Are your clients making the maximum allowable tax-deductible contribution to their defined-contribution plans (as much as $49,000 in 2006)? Would they be interested in contributing much more if possible? If the answer is "Yes," they should consider a cash balance plan.A CB plan is a qualified retirement plan established for the owner of a business and his employees. Tax-deductible contributions are made to the plan in the form of managed assets (stocks, bonds, mutual funds, variable annuities, etc.) with the option of purchasing life insurance inside the plan.
CB plans are designed to provide a monthly retirement benefit that is defined by the plan formula. Contributions are based on actuarial assumptions and are determined by an actuary as to the amount needed to provide the benefit at retirement.
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