Cash Balance Plans Explained: EDU #2552

December 24, 2025

Cash Balance Plans Explained: EDU #2552

Chris’s Summary
Jim and I are joined by Steve Sansone as we discuss cash balance plans and explain how they function as hybrid defined benefit plans that present as account-based arrangements. We cover who these plans are designed for, including high-income business owners and professional groups, how age and employee demographics affect feasibility, and why allowable contribution levels can far exceed defined contribution limits. We also outline nondiscrimination rules and how they are applied, employer commitment requirements, and other general setup considerations.

Jim’s “Pithy” Summary
Chris and I are joined by Steve Sansone as we take a deeper dive into cash balance plans and why they show up in very specific situations, not as a one-size-fits-all solution. Steve explains how these plans sit in the defined benefit world but look like a defined contribution account, which is where a lot of confusion starts. We spend time on who they’re actually built for, why high-income professionals tend to be the ones asking about them, and why the contribution numbers can look startling if you haven’t seen the mechanics before.

We also talk through the tradeoffs, because these plans are not free money and they are not magic. Steve walks through how demographics drive everything, why age gaps between owners and employees matter, and how employer contributions to staff are part of the deal. We discuss why, in the wrong situation, these plans can pour fuel on the fire of a future tax problem, and why, in the right situation, they can make sense when paired with intentional planning during the retirement tax planning window before required minimum distributions begin. We frame that discussion around the same planning lens we use elsewhere on the show, including how the 2-1-0 Tax Ordering Number concept helps evaluate whether the front-end tax benefit is worth the back-end complexity.

Podcast: Play in new window | Download (Duration: 1:14:06 — 33.9MB)

Subscribe: RSS

Check out the background of firms and investment professionals on SEC’s Adviser Info Page.

Jim Saulnier and Associates | 970-530-0556 | 506 East Mulberry Street, Fort Collins, Colorado 80524

© 2025, Jim Saulnier & Associates All rights reserved.

Ed Slott Advisor recognition requires an advisor to be well versed on the rules and regulations regarding IRAs. The advisor must attend two live training sessions and pass two written exams annually to remain in the program. Jim Saulnier & Associates, LLC (“RIA Firm”) is a registered investment adviser located in Fort Collins, CO. Jim Saulnier & Associates, LLC may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. Current registered states: CA, CO, PA, TX, WA, IL Insurance products and services are offered and sold through James H. Saulnier, a Colorado licensed insurance producer, only in those states in which he is reciprocally licensed or qualifies for an exemption or exclusion from licensing requirements. Current reciprocal insurance licensing in these states: AZ, CA, CA, CN, FL, HI, IA, MA, MD, NY, PA, SC, TN, TX, VA, WA, WI, WY Click here for a more detailed disclosure.