Retirement Plan Solutions
The following retirement plan solutions are offered by CPH:
DEFINED BENEFIT PLAN - When properly designed, a defined benefit plan can provide the highest contribution amounts allowable. Contributions are calculated based on the employees’ ages and compensation. These plans are not subject to 25% employer deduction limits or participant contribution limitations. Defined benefit plans work best when business owners/partners and key employees are more advanced in age compared to other employees. Defined benefit plans can also be designed for one employee businesses.
CASH BALANCE PLAN - A hybrid defined benefit plan also allowing for high contribution amounts. Contributions are calculated on the employees’ ages, compensation and employee classes. A cash balance plan can heavily favor business owners/partners and key employees and is typically designed in conjunction with a 401(k) Plan to satisfy non-discrimination requirements. Cash balance plans are better understood by participants and represent a good design solution for employers whose tax sheltering objectives cannot be met using a conventional defined benefit plan. Cash balance plans will work well when business owners/partners, key employees and are more advanced in age compared to all other employees (FAQs About Cash Balance Pension Plans from the DOL).
NEW COMPARABILITY (CROSS-TESTED) PROFIT SHARING PLAN - A defined contribution plan allowing for the high contribution amounts and flexibility. Contributions are based on the employees’ ages, compensation, employee classes and the percent of contributions determined by the employer. Cross-Tested plans work very well where business owners/partners and key employees are more advanced in age compared to other employees.
AGE-WEIGHTED PROFIT SHARING PLAN - A profit sharing plan combining the simplicity and flexibility of a traditional profit sharing plan with the best features from a defined benefit and target benefit plan.
MONEY PURCHASE PLAN - While this design solution has been replaced with profit sharing plans, CPH can provide administration services. A money purchase plan requires an employer to contribute and deduct a fixed percentage, up to 25% of eligible compensation as defined by the plan annually.
SAFE HARBOR 401(K) PLAN - A safe harbor 401(k) removes the highly compensated employee contribution limitations associated with a traditional 401(k) plan. A safe harbor 401(k) plan requires the employer to make either, i) a 3% safe harbor non-elective contribution or, ii) a safe harbor match contribution equal to or greater than 100% of the first 3% of each employee contribution and 50% of the next 2% of each employee contribution. Safe harbor contributions become immediately 100% vested.
401(K) PLAN - A traditional 401(k) plan provides employees an opportunity to invest a portion of their compensation on a pre-tax basis. Employers may contribute employer matching and/or employer profit sharing contributions. Highly compensated employee and employer matching contributions are subject to limitations based on annual non-discrimination testing.
ROTH 401(k) PLAN - Designed to allow employees the option to make after-tax contributions where investment earnings are not taxed, while also allowing for traditional 401(k) pre-tax basis contributions.
PROFIT SHARING PLAN - A traditional profit sharing plan allows an employer to contribute and deduct a discretionary contribution from 0% to 25% of eligible compensation annually. The plan can be designed to provide higher contribution percentages for highly compensated employees.