By: Scott Van Den Berg, CFP®, ChFC®, CEPA®, AIF®, CRPS®, CMFC®, AWMA®
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If you own a business and are looking for a potentially large 2022 tax deduction, it is not too late to see if you are eligible to setup and fund a 2022 Cash Balance Plan in combination with your existing 401(k).
If you meet the following criteria, you may be a candidate for a Cash Balance Plan:
- Small professional firm with high annual cash flow.
- Owner(s) are older (and at least age 50) than average age of employees.
- Owner reports over $500,000 in annual earned income or w-2 wages.
- Owner has maxed out 401(k) plan, if existing.
- Willing to contribute 5 – 8% of employees’ income (sometimes covered in full by tax savings!).
A Cash Balance Plan is a great solution to help you:
- Reduce your taxes
- Max out your annual retirement funding (potential up to $245,000 in addition to your 401(k))
- Put money into a federally asset protected retirement plan (i.e., retirement plans are safe from claims by other people)
- Reward, recruit, and retain your employees with an enhanced benefits package
You have until your 2022 tax return due date with extension to setup and fund a 2022 plan. This deadline is either:
- September 15, 2023, if you are a partnership or S-Corp
- October 15, 2023, if you are a C-Corp
Let us run a complementary illustration to see if this is right for you. Please give Scott Van Den Berg, or your Wealth Advisor, a call today!
Disclosures: Century Management Financial Advisors is an independently registered investment adviser with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. Century Management is also registered as a Portfolio Manager in the Province of Ontario. This information is not intended to be tax advice. Please consult legal or tax professionals for specific information regarding your individual situation. A full description of our Firm’s business practices, including our Firm’s investment management services, wealth and retirement plans, and advisory fees, are supplied in our Form ADV Part 2A and/or Form CRS. CM-23-02