DBIllustration o35-20-25-30-35-40-45-50-55-60-65

DBIllustrationBank

Owner Age(s): 35
Employee Ages: 20, 25, 30, 35, 40, 45, 50, 55, 60, 65
Year: 2007


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3 Plan Comparison Traditional
Defined Benefit Plan
Cash Balance Plan Cross-Tested
Cash Balance Plan +
Profit Sharing Plan
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Defined Benefit Plan Cost of owner(s) $47,036 $56,995 $56,995
Owners' % of plan cost 24.9% 41.4% see Owners' % of
Grand Total below
401(k) Plan
(includes
Profit Sharing)
optional/required optional optional required
Additional benefit
to owner(s)
(includes owners'
401(k) deferral)
$29,000 $29,000 $40,255
Combined Plans Total for owner(s) $76,036 $85,995 $97,250
Owners' % of Grand Total 31.4% 44.7% 54.6%
Administrative expense: high twice as high three times as high
Overall Grade*: F F D-
Comments: Owner may be better served to wait to start Defined Benefit Plan until just 10 years from retirement.


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*Note that even poorly graded plans may be appropriate in certain situations, such as for lower benefit levels, or if the employee total compensation package is negotiable.