Cash balance plans for businesses with employees.
Of the small business retirement plans available, this is the one that lets owners contribute more than a 401(k) allows, funded with profit that is generally deductible within plan limits. Your team earns a benefit by staying; owners and key people defer tax on the income they set aside.
My Pension Tree, LLC: 401(k) and cash balance plan consultants, with pension actuaries and plan administrators on the team. 25+ years of combined experience. Coral Gables, Florida.
Answer a few questions about your business and team. Our actuary reviews the design and emails you an illustration on your own census.
General information about how these plans work, not tax advice. Figures are illustrative of plan designs we have built, are hypothetical in nature, and are not a guarantee of future results. Your own numbers depend on your age, income, and plan design. Please consult an independent tax or financial advisor.
Traditional pensions are an administrative nightmare.
Disjointed emails, a distant third-party actuary, and a "black box" that leaves the owner, who is legally responsible for the plan, in the dark.
You should understand exactly how your plan works.
A dedicated in-house expert explains the design and the math, gives clear step-by-step guidance, and our platform carries the census, the proposal, the signatures and the annual filings. The owner makes the decisions; the admin headache goes away.
Request My Plan ReviewMyPensionTree vs traditional actuaries and TPAs.
A guided, in-house process instead of the industry's rigid, outsourced one.
Setup and administration
A dedicated in-house expert explains the design while our platform handles the census, the proposal, the signatures and the annual filings. The traditional path is hundreds of dense emails and a "black box".
Plan architecture
Direct, rapid access to the actuaries who design and test your plan, instead of slower communication, rigid rules and finger-pointing between firms.
Who you talk to
The same team runs the plan after it is set up: the annual calculations, the testing and the filings you sign.
An existing plan in trouble
Overfunded or frozen plans are reviewed for what they can be restructured into, and what the actuaries look at first.
Describes how MyPensionTree works and the traditional model it replaces. It is not a claim about any named firm.
From profit to plan in four steps
One contribution does three jobs: it gives your team a reason to stay, builds retirement wealth for owners and key people, and — because eligible contributions are generally deductible within plan limits — can lower this year's taxable income. Your illustration shows the effect on your own census.
- 1
Start with profit
The money you would otherwise send to the IRS in April. That is the funding source, not a new expense.
- 2
An actuary designs your plan
Our actuary weights the design to owners and key people and sets a compliant, vesting benefit for staff.
- 3
Fund it from profit, generally deductible
The business contributes, and eligible contributions are generally deductible within plan and compensation limits. Inside the plan, dollars fund retirement accounts and, if you choose, a life insurance policy.
- 4
Keep more, keep your team
Owners shelter income and build wealth; employees earn a pension benefit that grows the longer they stay.
See the four steps on your own census
Answer the questionnaire and our actuary returns a personalized illustration by email — no obligation.
Request My Plan ReviewA benefit that rewards the people who stay
Employees receive a real pension contribution that vests over time. Leave early and the unvested balance returns to the plan; stay, and it is all theirs. It is a benefit most competitors cannot match.
Vesting of up to six years
Graded schedules pay out 20% a year from year two; a three-year cliff is the alternative. Either way, tenure is rewarded.
Forfeitures come back
Unvested money left behind by early departures returns to the plan and offsets future contributions.
Deductible, and cheaper than it looks
Staff typically receive 5–7.5% of pay, and because eligible contributions are generally deductible the after-tax cost is lower than the headline number — your entity, bracket and plan limits set how much lower, and the illustration shows it for your census.
Maximize what owners and management keep
Profit you leave in the business is taxed at your top bracket. Profit you contribute to the plan is generally deductible within the limits that apply, grows tax-deferred, and is allocated first to the people who built the company.
Deductible within plan limits
Eligible contributions come out of pre-tax profit, so, to the extent the plan and deduction rules allow, money that might otherwise be paid as tax can go to work inside the plan instead. Your illustration shows the effect for your census.
Owner-weighted by design
Cross-tested designs commonly put 85–92% of plan funding with owners and key people, subject to annual nondiscrimination testing.
Tax-deferred compounding
Dollars grow inside a protected trust without annual tax drag, faster than the same money in a taxable account.
Who the contribution goes to
A real census from our orthodontic case study: $452,000 of total funding, split by the plan's annual testing.
Life insurance inside the plan
A qualified plan can hold permanent life insurance on its participants, funded with plan contributions. It is a plan feature, reviewed case by case: the insured reports a small annual economic-benefit cost as income, and IRS incidental-benefit rules cap how much coverage a plan can hold. A fully insured 412(e)(3) design belongs only in a business whose cash flow can carry the same premium every year. Turned down for coverage before? We are not tied to a single carrier, so a declined application can go to carriers with different underwriting, including indexed universal life (IUL), simplified-issue and guaranteed-issue designs. Approval is never guaranteed.
Four questions employers ask
What your team will cost, who does the work, what a lean year looks like, and whether this kind of plan fits a business like yours.
More answers, by entity type and plan feature, on the FAQ page. Read the full FAQ
What will it cost to fund my employees?
Employees must benefit, but they do not have to benefit equally. Cross-tested designs put the bulk of the contribution with owners and key people while staff receive a defined slice of pay — commonly 5% to 7.5% once the safe-harbor and profit-sharing pieces are combined.
That contribution is generally a deductible business expense, so its after-tax cost is lower than the headline number; how much lower depends on your entity, your bracket and the plan limits, and the illustration you receive shows it for your census. Forfeitures from employees who leave before vesting come back to the plan and offset future contributions.
Who does the administration, and what do I have to do?
We design and administer the plan as one service, with the actuarial work done by the firm's own actuarial desk rather than subcontracted: the plan document, the annual census and nondiscrimination testing, the actuarial valuation, the Form 5500 and participant notices.
Your part is short. Answer the questionnaire, share your payroll census, review and sign the plan documents, and make the contribution the actuary sets each year. The deadlines are watched by someone whose job it is.
How flexible is it if cash flow changes from year to year?
A pension expects a contribution every year the plan is active, inside a range the actuary sets annually: the valuation produces a minimum required contribution and a maximum deductible one, and anything between them is permitted. Most owners fund near the maximum in strong years and drop toward the minimum in a weak one.
If conditions change durably, the plan can be amended to adjust future benefits or frozen to pause accruals, each with its own process and timing rules. If profits are genuinely volatile, the better order is to max a 401(k) first and add the pension when income stabilizes — and we will say so.
Is a cash balance or life-insurance-in-plan design right for a business like mine?
It fits best when profits are stable and recurring, the owners or key people are older than most of the staff (contributions scale with age, which is what lets the design weight funding toward them), and you want a benefit that rewards tenure. We build for teams of 1 to 200.
Life insurance inside the plan is optional. A fully insured 412(e)(3) design belongs only in a business whose cash flow can carry the same premium every year; a standard cash balance plan keeps the funding range. The questionnaire is how we find out which design, if any, fits.
Design the next step around your business
Answer a few questions about your business and team to start a plan review with the right context.
Request My Plan Review