Now that we have (finally!) put 2024 taxes to bed and filed the (often extended) 2024 tax returns, it’s now time to turn our attention to 2025.

The 2025 tax planning season is the perfect opportunity for TPAs to present the idea of a cash balance plan to clients and prospects and for them to have the time to give the idea the careful thought and attention it deserves.

While there are options to adopt and even perhaps amend plans retroactively, planning ahead offers the client the broadest range of plan design options and allows other aspects of the client’s situation to be aligned to provide the optimum result.

Whether the goal is to add a cash balance plan for the current year (or maybe just to consider the possibility), discussions regarding a cash balance plan are an obvious part of tax and financial planning.

If the goal is to add a cash balance plan for next year, looking at the option now (e.g. review/analysis in 2025 for 2026 adoption) may give the client an opportunity to modify features of the 401(k) profit sharing plan to better coordinate with cash balance plan.

For clients with SIMPLE plans, this is critical as the sponsor of a SIMPLE plan cannot have any other plan in a year they have a SIMPLE pln. With advance planning, the sponsor could discontinue the SIMPLE by the end of the year and thus have the opportunity to add a combination cash balance plan 401(k) profit sharing plan for the subsequent year.

For clients who already have cash balance plans, tax planning season is an opportunity to review the plan in the light of the client’s current situation and determine if the cash balance plan formula and costs still meet the needs and goals of the client.

The combo CB/401k design (and the responsibilities that come with it) is not for every client. But for those for which it works, the rewards can be great.

Aegis Pension Services is a trusted partner for TPAs looking to outsource defined benefit & cash balance (DB & CB) plan design, testing, and administration. Our team brings deep actuarial expertise to even the most complex DB and CB plans. To streamline operations and ensure accuracy at scale, Aegis—along with many other top TPAs—leverages Stax.ai, an AI-powered platform that automates compliance workflows, data processing, and plan communications. Together, Aegis and Stax.ai make it easier than ever for TPAs to expand into DB and CB services with confidence and efficiency.