Is A Cash Balance Plan Right For Your Business?

Small business owners may want to sponsor cash balance plans or other retirement

savings plans for their employees to help these workers accumulate enough money for retirement. However, your choice of savings plan depends on what you're willing to contribute and how much you earn. Here are some considerations you need to take into account before opting for cash balance or hybrid plans for your small business:

Does your company earn consistently? Cash balance plans, much like pension plans that give defined benefits, require a steady flow of cash and stable profits. If your company makes good money on a regular basis, a hybrid plan may be the best retirement savings option for your employees because of the necessary contributions.

Do you want to make bigger contributions than what profit-sharing plans and 401Ks allow before taxes? Workers in higher income brackets can reach the contribution limits of other retirement savings plans easily, which is something that's less of a concern with the comparatively higher limits cash balance plans allow. Also, a successful company that needs better tax deductions may benefit from these types of retirement plans because it permits faster and larger savings and bigger tax deductions.

Businesses that use the hybrid plan typically include those that provide professional services, such as small businesses with multiple owners, CPA and law firms, and medical groups that require more leeway when it comes to contribution limits for their workers. Hybrid plans can also help you against creditor claims and help you protect your money and business assets, as well as give you the flexibility to vary contribution amounts among your employees or terminate or freeze contributions if needed. If you're thinking about setting up cash balance plans for your small business, you can fund it next year, although you'll have to establish it before this year ends.

by: Carina Smith

POST COMMENT

Business Worldlist (Alternative) Business Worldlist $$$ Make Your Business Stand Out Start A Business With Low Capital Ii Start A Business With Low Capital I Business2Day Safelist (Alternative) Business2Day Safelist $$$ Businesses should ask web design firms in Coventry about Content Management Systems An explanation of how Asset Finance can generate Business Funding Get The Commercial Overhead Doors In Houston That Are Best For Your Business Needs Advice on seeking Asset Finance for Business Funding How It Management In Houston Ensures Efficiency In Your Business Ways Remote Desktop Management Upholds A Properly Working Business System Choose a simple website design for your Midlands business Three Keys to a Successful Home Based Business