Key Takeaways
- 01A cash balance plan is a defined benefit plan that allows Arkansas business owners in their 50s and 60s to defer $150,000–$400,000+ per year on top of 401(k) plans, creating substantial tax savings at both the federal and state level.
- 02Cash balance plans work especially well for high-income owners (often $500,000+ AGI) who are behind on retirement savings, want to diversify away from their business, and have consistent, predictable profits.
- 03Cash balance plans differ from 401(k) plans in that they promise a targeted benefit, use age-weighted contribution limits, and place investment and funding responsibility squarely on the employer.
- 04Revolutionary Wealth, an Arkansas-based fiduciary firm, uses tech-driven modeling to design integrated cash balance and 401(k) strategies coordinated with tax planning, retirement timelines, and potential business exit scenarios.
- 05Your actionable next step: gather your last three years of business financials and schedule a planning call to determine whether a cash balance plan fits your goals before year-end deadlines.
Introduction: Why Business Owners Over 50 Are Turning to Cash Balance Plans
Picture a 55-year-old Arkansas practice owner pulling in $700,000. She maxes her 401 k every year - $24,500 deferral plus the $8,000 catch-up - and it barely dents her tax bill. Meanwhile, the retirement number she actually needs keeps floating further away. Sound familiar?
For business owners over 50, traditional defined contribution plan limits simply cannot keep pace with what's needed to fund a comfortable retirement in your 60s. The math doesn't lie. You can't catch up at $32,500 a year when the gap is seven figures.
A cash balance plan is the IRS-approved vehicle that changes that math. It's a type of defined benefit plan designed to let high-income owners accelerate retirement contributions and slash current taxes - often by six figures annually. A cash balance plan can be paired with a 401(k) to maximize retirement savings well beyond standard limits.
This article is written from the perspective of Revolutionary Wealth, a premier Arkansas-based fiduciary firm specializing in integrated tax and retirement planning for high-net-worth individuals and business owners. Below, we'll walk through how cash balance plans work, who they fit best, realistic contribution amounts, and how to get one designed around your specific business and exit timeline.
What Is a Cash Balance Plan? (In Plain English)
A cash balance plan defines benefits as a stated account balance - a "hypothetical account" that grows each year and looks similar to a 401(k) statement. That familiarity makes it approachable for owners used to checking a balance online.
But legally, cash balance plans are defined benefit plans, governed by ERISA regulations and the Internal Revenue Code, including age discrimination rules under the Employment Act. The participant's account shows a promised benefit, not a pile of segregated investments.
Each year, the plan credits participants with a pay credit - either a fixed rate percentage of compensation or a flat dollar amount - plus an interest credit, which might be tied to the 30-year Treasury rate or set at either a fixed rate like 4–5%. These formulas must be "definitely determinable," meaning no year-to-year discretion. Participants must be fully vested after three years of service.
Here's the critical difference from a 401 k plan: investment risk in cash balance plans is borne by the employer, not the employee. The employer bears the responsibility for funding the plan each year, and the business - not the participant - absorbs shortfalls or gains from plan investments. That structure is exactly what allows for higher, more predictable funding into tax-deferred retirement accounts.
Cash balance plans are often paired with 401(k) plans and a profit sharing plan to create a combined strategy that can dramatically exceed standard contribution limits.
How Cash Balance Plans Differ from 401(k) Plans and Traditional Pensions
Understanding how cash balance plans differ from other qualified retirement plans requires seeing the three categories clearly:
Feature | Traditional Pension (DB) | Cash Balance Plan (DB) | 401(k) Plan (DC) |
|---|---|---|---|
Benefit type | Monthly check for life | Stated account balance | Account balance (actual) |
Who bears investment risk | Employer | Employer | Employee |
Contribution limits | Actuarial | Actuarial (age-weighted) | Fixed dollar caps |
Familiar "balance" format | No | Yes | Yes |
Traditional defined benefit plans - traditional pension plans - promise a monthly retirement benefit based on years of service and salary. 401(k) plans are defined contribution plans where benefits depend entirely on contributions and investment performance, and 401(k) plans require employees to assume investment risk.
Cash balance plans differ from 401(k) plans in three critical ways: the employer promises a targeted benefit, the employer bears the investment risk, and higher contribution limits are driven by actuarial calculations that increase sharply with age - not capped at fixed dollar amounts.
For a business owner over 50, contribution limits in a cash balance plan can be three to five times what a 401(k) allows in any given year. In practice, many high-income owners maintain both: they max out a 401 k plan for themselves and staff, then layer on a cash balance plan for larger, age-weighted employer contributions.
