Retirement planning is an important step towards providing a secure future. It is not something to be taken lightly and should be investigated thoroughly. One of the retirement planning options that can help you achieve your goals is a cash balance plan. These plans are becoming increasingly popular due to their powerful tax advantages and many other benefits. At Stonecreek Wealth Advisors, we offer our clients cash balance plans in Utah. We can answer any questions about this powerful retirement planning option, so contact us today. More specifically, learn why small businesses should consider a cash balance plan.
Understanding Cash Balance Plans
Cash balance plans are essential for anyone looking to save for retirement. This type of pension plan combines features of traditional defined benefit and defined contribution retirement savings plans, making them a popular choice with employers and employees. By understanding how cash balance plans work and their advantages, you can make informed decisions about your financial future. A cash balance plan works similarly to a traditionally defined benefit plan, providing a guaranteed retirement income. However, the main difference between these two types of pensions is that instead of providing a fixed monthly income based on years of service and salary history, a cash balance plan provides participants with an account balance from which they can draw when it is time to retire. Both employer and employee contribute to this account and adjustments based on potential market returns. Employees have options when they retire as well. These include rollover into a traditional IRA, taking the balance as an annuity, or a lump-sum payment.
Advantages Of Cash Balance Plans For Small Businesses
Cash balance plans have quickly become the retirement plan for small businesses in Utah. These plans offer benefits over traditional pensions and 401(k)s, making them a wise investment for business owners who want to ensure their employees’ financial security after retirement. The main advantage of cash balance plans is that they provide more significant tax incentives than other options. Contributions get made pre-tax, allowing employers to reduce their taxable income. Furthermore, employee contributions are also tax-deferred until withdrawal at retirement age or termination from the company. This means employer and employee contributions grow faster with lower taxation rates. In addition to providing tax benefits, cash balance plans tend to be simpler and less expensive than other options. Essentially, cash balance plans make it simpler for organizations to save money on taxes and other expenses related to pensions and retirement investments.
Contact Stonecreek Wealth Advisors For More Information On Cash Balance Plans
Retirement is always something to consider if you’re a small business owner. A cash balance plan could be the right fit for you and your employees. This benefit plan is also gaining popularity as more business owners realize their advantages. We encourage you to contact us today if you want more information on how a cash balance plan can benefit your small business.