Save with a Cash Balance Plan

Are you a business owner paying too much in taxes?

With year-end approaching, here’s a great way to save.

You’re in one of the highest tax brackets and already maxing out 401(k) and HSA contributions. You may even be making non-deductible IRA contributions to squeeze out a little more tax-deferred benefit. What if you’ve run out of options to shelter taxes, but you can afford to sock away more than your 401(k) plan allows every year?

Cash Balance Plan to the Rescue

A cash balance plan may be the perfect fit for you. It is ideal for business owners who: are 35 years of age or older, have 0-25 employees, already have a 401(k) profit sharing plan with the new comparability feature, and can afford to contribute more than $50,000 annually. A cash balance plan has a flexible benefit design and allows owners to potentially contribute substantial amounts of earned income with lower and more controlled costs to employees. Contributions reduce ordinary income taxes dollar for dollar, which means the effects of compound interest in a cash balance plan are nothing to walk away from.

For example, if a 45-year-old business owner contributed $150,000 in 2015 and it grows 5% per year for 20 years, it would be worth $397,995 when he/she is ready to retire at age 65. Not to mention the fact that a business owner in the 33% tax bracket would have saved approximately $50,000 in federal income taxes. The future value would be significantly less if the original amount was invested with after-tax dollars and taxes were paid on earnings every year.

Why Now?

Many business owners pay themselves a lower salary during the year and are looking for ways to shelter taxes on large bonus payouts before year-end. The fall season typically brings these planning questions to light since owners are getting the general feel for their year-end projections.

Why Canon Capital?

We act as your fiduciary, which means that we have a legal obligation to act in your best interests. We have the ability to work with the most reputable plan administrators in the industry. The implementation costs and recurring annual costs are typically far less than the amount of federal taxes saved every year, which makes the cash balance plan very attractive as a wealth accumulation tool. We will customize a model targeting up to 6% per year based on your risk and return objectives. The platforms that we use have access to thousands of investment choices, and our role is to narrow down the choices and invest the monies for you. The account grows annually in two ways: 1) contributions and 2) interest credits, which are guaranteed. It’s an effective way to accelerate retirement savings, and worst case scenario — if the plan terminates prematurely — each participant can roll their balance into an IRA and manage it themselves or have it professionally managed.

It’s easy to get started. Feel free to give us a call today at 215-723-4881 and ask to speak with one of our investment advisors. We look forward to the opportunity to work with you!


Canon Capital Wealth Management Presents: Financial Self-Defense Moves for Your Work Retirement Plan and IRA Assets

We are pleased to announce the third seminar in our series on Financial Literacy, Financial Self-Defense Moves for Your Work Retirement Plan and IRA Assets. Taking place Wednesday, September 21st in our Hatfield location, we are offering two sessions so you may attend at your convenience. The first session will run from 3:00-4:00 pm and the second 7:00-8:00 pm.

You will learn:

• Strategies to maximize your account assets in time for your retirement
• Retirement plan expenses and how excessive fees can eat into your account returns
• Tax implications – whether to use pre-tax or Roth contributions
• Different account features – what they are and tips on how to use them

The information provided in this seminar is based on the recently-published book – Your 401k, The Danger Within – which was co-written by Dr. Peter Roland, Managing Director and one of the founders of Canon Capital, and Roger Levy, CEO of Cambridge Fiduciary Services, LLC. Roger Levy’s name might sound familiar to you because he filed an amicus brief in support of the plaintiff, 401(k) plan participants, in the recent landmark Supreme Court case, Tibble v. Edison International.

This seminar is provided free of charge and is for any individuals desiring to maximize the amounts accumulated in their retirement accounts and also to learn what to look for when reviewing account investments, expenses, and service features.

Our time together will be both educational and informative. Please feel free to bring a relative or friend who might benefit from the topic. Every attendee will receive a free copy of Your 401k, The Danger Within, and Dr. Roland will be happy to sign your copy.

RSVP by Friday, 9/16/2016, to Jen Norman. You may RSVP via email or call 215-723-4881, ext. 207. Please let us know whether you would like to attend the 3:00 pm or 7:00 pm session.

Canon Capital Management Group provides a single source of financial and business services to help you make the right decisions.