DBIllustration o35-55

DBIllustrationBank

Owner Age(s): 35
Employee Ages: 55
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 69.4% 85.2% 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 $15,500
Combined Plans Total for owner(s) $76,036 $85,995 $72,495
Owners' % of Grand Total 76.0% 86.7% 90.4%
Administrative expense: high twice as high three times as high
Overall Grade*: C- B B-
Comments: Owner may be better served to wait to start Defined Benefit Plan until just 10 years from retirement. Owner may be better served to wait to start Defined Benefit Plan until just 10 years from retirement. 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.