As a business owner, partner, or independent contractor (1099), finding effective strategies to reduce tax liability while building a secure financial future is essential. In 2025, there’s a unique opportunity to leverage cash balance plans and profit-sharing contributions to significantly lower 2024 taxable income while accelerating retirement savings.
Under the SECURE Act, you still have time to contribute for 2024 up until your tax filing deadline, including extensions. This flexibility makes these plans a powerful tool for tax planning and retirement strategy.
Cash Balance Plans + Profit Sharing: The Ultimate Combination
When paired together, cash balance plans and profit-sharing contributions offer some of the highest allowable contribution limits in the tax code. Here’s why these strategies work so effectively:
High Contribution Limits:
You can contribute up to $452,500 annually (cash balance + 401(k) + profit sharing), depending on your age and compensation. Profit-sharing contributions alone can account for up to $76,500 of that total, providing significant tax advantages.Tax Deductibility:
Contributions to both cash balance and profit-sharing plans are tax-deductible, reducing adjusted gross income (AGI). Lower AGI can also help you qualify for additional deductions, such as those under IRC Section 199A.Flexible Deadlines:
Contributions for 2024 can still be made up until the tax filing deadline, whether you file by the standard date or request an extension. This gives you time to optimize your tax strategy.Tailored Plan Design:
Cash balance plans can be customized to meet your financial goals and those of your employees (if you have employees). They are ideal for self-employed individuals, partnerships, and business owners looking to maximize retirement contributions while reducing taxes.
Why This Matters for You
Cash balance plans allow for much higher contributions than traditional 401(k) plans while profit-sharing contributions add flexibility. Together, they offer:
Accelerated retirement savings.
Significant tax savings, often in the six-figure range.
A competitive edge in attracting and retaining key talent.
For example, as a 55-year-old business owner, you could contribute over $350,000 annually to a combined cash balance and profit-sharing plan, significantly deferring taxes on your income while building retirement security.
Flexibility with Recordkeeper Options
One of the benefits of working with GAMSG is our independence. We provide the flexibility to work with your preferred recordkeeper, including leading providers like Charles Schwab, Fidelity, Vanguard, Principal, and many more. This ensures the plan integrates seamlessly with your existing financial infrastructure while maintaining the highest levels of service.
Partnering with FuturePlan by Ascensus
At GAMSG, we collaborate with FuturePlan by Ascensus, the largest third-party administrator (TPA) in this space. FuturePlan specializes in designing, administering, and maintaining retirement plans tailored to the unique needs of business owners and their employees. With their unmatched expertise, we ensure that your plans are designed to maximize savings and remain compliant with the latest regulations.
Access Key Resources
To better understand the benefits of these plans, explore these detailed resources:
Let’s Discuss How We Can Help
Now is the perfect time to explore how cash balance and profit-sharing plans can help you save on taxes and achieve your financial goals. Schedule a consultation with me today to learn more. Use my Calendly link to book a meeting, or contact my assistant, Adriane Holland, to arrange a time:
Phone: (678) 488-0336
Email: adriane@gamsg.biz
Let’s work together to make 2025 a year of financial growth and success for you. Share this blog with your network and encourage them to take advantage of these tax-saving strategies today!
Please note: GAMSG and its advisors are not tax professionals. Please consult your tax advisor to determine how these strategies apply to your specific situation.