Brokers AllianceTurn a strong year into a large deduction
Two defined benefit strategies your business-owner clients can use to put away far more than an IRA or 401(k) allows, take the deduction dollar for dollar, and keep those retirement dollars invested.
Built for the business owner
These are strategies for owners who want to defer more of their earnings into a retirement plan with higher limits than an IRA or a 401(k). Employees can be tied into the plan, which adds incentive and lifts overall morale, and the owner takes a deduction on what goes in. Both plans below solve the same problem at different scales, so match the strategy to how much your client can set aside.
The Cash Balance Plan
A strong tax-reduction tool for small to mid-size business owners. The owner defers earnings into a plan with a max funding of $2.4MM, takes a dollar for dollar deduction on what is contributed, and the money is then invested. Employees who are tied into the plan receive their defined benefit in a single lump sum when they retire. This plan does not require the owner to have employees to pursue it.
The Benefit Focus Plan
Similar in spirit to the Cash Balance Plan, but built for a larger deduction. It allows higher contributions, higher deductions, and lets the participants keep receiving benefits after they retire. The sweet spot is an owner who can set aside more than $2.4MM over time... the larger the annual contribution, the higher the deduction. Contributions are 100% tax deductible, life insurance is a requirement, and the benefit is paid out monthly rather than as a lump sum.
Match the plan to the contribution
Both plans deliver a deduction and keep retirement dollars working. The choice comes down to how much your client can set aside and how they want the benefit paid.
Cash Balance Plan
Strategy one
- Max funding
- $2.4MM
- Deduction
- Dollar for dollar
- Benefit paid as
- Lump sum
- Life insurance
- Not required
- Employees
- Optional
Benefit Focus Plan
Strategy two
- Max funding
- Above $2.4MM
- Deduction
- 100% deductible
- Benefit paid as
- Monthly
- Life insurance
- Required
- Extra
- Creditor protection
Run the case with us behind you
Brokers Alliance has been independently owned since 1982 and works with agents, agencies, IMOs, FMOs, and BGAs. Bring us the case and we will help you position the right strategy, and where a defined benefit plan is not the cleanest answer, we will tell you when Premium Finance is the more suitable option. Our myAdvisor Cloud sales tools, resources, and dashboard put quoting and client presentations in one convenient place.
Ready to bring a defined benefit case to your clients?
Get contracted with Brokers Alliance and we will help you place the right strategy for the business owner in front of you.
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