2025-03-11
9 分钟Here's your money briefing for Tuesday, March 11.
I'm Mariana Aspuru for the Wall Street Journal.
On top of their 401k plans, many lawyers, doctors and accountants also have another retirement savings option.
It's called a cash balance plan.
This offers them the ability to sort of tack on this extra plan and put a whole lot of money into it and leave with as much as $3.5 million.
We'll hear from Wall Street Journal reporter Anne Turgason about how they're using these plans to build wealth after the break.
High earners may have a secret weapon for saving millions for retirement, cash balance plans.
Wall Street Journal reporter Anne Turgason joins me and what's the biggest difference between a cash balance plan and another retirement plan like a 401k. So cash balance plans are technically pension plans,
so you can think of them that way.
They are structured a little differently than traditional pensions that everybody's familiar with,
but the difference really is that with a traditional pension you're paid a monthly income with a cash balance plan,
most people save a lump sum amount similar to what you would do in a 401k. How are contribution limits different in cash balance plans?
With a 401k there's an annual amount that you're able to save,
and if your balance goes to $200 million that's fine, nobody's capping the balance with a cash balance plan.
They capped the balance, so you're able to save up to,
it depends on your age and your income, but it's about three and a half million dollars for most people.
How do the taxes work with these accounts?
It's the same as 401k's, you put the money in on a tax deferred basis,
and you take them out in retirement, and you pay tax at that point in income tax.
And what does the return on a cash balance plan look like?