Cash Balance Plans for Professional Practices. - 4 0 16; Evans, Allison L, CPA, PhD; Irving, James H, CPA, PhD.; 5 Journal of Accountancy. 219 (3) : March 2015. pp. 48
Abstract : Cash balance plans, often referred to as hybrid retirement plans, are defined benefit plans that in many ways resemble defined contribution plans. Consequently, a cash balance participant could potentially defer tax by directing his or her practice to invest up to three or four times the Sec 401(k) limit into a cash balance plan in a given year (depending on age, time until retirement, and other factors), with a corresponding decrease in salary that will save current tax dollars. To optimize tax deferral and retirement savings, a cash balance plan can be used in conjunction with a Sec 401(k) plan and a profit sharing plan. Though both cash balance plans and pensions are defined benefit plans, cash balance plans possess features of Sec 401(k) accounts that make them appealing in ways traditional pensions are not. The health care and professional services industries, which are heavily represented by professional practices, account for nearly two-thirds of all cash balance plans.
Keywords: 2 -- 0; 6; Tax Deffered Privileges. -- Benefit Plans -- Retirement Plans -- Professional Practices; 20; 2