Are You Missing Out on Huge Tax Deductions? Cash Balance Plans Explained #236

It's...

Yeah.

Sounds good, sounds good to me.

So, so Mark, what, uh, maybe this is a good time to insert this question, is what products are we talking about in these plans in order to do what you just, what you just said?

Okay.

So let's delineate between different types of plan and products you use inside of these plans.

Perfect.

So there are two types of plans.

There's a de- defined contribution plan, acronym DC.

That's typically a 401(k), a simple, a, uh, SEP Unlike a defined benefit plan, market volatility plays an important role in those plans because there is s- no set number at retirement that you have, have, that you have to have in those plans.

So if the market goes up, that's great.

If the market goes down, that affects you, but it's not the end of the world.

It's just the opposite in a defined benefit plan.

In a defined benefit plan, you wanna use safe, secure products so that if you lose money in those plans, please note that you need to make it up, because the plan needs to be fully funded each and every year.

Conversely, if you make too much money, your contribution goes down.

Okay

Because of the contribution amounts in a defined benefit plan, there are three reasons why you do a defined benefit plan.

The primary reason is tax deductibility.

100% of this contribution made by the business is tax deductible to the business.

You know, typically when I'm on stage and I ask the question to the audience, "What's the contribution amount you can put into a defined benefit plan?" The numbers vary, and I'll ask both David and Paul what your thoughts are on how much you think you can put into a defined benefit plan.

Well, it, it depends on how old you are-

Okay

... and how much money you make.

So it's age and income.

So if I say a 55-year-old making $360,000 in 2026, how much can he or her put into that plan?

It's...

Yeah.

Sounds good, sounds good to me.

So, so Mark, what, uh, maybe this is a good time to insert this question, is what products are we talking about in these plans in order to do what you just, what you just said?

Okay.

So let's delineate between different types of plan and products you use inside of these plans.

Perfect.

So there are two types of plans.

There's a de- defined contribution plan, acronym DC.

That's typically a 401(k), a simple, a, uh, SEP Unlike a defined benefit plan, market volatility plays an important role in those plans because there is s- no set number at retirement that you have, have, that you have to have in those plans.

So if the market goes up, that's great.

If the market goes down, that affects you, but it's not the end of the world.

It's just the opposite in a defined benefit plan.

In a defined benefit plan, you wanna use safe, secure products so that if you lose money in those plans, please note that you need to make it up, because the plan needs to be fully funded each and every year.

Conversely, if you make too much money, your contribution goes down.

Okay

Because of the contribution amounts in a defined benefit plan, there are three reasons why you do a defined benefit plan.

The primary reason is tax deductibility.

100% of this contribution made by the business is tax deductible to the business.

You know, typically when I'm on stage and I ask the question to the audience, "What's the contribution amount you can put into a defined benefit plan?" The numbers vary, and I'll ask both David and Paul what your thoughts are on how much you think you can put into a defined benefit plan.

Well, it, it depends on how old you are-

Okay

... and how much money you make.

So it's age and income.

So if I say a 55-year-old making $360,000 in 2026, how much can he or her put into that plan?