This hybrid approach delivers the familiarity of a defined contribution plan plus the acceleration and tax advantages of a defined benefit pension plan.
Who Is a Good Candidate? (Business Owners Over 50)
Cash balance plans work best for high-income owners in their 50s and early 60s with strong, relatively predictable profits. Plans are designed for businesses with predictable income that can sustain required annual contributions over multiple years.
Concrete profiles we see regularly in Arkansas:
Physicians in group practices earning $500,000–$1,000,000+
Law firm partners with stable K-1 distributions
Successful contractors and construction company owners
Multi-location dental practices
Closely held manufacturing or service companies with owner income above $500,000
Cash balance plans are suitable for owners over age 35, but the real acceleration happens after 50. Business owners typically need profits of $100,000 or more to justify setup and ongoing costs. Self-employed individuals can also set up cash balance plans, including solo practitioners with fewer employees.
The owners who benefit most are in their mid-50s to early 60s, behind on savings, with most of their net worth locked inside the business, and planning a sale or partial exit in 5–10 years. If you already max your 401 k but still see large Schedule C, K-1, or W-2 income, you're a prime candidate.
How Cash Balance Plans Work Day-to-Day
Here's the mechanics in plain language, using a 55-year-old owner targeting retirement age 65.
Each year, an enrolled actuary calculates the required annual contribution to keep the plan on track to deliver a specified retirement benefit or stated account balance by the target age. Defined benefit plans often require an enrolled actuary for compliance and funding determination - this isn't optional.
The employer contributes a percentage of employee compensation annually (for covered staff) and a much larger amount for the owner. Contributions are made by the employer, not the employee, and are tax deductible to the business. The annual contribution varies by age, compensation, years to retirement, and existing cash balance plan assets.
Once established, plans typically require contributions each year, though there is some flexibility within a minimum-maximum range depending on cash flow and how plan assets perform relative to assumptions.
Cash balance plan assets are pooled and invested under an investment policy statement, often targeting moderate returns to align with the interest credit rate and manage funding risk.
Contribution Limits and How Much You Can Really Put Away
Unlike the fixed caps on a 401 k, cash balance contribution limits are actuarially determined and increase with age and income. Older participants can contribute more due to fewer years until retirement - and the numbers get significant fast.
Illustrative annual contribution ranges (2025–2026):
Owner Age | Cash Balance Plan Only | Combined CB + 401(k)/PS |
|---|---|---|
50–55 | $150,000–$240,000 | $230,000–$320,000 |
55–60 | $200,000–$300,000 | $280,000–$380,000 |
60–65 | $250,000–$400,000+ | $330,000–$430,000+ |
When combined with a 401(k) profit sharing plan - for example, a $24,500 deferral, $8,000 catch-up, and up to $46,000–$46,500 in employer profit sharing for 2026 - total annual tax-deferred retirement contributions can exceed $300,000 for an older owner.
The IRS limits annual benefits from cash balance plans to $285,000, with the maximum defined-benefit annual payout rising to $290,000 in 2026. The maximum contribution in any year is driven by factors like desired retirement age, current retirement savings, prior service, and how aggressively the owner wants to fill the gap. Contribution limits for cash balance plans exceed those of 401(k) plans by a wide margin, which is why older business owners can make larger tax-deductible contributions to catch up on retirement savings.
Revolutionary Wealth uses tech-driven actuarial illustrations to show Arkansas owners a side-by-side projection of different maximum contribution scenarios before they commit to a specific balance plan design.
Tax Advantages for High-Income Owners
For owners in high federal brackets (32%–37%) plus Arkansas state taxes topping out at 3.9%, shifting $200,000–$400,000 of income into a cash balance plan can reduce total tax burden by $80,000 or more annually.
Cash balance plans allow significant tax-deductible contributions. Employer contributions to a cash balance plan are generally deductible on a pre tax basis, reducing taxable income at both the entity level and the owner's personal return. The exact mechanics depend on business structure - s corporations, partnerships, C-corps, and sole proprietorships each handle employer contributions differently.
Tax deferral works just like in a 401(k): funds grow inside the plan and cash balance plan contributions are tax-deferred until withdrawal, at which point they're taxed as ordinary income - potentially at lower marginal rates if the owner has structured retirement distributions thoughtfully.
For owners planning a business sale in their 60s, a cash balance plan can be coordinated with exit planning to smooth taxable income over the final working years and build guaranteed retirement benefits before a liquidity event.
