401k and Cash Balance Plans

Wealth-Building Made Simple

English - September 22, 2023 12:18 - 11 minutes - 10.7 MB - ★★★★★ - 12 ratings
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Key Takeaways:

The CARES Act allows business owners to receive up to a $5,000 tax credit for the next three years to offset administrative costs of setting up a 401(k) plan.
Requiring auto enrollment for employees in a 401(k) plan can result in a $1,500 tax credit for the business owner in the first year.
Cash balance plans allow business owners to contribute a significant amount of money towards retirement, potentially several hundred thousand dollars per year.
Cash balance plans require a five-year commitment and annual contributions, even in years with poor cash flow.

Chapters:

| **Timestamp** | **Summary** |
| ------------- | ----------- |
| 0:00:07 | Introduction and disclaimer |
| 0:00:38 | Discussion on tax planning |
| 0:02:20 | Benefits of 401K plans for business owners and employees |
| 0:03:41 | Tax credits available for setting up a 401K plan |
| 0:04:21 | Additional tax deductions with profit sharing component |
| 0:04:52 | Exploring cash balance plans for higher contributions |
| 0:06:11 | Considerations for implementing a cash balance plan |
| 0:06:54 | Using defined benefit plans for lifestyle businesses |
| 0:08:19 | Layering different retirement plans for maximum benefits |
| 0:09:54 | Contact information for further discussion on tax planning |

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Phillip Washington, Jr. is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.