The Opportunity
Cash balance plans offer great opportunity in that they allow business owners to achieve the following:
Large Current and Future Tax Deductions
In some cases, six-figure annual tax deductions.
Partner and Employee Attraction
Offering a cash balance plan shows prospective partners and employees that your company takes employee benefits seriously.
Tax-Free Investment Growth
Similar to investments in a 401(k), cash balance investments grow tax free until retirement.
Asset Protection
As an ERISA protected retirement plan, investments within your cash balance plan are protected from creditors, litigation, and bankruptcy.
Early Retirement Potential
An opportunity to super-charge your retirement savings with outsized annual contributions.
Employee Retention
Most plans are designed with a three-year vesting schedule for employees.
The Hurdle
Without the right team of professionals supporting you, cash balance plans can be difficult to understand, difficult to put in place, and difficult to administer. Engaging the wrong team can result in overpayment for services, administrative errors, and unintended financial consequences. To best meet the goals and requirements of a CB plan, the following advisory services are recommended:
Actuarial Assistance to create the most desirable plan design given your specific objectives.
Legal Consultation to prepare the plan documents and ensure compliance with law.
Custodial Services to custody your CB investments—think of this as a brokerage account.
Investment Consulting to advise in connection with how to invest the capital in your cash balance plan.
Record-keeping Services to ensure ongoing plan compliance, and to assist with ongoing filing requirements.
The Solution
Your company’s size, structural complexity, fee sensitivity, and risk appetite all factor into which third party administrator, custodian, and financial advisor are best suited for you. The problems are: (1) each of these service providers are going to have a strong bias towards selling you on the fact that they are the right provider for you, and (2) you likely do not have the time or desire to seek-out, conduct diligence on, and manage these various service providers—that’s where Inventive comes into play. As your dedicated plan consultant, we will provide the following services related to your CB plan creation and continued compliance:
Data Intake and Plan Illustrations
Gather from you the information necessary to determine whether a CB plan is right for you, and, if so, which plan design best suits your objectives.
Education
Educate your owners and employees on CB plan participation and compliance.
Legal Services
Have our in-house attorneys review and finalize your CB plan document.
Third Party Administrator (TPA)
Determine, based on your specific facts and circumstances, which TPA is best suited for you, and handle your TPA onboarding.
Custodian
Determine, based on your specific facts and circumstances, which Custodian is best suited for you, and handle your Custodian onboarding.
Investment Options
Assist you in determining whether a financial advisor is desirable for your particular strategy, and share alternative, cost-effective options with you.
Ongoing Education, Compliance, and Coordination
Continue, throughout the life of your CB plan, to educate your staff, encourage CB plan compliance, ensure that your governmental filings are completed in a timely manner, and act as the liaison between your custodian, TPA, accountant, and financial advisor.
Inventive Partners 