DBIllustration o35-3x20-6x25-6x30-6x35-5x40-6x45-5x50-5x55-5x60-3x65
© 2004
AutomatedPensions.com
DBIllustrationBank
Owner Age(s):
35
Employee Ages:
3@20, 6@25, 6@30, 6@35, 5@40, 6@45, 5@50, 5@55, 5@60, 3@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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illustration
illustration
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Defined Benefit Plan
Cost of owner(s)
$47,036
$56,995
$56,995
Owners' % of plan cost
7.0%
25.4%
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)
$22,250
$22,250
$45,000
Combined Plans
Total for owner(s)
$69,286
$79,245
$101,995
Owners' % of Grand Total
9.2%
25.6%
33.9%
Administrative expense:
high
twice as high
three times as high
Overall Grade
*
:
D-
C-
B
Comments:
As an employee benefit plan, this plan is too rich with many employees costing more than 30% of pay.
Owner may be better served to wait to start Defined Benefit Plan until just 10 years from retirement.
Employee cost is 9.5% of pay.
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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.
