Many profitable small-business owners would like to have a retirement plan that can provide more than $50,000 of deductible contributions to the owners and other key employees.A defined-benefit plan is perhaps the only tax-qualified retirement plan that can achieve this. However, in traditional DB plans, the worker benefit costs are too high to make them practical. A cash-balance plan is the solution (see box).

Unlike other defined-benefit plans, a cash-balance plan may be designed to better control the cost of the rank-and-file employee benefits. A cash-balance plan may be designed to either level the owner's contributions, despite wide differences in age (not shown), or to optimize each owner's contribution. As the example also illustrates, the typical cash-balance plan often results in over 90 percent of the benefits being derived by the business owners.

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