At Revolutionary Wealth, we integrate cash balance plan design with broader tax planning, RMD strategies, Roth conversion analysis, and estate planning for high-net-worth Arkansas families.
Investment Strategy and Managing Cash Balance Plan Assets
While retirement benefits are expressed as a cash balance, the underlying plan assets are pooled in a single trust account invested on behalf of all plan participants.
Investment risk is on the employer. If actual returns fall below the interest crediting rate, the business must contribute more in future years. If returns exceed expectations, contributions can sometimes be reduced within IRS limits. This is fundamentally different from a 401 k, where the employee absorbs gains and losses.
Typical investment philosophy for cash balance plan investments: moderately conservative portfolios targeting 4%–6% long-term returns using diversified bonds, high-quality equities, and occasionally alternative strategies appropriate for a pension-style plan. Some other plans may include real estate or private equity, but liquidity and valuation must be carefully managed to meet annual funding requirements.
Revolutionary Wealth uses tech-driven risk modeling to align each plan's portfolio with its interest crediting formula, so Arkansas owners can balance tax efficiency with funding predictability.
Pros, Cons, and Common Pitfalls for Owners Over 50
A balanced look at when cash balance plans deliver - and when they don't.
Advantages:
Higher contribution limits for older owners, often 3–5x what a 401 k allows
Substantial current-year tax deductions reducing both federal and state tax burden
Accelerated retirement funding before a planned exit
Cash balance plans protect assets from creditors in many cases
Drawbacks:
Mandatory annual funding obligations once adopted, even in lean years
Cash balance plans may result in higher costs and administrative complexity compared to other plans, including annual actuarial fees, accounting services, and plan administration
The need to provide meaningful benefit plans for eligible employees to satisfy non-discrimination testing based on employee demographics
Federal law prohibits reducing already earned benefits during amendments, and employers must notify participants of significant benefit reductions
Common pitfalls:
Setting overly aggressive plan investments that create funding volatility
Designing benefits that unintentionally fail non-discrimination tests
Establishing a plan too close to a business downturn or sale, leaving insufficient time to amortize costs
Ignoring that existing plans (SEP, SIMPLE) may need to be terminated or restructured
Working with a fiduciary financial advisor and an experienced actuary from the outset prevents costly redesigns or plan terminations that negate the intended retirement benefits.
Designing a Cash Balance + 401(k) Combo for Your Arkansas Business
Most small business owners over 50 won't use a cash balance plan alone. They pair it with a 401(k) and profit sharing plan to optimize both owner and employee benefits.
Plan design testing is where the actuary earns their fee: scenarios are run to ensure the combined plans meet coverage and non-discrimination rules while funneling the majority of contributions - often 80%–90% - to the owners and key employees.
Design decisions include which employees to include, how contribution amounts are allocated between owners and staff, and whether a safe harbor 401(k) design simplifies compliance. Revolutionary Wealth customizes designs by reviewing your full census, payroll structure, and goals - whether that's rewarding long-term staff, preparing for partner transitions, or aligning employer contributions with ownership percentages.
The final plan design should integrate with broader retirement planning: target retirement ages, projected spending, Social Security timing, and potential annuity or lump sum distribution strategies.
Step-by-Step: How to Set Up a Cash Balance Plan Before Year-End
Timing matters. To get deductions for a given tax year, the plan generally must be adopted by December 31, even if contributions are funded later within IRS deadlines.
Practical steps:
Discovery call with Revolutionary Wealth to assess fit
Gather documents: three years of business tax returns, financials, an employee census, and current retirement plan documents (401(k), SEP, SIMPLE, etc.)
Actuarial design: an enrolled actuary prepares illustrated designs showing contribution ranges, projected cash balance at retirement, and estimated tax savings over 5–10 years
Plan adoption: formal plan documents are drafted, an ERISA-compliant trust is established, and an investment policy is created for plan assets
Fund and file: contributions are made, and annual Form 5500 reporting begins
Typical timelines run 4–8 weeks from initial consultation to a fully implemented plan for a straightforward case. Starting by early fall is advisable for owners wanting deductions for the current calendar year.
How Revolutionary Wealth Helps Arkansas Owners Decide If a Cash Balance Plan Is Right
Revolutionary Wealth is a fiduciary, Arkansas-based investment advisor focused on high-net-worth pre-retirees and business owners integrating tax, retirement, and exit planning. We are not a product-first shop. We don't sell you a truck to fix your tax bill.
