No, that’s not a typo. 2022.
As you’re sticking to your 2023 goals and resolutions, it’s always good to reflect back on 2022. If you are anything like us, there’s probably a few things you wish you had done a little differently. Whether you wish you’d eaten a little healthier, didn’t have quite as many drinks at the company holiday party, or saved more money – we get it. But what if we told you there was a way to turn back the clock? What if we told you employers could still save money with a retirement plan in 2022?
It might sound like a sci-fi movie, but it’s not. It’s one of the benefits of the SECURE Act (take 1). In 2023, employers can still establish a retroactive defined benefit, cash balance, or profit sharing plan for 2022!
Next question….why establish a cash balance plan?
If your next question is “why would an employer want to set up a cash balance plan?” – we’ve got answers at the ready. You can check out our Cash Balance Overview to learn more about these plans. But also…we love a good story. Gather round, and we’ll tell you a tale of one of an employer who once asked the same question…
Story time: The case of the unexpected savings…
Once upon a time, a dentist in his early 40s was hoping to save more for retirement and reduce his taxes. However, with an older employee demographic, the business scenario was not ideal for allowing this. He and his wife were not able to save more than $55,000 together with their 401(k) plan and safe harbor match.
They needed a retirement plan hero.
The retirement plan design experts at EGPS were able to review the dentist’s plan and allow them to add a cash balance plan, keeping the employer in compliance with the IRS and DOL, while also allowing much larger savings opportunities. With this solution in place, the dentist and his wife were able to save over $140,000 and retain 85.5% of the total benefits of the retirement plan!
What might seem impossible is not always so, especially when employers engage EGPS! Cash balance plans can allow employers to save significantly more for retirement and reduce taxes, yet many don’t even know they have this option.
Our experienced retirement plan professionals are ready to help evaluate if a cash balance plan could be a good fit for employers, even for last year 😉.