In recent years, I've seen a renewed interest in "combo" retirement plans. Although not a new retirement plan design, the “combo plan” has become a popular way for higher-income business owners to significantly boost their retirement savings, while reducing taxes along the way.
What is a "combo plan"?The term “combo plan” generally refers to the combination of:
- A defined contribution plan - usually a 401(k) profit sharing plan
- A defined benefit plan - usually a cash balance plan
The combined benefits of both plans are tested together, allowing owners or key individuals to receive significantly larger retirement plan contributions, typically without costing a lot in contributions to the employees.
Combo plans may be the perfect solution for business owners and partners of firms who are looking for larger tax deductions and accelerated retirement savings - check out the results from our recent case study:
If you think this might be a good fit for your business, here are some steps you can take:
- Review your current retirement plan design to see if it still makes sense for you
- Contact a wealth management professional to assist you in adjusting your plan
As a guest blogger, I'm unable to respond to comments posted below, but if you have any questions please feel free to contact me directly and I will be happy to help!
*Kristen Zavaski is a guest blogger, representing Axial Financial Group in Burlington, MA. She offers securities as a Registered Representative of Commonwealth Financial Network, Member FINRA/SIPC. CRR, LLP (also represented as CRR, CRR CPA), Axial Financial Group, and Commonwealth Financial Network are separate and unrelated entities. Kristen can be reached at 781-273-1400 or kristen.zavaski@axialfg.com.
This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend that you consult a tax preparer, professional tax advisor, or lawyer.