We start with the owner's full financial picture: business value, personal assets, desired retirement age, family goals, and estate considerations. Then we use tech-driven planning tools to compare scenarios - "401(k)-only" vs. "401(k) + cash balance plan" vs. alternative structures - including after-tax income and projected wealth at retirement.
We coordinate with your CPA and attorney to ensure the plan design, business structure, and estate plan all work together. This is not investment advice in a vacuum. It's integrated financial planning where every piece connects.
If you're an Arkansas business owner over 50, schedule a consultation. Bring your tax returns, business financials, and current plan statements. No obligation, no truck purchase required.
Frequently Asked Questions
How long should I plan to keep a cash balance plan in place?
While there is no formal minimum, the IRS expects a "permanent" intent when establishing qualified retirement plans. In practice, owners should plan on at least 5–10 years of funding to justify setup costs and avoid scrutiny. A plan can be amended or terminated if business conditions change, but frequent starts and stops can undermine tax and retirement benefits. Revolutionary Wealth models different time horizons so owners can see the impact of a 5-year, 7-year, or 10-year funding commitment before selecting a plan design.
What happens to my cash balance plan if I sell or close my business?
In a sale, options depend on whether the buyer assumes the plan. Many owners terminate the plan prior to or at closing and fully fund remaining obligations. Upon termination, participants generally can roll their lump sum into an IRA or another qualified plan, preserving tax deferral. Cash balance plans must offer a lifetime annuity option, and participants can choose a lump sum or annuity at retirement. Exit planning should begin several years before a sale so the cash balance plan is fully integrated with the transaction structure. The Pension Benefit Guaranty Corporation (also known as the benefit guaranty corporation PBGC) provides certain protections, though most small-plan owners won't need to interact with it directly.
Do I have to include all my employees in the cash balance plan?
Participation rules are governed by IRS coverage and non-discrimination tests, but plan designs can often be structured so that only certain classes of employees participate. A vesting schedule applies, and participants must be fully vested after three years of service. Many designs include owners, partners, and selected key employees, while other staff receive benefits through the existing 401(k) and profit sharing plan. Revolutionary Wealth and its actuarial partners from the Employee Benefits Security Administration-compliant network test multiple designs to balance owner-focused benefits with fair, compliant coverage.
What are typical costs to set up and maintain a cash balance plan?
Solo or simple cash balance plans might start around $4,000–$5,000 for setup and $3,000–$5,000 annually for administration and actuarial work. More complex multi-owner plans cost more. Investment management fees for cash balance plan assets are separate. For high-income owners contributing $150,000–$300,000+ annually, the tax savings usually dwarf the administrative costs by a wide margin when the plan is designed properly. Think of it this way - a financial professional charging $5,000 to save you $80,000 in taxes is the math you want.
Can I take the money out early if I need it?
Cash balance plans are designed for retirement. Early distributions before age 59½ are subject to ordinary income tax plus a potential 10% early withdrawal penalty. Distributions generally occur at or near retirement age and can be paid as a lump sum - often rolled to an IRA - or as an annuity, depending on plan terms. Owners should not set up a cash balance plan with money they might need for short-term business operations or personal spending. This is long-term retirement savings, and treating it otherwise undermines both the tax advantages and the promised benefit structure.
Disclosures
This blog contains general information that may not be suitable for everyone. The information contained herein should not be construed as personalized investment advice. There is no guarantee that the views and opinions expressed in this blog will come to pass. Investing in the stock market involves gains and losses and may not be suitable for all investors. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security. Revolutionary Wealth LLC does not offer legal or tax advice. Please consult the appropriate professional regarding your individual circumstance. Past performance is no guarantee of future results.
Mutual Funds are sold by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing in Mutual Funds. The prospectus, which contains this and other information about the investment company, can be obtained directly from the Fund Company or your financial professional. Be sure to read the prospectus carefully before deciding whether to invest. An investment in the Fund involves risk, including possible loss of principal.
Rebalancing/Reallocating can entail transaction costs and tax consequences that should be considered when determining a rebalancing/reallocation strategy.
A REIT is a security that sells like a stock on the major exchanges and invests in real estate directly, either through properties or mortgages. REITs receive special tax considerations and typically offer investors high yields, as well as a highly liquid method of investing in real estate. There are risks associated with these types of investments and include but are not limited to the following: Typically no secondary market exists for the security listed above. Potential difficulty discerning between routine interest payments and principal repayment. Redemption price of a REIT may be worth more or less than the original price paid. Value of the shares in the trust will fluctuate with the portfolio of underlying real estate. Involves risks such as refinancing in the real estate industry, interest rates, availability of mortgage funds, operating expenses, cost of insurance, lease terminations, potential economic and regulatory changes. This is neither an offer to sell nor a solicitation or an offer to buy the securities described herein. The offering is made only by the Prospectus.
