If you have a cash balance plan you HAVE to understand this

The big deferrals during peak earning years are incredibly valuable. That part everyone understands.

What most people miss is the exit plan.

For us, it’s straightforward:

• Defer income aggressively while you’re working to maximize the income-tax shield
• Roll the cash balance plan into an IRA once you stop working
• Execute Roth conversions paired with ordinary-income deductions (e.g., tax-aware hedge funds)

That pairing is the whole game.

Advanced tax planning isn’t about eliminating taxes in one year — it’s about smoothing income recognition over your lifetime and making sure you have deductions available when income shows up.

If you skip that last step, cash balance plans don’t eliminate taxes — they delay them. And what you’re often left with are very large IRAs that turn into painful RMDs in your 70s and 80s.

Used correctly, a cash balance plan lets you:

• Defer income at your highest marginal rates
• Control when that income is recognized later
• Convert it to Roth while offsetting the tax bill
• Shift taxation into deferred, unrealized gains elsewhere

The contribution is the easy part.

The exit strategy is where the real tax alpha lives.