Direct Recognition Variable Investment Plan vs. Cash Balance Plan
Pension plans are not created equal
Cash balance plans and other defined benefit plans offer successful business owners opportunities to save in taxes and create retirement income streams for plan participants. However, cash balance plans have limitations and risks that Direct Recognition Variable Investment Plans (DR-VIPs) don’t have. There is a way to avoid being trapped by cash balance plan limitations; by terminating a cash balance plan and starting up a DR-VIP, participants can gain access to their investments before retirement age and capture the opportunity to accumulate even more. USI Consulting Group’s (USICG’s) DR-VIP is a business-smart solution for mitigating plan sponsor liabilities, putting plan assets under participant control and continuing tax-deductible contributions.
See for yourself: Cash balance plan limitations & the DR-VIP difference
| Plan Features | DR-VIP | Cash Balance Plans |
| Maximum Contribution Per Person | $300,000 +/- | $300,000 +/- |
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Tax Deductible Contributions |
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Tax Deferred Accumulations |
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Contribution Certainty |
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Mitigate Underfunding Liability |
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Mitigate Overfunding |
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Direct Recognition |
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No Caps or Floors on Investment Returns |
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Daily Valuation |
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Fully Automated |
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Suitable profile for a DR-VIP
Firm partners/employees earning over $400K and seeking:
To contribute up to $300,000/year to 401(k), profit-sharing and/or DR-VIP plan
High tax-deductible contributions2 in excess of the direct contribution (DC) plan limit
Investment flexibility
Mitigation of liabilities related to investment performance
Suitable profile for a cash balance plan
Partner/business owners over 40 years of age
Younger employees
Low ratio non-owner to owner
Demonstrated consistent profitability
Seeking to save more than DC plan limits
Currently offer a 401(k)
Access detailed comparison charts for traditional Cash Balance plan and Market Rate Cash Balance plan.
How USICG Can Help
To learn more about our Direct Recognition Variable Investment Plan, please visit our DR-VIP FAQs page, contact your USICG representative or reach out to us directly at VIPNewBizSupport@usi.com.
Additional information