Diversification does not guarantee a profit or protect against a loss in a declining market. It is a method used to help manage investment risk.
Converting an employer plan account or Traditional IRA to a Roth IRA is a taxable event. Increased taxable income from the Roth IRA conversion may have several consequences including but not limited to, a need for additional tax withholding or estimated tax payments, the loss of certain tax deductions and credits, and higher taxes on Social Security benefits and higher Medicare premiums. Be sure to consult with a qualified tax advisor before making any decisions regarding your IRA.
Indexed annuities are insurance contracts that, depending on the contract, may offer a guaranteed annual interest rate and some participation growth, if any, of a stock market index. Such contracts have substantial variation in terms, costs of guarantees and features and may cap participation or returns in significant ways. Any guarantees offered are backed by the financial strength of the insurance company. Surrender charges apply if not held to the end of the term. Withdrawals are taxed as ordinary income and, if taken prior to 59 ½, a 10% federal tax penalty. Investors are cautioned to carefully review an indexed annuity for its features, costs, risks, and how the variables are calculated.
Not associated with or endorsed by the Social Security Administration, Medicare or any other government agency. Maximizing your Social Security Benefits assumes foreknowledge of your date of death. If as an example you wait to claim a higher monthly benefit amount but predecease your average life expectancy, it would have been better to claim your benefits at an earlier age with reduced benefits.
Please consider the investment objectives, risks, charges, and expenses carefully before investing in Variable Annuities. The prospectus, which contains this and other information about the variable annuity contract and the underlying investment options, can be obtained from the insurance company or your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.
The investment return and principal value of the variable annuity investment options are not guaranteed. Variable annuity sub-accounts fluctuate with changes in market conditions. The principal may be worth more or less than the original amount invested when the annuity is surrendered.
QLACs cannot be purchased with Roth or Inherited IRA dollars; value of such IRAs cannot be included in determining 25% premium limit. If Funding Source is Traditional IRA, 25% limit is calculated by combining the total value of all Traditional IRAs as of December 31st of the previous year. If Funding source is Employer sponsored qualified plan (401k, 403b and governmental 457b), 25% limit is calculated on an individual plan basis based on the plan's account value on the previous day's market close. If you previously purchased a QLAC, the calculation of your 25% limit is more complicated. Please contact an attorney or tax professional for additional details. Any guarantees of the annuity are backed by the financial strength of the underlying insurance company.
The projections or other information generated by Monte Carlo analysis tools regarding the likelihood of various investment outcomes are hypothetical in nature, are based on assumptions that you provide which could prove to be inaccurate over time, do not reflect actual investment results, and are not guarantees of future results. Results may vary with each use and over time.
Disclosures
Securities and investment advisory services offered through Integrity Alliance, LLC, Member SIPC www.sipc.org (opens in a new window). Integrity Wealth is a marketing name for Integrity Alliance, LLC. Revolutionary Wealth LLC is not affiliated with Integrity Wealth. This site is published for residents of the United States only. Representatives may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed until appropriate registration is obtained or exemption from registration is determined. Not all services referenced on this site are available in every state and through every advisor listed. Tax and legal services are not offered through Integrity Wealth.
Full disclosures
Neither Asset Allocation nor Diversification guarantee a profit or protect against a loss in a declining market. They are methods used to help manage investment risk.
Active portfolio management, including market timing, can subject longer term investors to potentially higher fees and can have a negative effect on the long-term performance due to the transaction costs of the short-term trading. In addition, there may be potential tax consequences from these strategies. Active portfolio management and market timing may be unsuitable for some investors depending on their specific investment objectives and financial position. Active portfolio management does not guarantee a profit or protect against a loss in a declining market.
Rebalancing/Reallocating can entail transaction costs and tax consequences that should be considered when determining a rebalancing/reallocation strategy.
Tax-loss harvesting is a strategy of selling securities at a loss to offset a capital gains tax liability. It is typically used to limit the recognition of short-term capital gains, which are normally taxed at higher federal income tax rates than long-term capital gains, though it is also used for long-term capital gains.
