Designer DB Plus®
How the 3-Layer Strategy Works
The Designer DB Plus® strategy is a coordinated retirement planning approach that combines a Cash Balance Plan, a 401(k) / Profit Sharing Plan, and a 401(h) Medical Account to help business owners increase tax-deductible contributions and accelerate retirement savings.
Strategy Overview
The 3-Layer Strategy
Rather than relying on just one retirement plan, this strategy coordinates multiple qualified plans to create a more efficient tax and retirement structure for business owners.
Layer 1
Cash Balance Plan
The Cash Balance plan is the primary driver of larger tax-deductible contributions. Contribution amounts are determined based on age, income, and plan design.
Layer 2
401(k) / Profit Sharing
The 401(k) and Profit Sharing plan works alongside the Cash Balance plan and is used to help meet compliance requirements and control employee costs.
Layer 3
401(h) Medical
The 401(h) account allows for tax-deductible contributions that can be used for tax-free medical expense reimbursement in retirement.
Why It Matters
Why Use a Coordinated Plan Design?
When designed properly, coordinating these plans may allow business owners to significantly increase retirement contributions while managing employee costs and improving long-term retirement accumulation.
The strategy is not appropriate for every business owner, but when the right fact pattern exists, the impact on taxes and retirement savings can be significant.
Flexibility
Designed With Flexibility in Mind
Many CPAs are familiar with older defined benefit plans that were often very rigid. Most modern Cash Balance plans are designed with funding ranges and are reviewed annually.
- Contributions are often managed within a range
- Plans are reviewed annually
- Plan design can be adjusted over time
- Plans can be frozen if business conditions change
For CPAs & Business Owners
We Work With CPAs and Business Owners
We typically work with CPAs when their business owner clients reach a level of income where more advanced retirement planning strategies may be appropriate.
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