What is Tax Deferral?
Tax Deferral is a crucial tax concept and the reason why retirement accounts are such a powerful investment vehicle. Tax deferral occurs when you use a specially designated account, or investment option, that does not require you to claim the investment income earned inside of the account every year on your tax return. Instead, you […]
What is a 401(k) Plan?
401(k) plans can be a powerful tool in promoting financial security in retirement. They are a valuable option for businesses considering a retirement plan, providing benefits to employees and their employers. Anyone with a business with or without employees. can establish a 401(k). The business can be a sole proprietorship, LLC, corporation, partnership, or any […]
Understanding the Combo 401(k) & Cash Balance Plan
As a tax attorney with a Master’s Degree in taxation, I can pretty much read any provision of the Internal Revenue Code and, after some additional research, understand the tax code provision fairly well. However, when it came to learning about the combo cash balance defined benefit plan, I actually found the practice of reviewing […]
Why Your Employees May be Better off with a Cash Balance Plan than a Traditional Defined Benefit Pension Plan
Behind every successful business you will find key people that help drive its success. Every smart business owner knows that without the team, there would be no business. This is probably the primary reason why the cash balance retirement plan has become the most popular type of defined benefit plans for small businesses. What is […]
Dental Practices – How to Choose the Best Retirement Plan
Over the years, Pension Investors have had the privilege of helping thousands of dental offices across the country establish pension plans. In general, most dental practices will have at least one-full time employee other than the business owner. Hence, in most cases, when deciding what type of retirement plan to adopt for the business, most […]
Is My Business Right for a Cash Balance Plan?
A cash balance plan is a type of defined benefit plan. Similar to traditional defined benefit plans, cash balance plans have high contribution limits (possibly $300,000+) but contain features that make them more attractive than traditional defined benefit plans. A cash balance plan is not a 401(k) plan. The main difference between a cash balance plan […]
How do Cash Balance Plans Differ from Traditional Pension Plans?
There are two general types of pension plans — defined benefit plans and defined contribution plans. A cash balance plan is a defined benefit plan that defines the promised benefit in terms of a stated account balance. According to the Department of Labor, while both traditional defined benefit plans and cash balance plans are required […]
Calculating 401(k) Benefits—the Power of Tax Deferral
Saving through a 401(k) plan is the best way to retire with real wealth because it is based on the power of compounding interest. All plan investment gains in the plan are not taxed until distributed. Plan assets can be carried from one employer to another and contributions can be made easily through payroll deductions. […]
Why Save Through a 401(k) Plan?
The biggest advantage of saving through a 401(k) plan is that contributions are elective and can be can create a tax deduction. In addition, all income and gains from plan assets grow without tax. This is known as tax-deferral or tax-free growth in the case of a Roth 401(k) plan contribution. Tax Deferral Tax deferral […]
What is the Pension Benefit Guaranty Corporation (PBGC)?
Pension Benefit Guaranty Corporation, or PBGC, insures defined benefit plans offered by private-sector employers. The PBGC only covers certain employer’s who established defined benefit plans. Being protected by the PBGC has some advantages and disadvantages. PBGC is a federal agency created by the Employee Retirement Income Security Act of 1974 (ERISA) to protect pension benefits […]
