DBIllustration o65-3x20-6x25-6x30-6x35-5x40-6x45-5x50-5x55-5x60-3x65


Owner Age(s): 65
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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Defined Benefit Plan Cost of owner(s) $280,604 $203,639 $203,639
Owners' % of plan cost 16.2% 56.5% see Owners' % of
Grand Total below
401(k) Plan
Profit Sharing)
optional/required optional optional required
Additional benefit
to owner(s)
(includes owners'
401(k) deferral)
$27,250 $27,250 $50,000
Combined Plans Total for owner(s) $307,854 $230,889 $253,639
Owners' % of Grand Total 16.9% 51.3% 60.3%
Administrative expense: high twice as high three times as high
Overall Grade*: F C A
Comments: As an employee benefit plan, this plan is far too rich with many employees costing more than 105% of pay. Employee cost is 7.5% of pay for CBP, 10.5% for both plans. Employee cost is 8% of pay for both plans.

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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.