Cash Balance Plans Explained: EDU #2552

The Retirement and IRA Show

Jim Saulnier, CFP® & Chris Stein, CFP®

Business, Investing

4.3 • 729 Ratings

🗓️ 24 December 2025

⏱️ 74 minutes

🔗️ Recording | iTunes | RSS

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Summary

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.

The post Cash Balance Plans Explained: EDU #2552 appeared first on The Retirement and IRA Show.

Transcript

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0:00.0	The retirement and IRA show represents the words and views of the show hosts exclusively and should not be construed as investment legal or tax advice. All information is believed to be from reliable sources. However, we make no representation as to its completeness or accuracy. All economic and performance information is historical in nature and is not indicative of any future results. Any indices mentioned on the show are unmanaged and cannot be invested indirectly. Diversification and asset allocation strategies do not assure profit or protect against loss.
0:23.8	Never make any investment or financial decisions based on information offered on this show
0:26.9	without first consulting your financial legal or tax advisor.
0:29.7	Financial planning services offered through Jim Solnior and Associates LLC, a registered investment advisor.
0:47.3	This is the retirement and IRA show coming to you from beautiful Northern Colorado.
0:52.9	Join us as certified financial planner Jim Sondier, as well as Colorado State University Finance instructor and certified financial planner Chris Stein, teach you about IRAs,
0:58.4	borrow-in-case, annuities, social security, pension plans, and estate planning in a fun and enjoyable show.
1:05.6	Whether you are listening live in Colorado or streaming from their website or iTunes podcast,
1:12.6	Jim and Chris want you to know that they're available to help you plan for your retirement. Just visit their website at Jimhelps.com.
1:18.7	That's Jim H-E-L-P-S dot com and click the Meet the Team button on the homepage. Now here's Jim and Chris
1:26.3	with today's show.
1:35.0	Hello and welcome to the Retirement and IRA show EDU edition for this week.
1:42.1	On this week's show, as we actually this is going to release here on Christmas Eve.
1:46.4	So Merry Christmas to those of you right on the cusp of that holiday tomorrow, assuming you're listening to it on Christmas Eve, but we've got kind of a special
1:54.0	show today, not Christmas themed, but rather a special guest that's going to join us that we've
2:00.6	been talking about
2:01.4	for the past couple of weeks, who is going to talk to us a little bit about cash balance
2:07.4	plans, which is a type of employer-sponsored retirement plan. They're quite unique, and
2:13.2	that's why we brought Steve Sansone on, who spent about four decades servicing retirement plans.
2:22.3	He's a recognized authority and cash balance plan design specifically, specializing solutions for professional service groups and business owners, seeking tax optimization and accelerated retirement savings.
2:36.0	So we'll get into some of those aspects as he helps us kind of understand the ins and outs of
2:42.1	these cash balance plans. So Steve's expertise has earned significant industry recognition.
	...

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