Everyone tries to save a significant amount of money for their old age so that when they retire, they don’t have to be financially dependent on anyone. There are several retirement plans available in the marketplace offered by various bodies. It is highly recommended to carefully compare them and choose the one that best fits your requirements. These plans include Boca Raton cash balance pension plans, which are proven to be useful for the employees. It is important to learn a few facts about this plan. Some of the frequently asked questions about this plan are explained below:
What is a cash balance plan?
A cash balance is an employer-sponsored and tax-qualified retirement saving plan. It is a defined benefit plan in which the contribution is done by the employer and the contribution in the plan is pre-defined.
The involvement of assets in the cash balance plan
In this plan, the assets are not maintained in different accounts for participants, and they are unable to direct their own investments. On the contrary, the assets are maintained in the pooled trusted account, which is maintained under the plan’s name and the investment advisor of the plan manages them. Thus, the account is funded by the employer and managed by the investment advisor of the plan.
Can I keep cash balance plans along with other retirement plans?
One of the reasons why people are amazed by cash balance plans is because they can keep other retirement plans such as 401(K) plans. It is another good way to add more benefits to one retirement plan. This gives more benefits to the owners and employers.
When should I think about opting for cash balance plans?
This is a great option to save money for retirement and reduce taxes. If you are a self-employed person or a business owner, making a good amount of money, and have reached the maximum limit of the 401(K) plan, this should be the best choice for you. However, several factors such as the number of employees and their salaries can make a great difference to this plan.
How it is good for a self-employed person?
If you are self-employed and have no employees, this can be your best bet. After reaching the maximum limit of the 401(K) plan, you can save additional earnings under this plan, which will give you the maximum benefits as you age because the limits will reduce as you age.