The IRS released their 2025 limitations on the contribution amounts into qualified plans, such as 401(k) and Defined Benefit/Cash Balance plans.

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…

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…

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…

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…

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…

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…

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…

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…

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…

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…

The Employee Retirement Income Security Act of 1974, or ERISA, protects the assets of millions of Americans so that funds placed in retirement plans during their working lives will be there when they retire. According to the IRS, the Employee…

For those business owners who are seeking to make annual plan contributions in excess of the 401(k) limitations, the cash balance/401(k) combo plan is an amazing option. The ideal candidate for a combo cash balance/401(k) plan is a highly compensated…

A cash balance plan is a defined benefit plan that defines the benefit in terms that are more characteristic of a defined contribution plan. In other words, a cash balance plan defines the promised benefit in terms of a stated account…

Defined benefit pension plans provide a fixed, pre-established benefit for employees at retirement. Employers can contribute (and deduct) more than under other retirement plans. In addition, a defined benefit plan provides a predictable retirement benefit. Defined benefit pension plans offer…

With a 401(k) plan, employees can choose to defer some of their salary. Instead of receiving that amount in their paycheck, the employee defers, or delays, getting that money. In this case, their deferred money is going into a 401(k) plan…

Safe Harbor 401(k) Plans are very popular with business owners and plan participants alike.  The Safe Harbor 401(k) provisions have some very big benefits and a few drawbacks. Beginning in 1999, the Safe Harbor rules were designed for 401(k) plans.  These…

Many small business retirement plans will appoint the employer as the plan administrator.  However, in most cases, and for good reason, the employer will appoint a third-party entity, better known, as a third-party administrator (“TPA”) to perform the duties associated…

According to the IRS, actuaries assess the financial consequences of risks and use mathematics, statistics and financial theory to analyze and determine the financial impact of uncertain future events. Pension actuaries suggest methods to eliminate or reduce damage to parties…

In a cash balance plan, the rules do not limit the annual contribution amount but instead limit the ultimate benefit payable from the plan. The current maximum benefit is a life annuity of $245,000 per year payable beginning at age…

Contributions to a defined benefit plan are based on what is needed to provide definitely determinable benefits to plan participants. Actuarial assumptions and computations are required to figure these contributions. Defined benefit plans typically are funded entirely by the employer.…

A defined benefit plan, funded by the employer, promises you a specific monthly benefit at retirement. For example, your pension benefit might be equal to one percent of your average salary for the last five years of employment times your…

Two of the advantages of participating in a 401(k) plan are: (i) elective deferrals to the plan and investment gains are not subject to federal income taxes until distributed from the plan and (ii) elective deferrals are always 100% vested.…

Plan sponsors must test traditional 401(k) plans each year to ensure that the contributions made by and for rank-and-file employees (non-highly compensated employees (NHCE)) are proportional to contributions made for owners and managers (highly compensated employees (HCE)). According to the…

The primary purpose of a 401(k) plan record-keeper is to keep track of the plan money.  Record-keepers are also responsible for maintaining the accounting of plan contributions and what they have earned. Record-keepers track which incoming dollars are which.  All record-keeping function…

A 401(k) plan is one of the most popular retirement savings vehicles available in the United States, offering numerous benefits that can significantly enhance an individual’s financial security in retirement. This employer-sponsored plan allows employees to contribute a portion of…