Minimum Cash Value plan and the IRS
 

I’ll start the fun here. I’m interested in the source (tax code or otherwise) behind the IRS’s potential treatment of DALPA’s proposed minimum cash value optional retirement plan. My guess is that an optional plan above the 401k limits would NOT be tax advantaged, but I didn’t even stay at a Holiday Inn Express last night.

Who knows more than me here?


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https://www.cashbalancedesign.com/resources/cash-balance-101/

Tax free just like a 401K. Max contribution amounts vary by age so that the Defined lump sum benefit cannot exceed 2.6 Million.

401ks are not tax free. Just tax-deferred.

Thats what I meant. Basically this proposed plan allows us to buy an annuity pre tax or for the company to buy the annuity with excess DC money. Thats how I see it working.

Is this what Fedex has? And if so, anyone know if they like it?

Great reference; thanks. Kravitz’s biased but hopefully accurate pitch shows a potential HUGE increase in tax-deferred annual contributions with the MCB plan.

What’s the downside here from a retirement standpoint?


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just curious.....do those who think this is a good idea also believe in whole life insurance as a retirement investment plan?

I am not an expert by any means but I don’t think they correlate as equals. Last year I had a talk with my financial planner about sheltering more money from taxes. We had discussions about some ideas but there aren’t a lot for hourly employees like us. One of the things he mentioned was a cash balance plan. The company he works for has been setting them up for doctor and lawyer practices as a way to shield more money from taxes now. There were definitely some good benefits

It if it truly is an optional plan that you can put your excess DC company contributions in. I am tentatively for it. The devil is in the details.

Can we have an option to not participate? Or are these type of programs mandatory? I want to pay my taxes now and manage my own investments.

The opener says optional. No idea if that’s kosher with the feds.


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