Not associated with or endorsed by the Social Security Administration, Medicare or any other government agency. Maximizing your Social Security Benefits assumes foreknowledge of your date of death. If as an example you wait to claim a higher monthly benefit amount but predecease your average life expectancy, it would have been better to claim your benefits at an earlier age with reduced benefits.
Any references to protection or steady and reliable income streams refer only to fixed insurance products. References to protection can also refer to estate planning. They do not refer, in any way, to securities or investment advisory products.
Fixed Annuities are long term insurance contracts and there is a surrender charge imposed generally during the first 5 to 7 years that you own the annuity contract. Withdrawals prior to age 59 1/2 may result in a 10% IRS tax penalty, in addition to any ordinary income tax. Any guarantees of the annuity are backed by the financial strength of the underlying insurance company.
Mutual Funds are sold by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing in Mutual Funds. The prospectus, which contains this and other information about the investment company, can be obtained directly from the Fund Company or your financial professional. Be sure to read the prospectus carefully before deciding whether to invest. An investment in the Fund involves risk, including possible loss of principal.
A REIT is a security that sells like a stock on the major exchanges and invests in real estate directly, either through properties or mortgages. REITs receive special tax considerations and typically offer investors high yields, as well as a highly liquid method of investing in real estate. There are risks associated with these types of investments and include but are not limited to the following: Typically no secondary market exists for the security listed above. Potential difficulty discerning between routine interest payments and principal repayment. Redemption price of a REIT may be worth more or less than the original price paid. Value of the shares in the trust will fluctuate with the portfolio of underlying real estate. Involves risks such as refinancing in the real estate industry, interest rates, availability of mortgage funds, operating expenses, cost of insurance, lease terminations, potential economic and regulatory changes. This is neither an offer to sell nor a solicitation or an offer to buy the securities described herein. The offering is made only by the Prospectus.
Converting an employer plan account or Traditional IRA to a Roth IRA is a taxable event. Increased taxable income from the Roth IRA conversion may have several consequences including but not limited to, a need for additional tax withholding or estimated tax payments, the loss of certain tax deductions and credits, and higher taxes on Social Security benefits and higher Medicare premiums. Be sure to consult with a qualified tax advisor before making any decisions regarding your IRA.
Indexed annuities are insurance contracts that, depending on the contract, may offer a guaranteed annual interest rate and some participation growth, if any, of a stock market index. Such contracts have substantial variation in terms, costs of guarantees and features and may cap participation or returns in significant ways. Any guarantees offered are backed by the financial strength of the insurance company. Surrender charges apply if not held to the end of the term. Withdrawals are taxed as ordinary income and, if taken prior to 59 1/2, a 10% federal tax penalty. Investors are cautioned to carefully review an indexed annuity for its features, costs, risks, and how the variables are calculated.
Please consider the investment objectives, risks, charges, and expenses carefully before investing in Variable Annuities. The prospectus, which contains this and other information about the variable annuity contract and the underlying investment options, can be obtained from the insurance company or your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.
The investment return and principal value of the variable annuity investment options are not guaranteed. Variable annuity sub-accounts fluctuate with changes in market conditions. The principal may be worth more or less than the original amount invested when the annuity is surrendered.
QLACs cannot be purchased with Roth or Inherited IRA dollars; value of such IRAs cannot be included in determining 25% premium limit. If Funding Source is Traditional IRA, 25% limit is calculated by combining the total value of all Traditional IRAs as of December 31st of the previous year. If Funding source is Employer sponsored qualified plan (401k, 403b and governmental 457b), 25% limit is calculated on an individual plan basis based on the plan's account value on the previous day's market close. If you previously purchased a QLAC, the calculation of your 25% limit is more complicated. Please contact an attorney or tax professional for additional details. Any guarantees of the annuity are backed by the financial strength of the underlying insurance company.
The projections or other information generated by Monte Carlo analysis tools regarding the likelihood of various investment outcomes are hypothetical in nature, are based on assumptions that you provide which could prove to be inaccurate over time, do not reflect actual investment results, and are not guarantees of future results. Results may vary with each use and over time.
This material is for general informational purposes only and is not intended to provide specific investment, tax, or legal advice or recommendations for any individual. Consult with your own tax or legal professional regarding your specific situation before acting on any information presented here. The information has been developed from sources believed to be providing accurate information, but no representation is made as to its accuracy or completeness.
Cash balance and other qualified retirement plan strategies described here are general in nature; actual contribution limits, deductibility, and plan design depend on individual circumstances, plan documents, and applicable IRS rules, and should be reviewed with a qualified plan actuary or administrator.