Cash Balance Retirement Plan An account - based Defined Benefit strategy for retirement accumulation Higher deductible contributions • Tax - deferred growth • Rollover flexibility Prepared from Saber Pension resources What Is a Cash Balance Retirement Plan? 01 • Defined Benefit plan — A Cash Balance Plan is a type of Defined Benefit retirement plan. • Hypothetical account — Each participant has a notional account balance used to express the benefit. • Pay + interest credits — The balance grows through employer pay credits and predefined interest credits. • 401 (k) - like experience — The account - balance format can make the plan easier to understand than a traditional pension. Think: “ pension design ” with an “ account balance ” presentation Source: Saber Pension | https://saberpension.com/ 2020 / 08 / 19 /what - is - cash - balance - plan/ How the Cash Balance Retirement Plan Grows 02 • 1 Pay credit — The employer adds a fixed dollar amount or percentage of pay. • 2 Interest credit — The hypothetical balance receives a predefined rate, which may be fixed or index - based. • 3 Pooled assets — Plan assets are pooled and professionally managed rather than held in separate participant accounts. • 4 Employer investment risk — Participants generally receive their credited benefit even if actual investments underperform. Annual credits accumulate toward the participant ’ s retirement benefit Source: Saber Pension | https://saberpension.com/ 2020 / 08 / 19 /what - is - cash - balance - plan/ Why Business Owners Consider Cash Balance Plans 03 • Large tax deductions — Saber Pension notes that Cash Balance Plans can permit much higher deductible contributions than typical retirement plans, depending on circumstances. • Tax deferral — Employer contributions are not immediately taxable to employees, and investment gains can grow tax - deferred. • Flexible deductions — Cash Balance Plan deductions are not capped at 25 % of compensation in the same way as Defined Contribution plans. • 401 (k) pairing — A Cash Balance Plan can be paired with a 401 (k) Plan to further increase retirement savings. Often considered by high - income owners with stable cash flow Source: Saber Pension | https://saberpension.com/ 2020 / 08 / 19 /what - is - cash - balance - plan/ Who May Benefit — and What to Consider 04 • Potential fit — High - income business owners, self - employed professionals, and owners who want to accelerate retirement savings. • Annual commitment — Defined Benefit plans generally require ongoing funding; contributions are not as flexible as a typical Defined Contribution plan. • Administration — Cash Balance Plans require annual actuarial calculations and professional administration. • Portability — Plans are commonly designed to permit a lump - sum distribution that may be rolled over, subject to plan and tax rules. Good plan design balances tax savings, funding commitment, and long - term goals Source: Saber Pension | https://saberpension.com/cash - balance - plan - pros - and - cons Explore a Cash Balance Retirement Plan Phone: ( 480 ) 795 - 8256 Email: info@saberpension.com Website: www.saberpension.com Saber Pension & Actuarial Services Defined Benefit Plans • Cash Balance Plans