Cash Balance Plans
Many times, an owner in a 401(k)/ Profit Sharing Plan wants to contribute more money than the $53,000 or $59,000 (with Catch Up) defined contribution limits allow.
For 2017, the maximum contributions are:
Salary Deferral $18,000
Catch up (50+) 6,000
Profit Sharing 29,000
Total Contribution $53,000
Using the illustration below, compare the Combination Cash Balance/ 401(k) Profit Sharing Plan to the New Comparability Plan. Notice that the contribution for each owner increased from $52,000 to $143,000, yet the cost for the NHCEs is still minimal at $15,693.
For a more detailed discussion of Cash Balance Plans, go to the U.S. Department of Labor web site where you will find FAQs about Cash Balance Plans
Compare the following Combination Cash Balance/401(k) Profit Sharing Plan to the New Comparability plan. Notice that the contribution for each owner has increased to $143,000 from $59,000, yet the cost of the NHCEs is still minimal at $15,693.
Sample Combination Cash Balance / 401(k) Profit Sharing Plan