Financial Planning and Money Management
Financial Planning and Money Management
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Kon Litovsky
Kon Litovsky

Group Cash Balance Plans: Best Practices, Avoiding Pitfalls, and Making the Most of Your Plan

4/21/2026 5:22:45 AM   |   Comments: 0   |   Views: 39

A cash balance plan is an amazing vehicle that allows high-income doctors to accumulate significant tax-deferred assets over a relatively short term. In 2025, a lifetime maximum for a 58-year-old is about $4 million, and this can be accumulated over a 10-year period. There are big advantages to maximizing tax-deferred account contributions for those in the highest tax brackets. It can be demonstrated (see chart below) that, over a 10-year period, a cash balance plan is very advantageous vs. a taxable account for those in the highest tax brackets. It would take an average taxable account rate of return of between 10%-12% to just break even with a cash balance plan with an interest crediting rate (ICR) of 4% (assuming 37% federal and 0%-10% state brackets).

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Group Cash Balance Plans Best Practices, Avoiding Pitfalls, and Making the Most of Your Plan

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