CB + 401(k) for Groups: Fair Allocations, Staff Cost, and Testing
Combining a Cash Balance plan with a 401(k)/profit sharing plan can dramatically increase owner savings while passing coverage and nondiscrimination tests at reasonable staff cost.
Design building blocks
401(k): employee deferrals, safe harbor, cross‑tested profit sharing.
Cash Balance: age‑weighted benefits with predictable targets; select interest credit to match risk.
Testing & coverage: coordinate the two plans so the whole program passes cleanly.
Patterns that work
Two‑tier CB pay credits + new‑comparability profit sharing in 401(k).
Partner classes by age bands to align value with tenure.
Staff floors that meet testing and support retention.
Example approaches (no dollar amounts)
Orthopedics (5 partners, 18 staff): CB tiers by age; 401(k) safe harbor + cross‑tested PS.
Dermatology (solo + 5 staff): steady CB; 401(k) safe harbor nonelective.
Anesthesia (variable comp): CB contribution range + Treasury‑based interest credit.
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