With over 30 years of experience as a third party administrator for retirement plans, WealthPRIME offers access to unique tax mitigation strategies, usually reserved for the Top 1% of income earners.

WealthPRIME works with business owners to mitigate their tax liability and build wealth. Most business owners are limited to maxing out their 401(k), which is around $20,000 per year. WealthPRIME provides clients unique retirement plan options such as:

  • WealthPRIME ComboK- A defined benefit plan that allows up to $200,000 per year in contributions, which can save a client up to $100,000 a year in taxes. Watch the video.
  • RothPLUS- Utilizes various insurance and other instruments to create significant tax free distributions in retirement.

What is a cash balance plan?

A cash balance plan is a type of “defined benefit” retirement plan.

With a cash balance plan, a business owner can save $100,000 or more in taxes. For example, a business owner making over $300k could contribute up to four times what they could in a traditional 401(k) plan.

In a cash balance plan, the employee’s retirement benefit is represented by an account balance that is credited with a regular pay credit (for example, a percentage of salary) and an interest credit (usually based on the rate of return on plan assets).

It’s important to note that cash balance plans are subject to certain government regulations. They require management by a Third-Party Administrator (TPA) and actuarial team.

Are cash balance plans a good idea?

Cash balance plans enable much higher annual contributions than a 401(k) if you are a high wage earner or business owner. If you qualify, a cash balance plan can result in tax savings of $100,000 or more per year. Contribution to a plan can increase with age.

Cash balance plans are most applicable to physician groups, attorneys, investment advisors, and other highly profitable and closely held companies. One key difference in cash balance plans is that employees are not required to contribute to them.

The Pension Protection Act (PPA) has made these plans more accessible. They require management by a Third-Party Administrator (TPA) and actuarial team.

Is a cash balance plan better than a 401(k)?

Unlike traditional “defined contribution” plans, a cash balance plan is a “defined benefit” plan, designed to minimize risk.

Therefore, the government allows businesses that utilize cash balance plans to enable far higher tax deferment than traditional 401(k). The business owner must be willing to provide employees with a company contribution of 6-7% of their wages, but will result in a higher tax deferral for the business owner.

Cash balance plans also have “catchup” provisions that allow older business owners to “accelerate” their savings. Cash balance plans are governed by ERISA (Employee Retirement Income Security Act), which protects the methods by which plan assets may be invested.

What is an Example of a Cash Balance Plan

Here is an example of a illustration you can run in the WealthPRIME calculator. In this example, a 50 year old male, with only $250K in W-2 wages, can sock away $232,768 in a cash balance plan. The cash balance plan supplements the business owner’s 401k, and contributions are fully deductible- resulting a $100k+ in tax savings.