Client told us they wanted to continue to use their 401(k) plan for their 42 employees without much change (3% Safe Harbor plus 2% Profit Sharing), but that they would be interested in getting more money put away for the Owners and several key people. They gave us a budget of $50,000 additional for two owners; $30,000 for the other two owners and $10,000 each for three key people or $190,000 total. They will want to do more than that when the economy recovers, but that was their budget for 2009.
We included the seven of them in the Cash Balance Plan for the $190,000 budget and also covered only their 10 lowest paid employees and the cost for them to pass all discrimination testing, etc. was only $6,300. So, $190,000 for principals of $196,300 total is 96.8%.
Cash Balance additions to existing 401(k)'s for highly successful professional plan sponsors is a great retirement plan savings tool and tax-shelter solution.
Sunday, September 20, 2009
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