Cash balance plans help doctors, lawyers, and other high-earning professionals save more for retirement than a 401(k) allows while similarly deferring taxes. These plans work like pensions, letting older, high-income people save up to $380,000 a year. While some critics say they mainly benefit the wealthy, businesses must also contribute to lower-paid employees to follow IRS rules.
Medical and law firms use cash balance plans as an attraction and retention tool, however, the offerings have become commonplace in more industries as well. As quoted in a recent article on the subject, Jerry Cicalese says cash balance plans are now being used in industries like "real-estate developers, brokers and design firms." These plans also help professionals who start saving later in life catch up, often rolling their savings into IRAs or 401(k)s for future growth.
Interested in learning more? Read the full Wall Street Journal article here.
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