DBIllustration o35-25-25
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AutomatedPensions.com
DBIllustrationBank
Owner Age(s):
35
Employee Ages:
25, 25
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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illustration
illustration
illustration
Defined Benefit Plan
Cost of owner(s)
$47,035
$56,995
$56,995
Owners' % of plan cost
89.3%
88.4%
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
$27,250
Combined Plans
Total for owner(s)
$76,035
$85,995
$84,245
Owners' % of Grand Total
89.8%
89.1%
94.4%
Administrative expense:
high
twice as high
three times as high
Overall Grade
*
:
A-
C-
B-
Comments:
Owner may be better served to wait to start Defined Benefit Plan until just 10 years from retirement.
The marginal increase in benefits is offset by a decrease in benefit-to-cost efficiency and an increase in administrative costs and complexity.
The marginal increase in benefits and benefit-to-cost efficiency must be weighed against the sharp increase in administrative costs and complexity.
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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.
