Strategies for high-income owners to save more for retirement, invest outside the business, and plan for a sale.
Cash Balance Plans & Wealth Planning for Orange County Business Owners
Business owners often earn more than they ever planned for, and much of it is taxed at the highest rates. Meanwhile, most of their wealth is tied up in the business, and their own planning waits until "later."
See how much you could contribute
Serving business owners throughout Orange County.
Your complimentary cash balance plan illustration
- ✓A contribution estimate prepared with a third-party administrator
- ✓Coordination with your CPA and attorney
- ✓No obligation to set up a plan
Your plan
A plan for each stage of ownership
I help owners put that income to work. That can mean larger tax-deductible retirement contributions, investing outside the business, and a plan for the day you sell or step back.
01
High-income years
Pair a cash balance plan with your 401(k) to make larger, generally tax-deductible contributions.
02
Wealth outside the business
Invest surplus profits tax-efficiently and diversify away from your own industry.
03
Preparing to sell
Losses harvested in earlier years can carry forward to offset capital gains when you sell. I coordinate with your CPA and attorney.
04
Life after the business
Turn plan balances and investments into retirement income, with a distribution order designed to manage taxes.
Planning for one of these stages? Request a call →
Cash balance plans
Cash balance plans: save more than a 401(k) allows
For owners with high, steady income, a 401(k) alone may limit how much you can set aside. Adding a cash balance plan can raise that ceiling significantly. Depending on your age and income, a combined design may allow contributions well into six figures per year. Contributions are generally tax-deductible to the business.
How the contribution ceiling rises
401(k) salary deferrals
+ Profit sharing
+ Cash balance plan
Illustration only. Actual limits depend on age, compensation, plan design, and employee coverage.
Cash balance plans tend to fit owners who:
- ✓Have steady, consistent profits they can commit for several years
- ✓Already contribute the maximum to a 401(k)
- ✓Are age 45 or older and want to catch up on retirement savings
- ✓Have a small number of employees
Want your own number? Get a complimentary cash balance plan illustration →
Beyond the business
Investing profits outside the business
Profits that build up outside the business need somewhere to go. With direct indexing, you own an index's individual stocks. Holdings that decline can be sold to realize a loss and replaced with similar ones. For owners, that opens up three advantages:
Offset gains from a sale
Harvested losses can offset capital gains from selling your business, real estate, or appreciated stock. Unused losses carry forward.
Diversify away from your industry
Your income already depends on one industry. The portfolio can limit holdings in it, so your investments don't rise and fall with the business.
Stay invested
Each loss is harvested by swapping individual stocks, not by moving to cash, so the rest of the portfolio keeps working.
Direct indexing has account minimums that vary by program. How direct indexing and tax-loss harvesting work →
Exit planning
Planning for a sale or succession
The business is often an owner's largest asset, and selling it can create the largest tax bill of their life. Planning a few years ahead gives you more options.
- ✓Build up harvested losses in the years before a sale
- ✓Plan how sale proceeds will be invested and drawn on in retirement
- ✓Coordinate timing and structure with your CPA and attorney
- ✓Help prepare your family with the right insurance and estate planning strategies
Thinking about a sale in the next few years? Request a call →
Looking for help with your company's 401(k)?
Plan benchmarking, advisor searches, and request for proposal (RFP) support for plan committees have their own page.
See 401(k) Plan Reviews
About
Sammy Khalil, QPFC
Financial Advisor · Wells Fargo Advisors
I've built my practice around a simple idea: most financial decisions aren't really about products. They're about tradeoffs people haven't had the chance to talk through with anyone.
Before becoming an advisor, I spent years working closely with business owners at the companies I worked for. That experience is what led me to this work, and it still shapes how I plan.
I work with individuals, families, and business owners across Orange County.
Verify my registration on FINRA BrokerCheck.
What happens next
Send the form
It takes under a minute. Only your name and phone are required.
I call at the time you picked
A short conversation to learn what you're looking for.
You get your illustration
We go over your numbers together, with no obligation to set up a plan.
Start here
Get a complimentary cash balance plan illustration
Share a few basics, and I'll have a custom illustration prepared with a third-party administrator. Only your name and phone are required; the rest makes the illustration more accurate.
What you get
- ✓An estimate of how much you could contribute each year with a cash balance plan and your 401(k)
- ✓The estimated deduction for your business and the cost of employee contributions
- ✓How the plan would fit with your investments and plans for a future sale
By submitting this request, you agree that the information you provide may be used by one of our associates from Wells Fargo Advisors to contact you about Wells Fargo Advisors' investment products and services. In addition, if you have other Wells Fargo products or services, you agree that Wells Fargo Advisors may share this information with those other Wells Fargo businesses or entities. Please review our privacy policy.
Questions Orange County business owners ask about cash balance plans
Tap a question to see the answer.
What is a cash balance plan?
A type of defined benefit retirement plan that credits each participant with a set contribution every year. For older, high-income owners, it can allow much larger contributions than a 401(k). Contributions are generally tax-deductible to the business.
How much can I contribute to a cash balance plan?
It depends on your age, compensation, and plan design, and older owners can generally contribute more. A third-party administrator calculates your specific limits, and I can coordinate that analysis for you.
Do I have to contribute for my employees too?
Generally, yes. Qualified plans must pass nondiscrimination testing, so eligible employees receive contributions as well. A well-designed plan can still direct most of the benefit to the owners.
Can I have a cash balance plan and a 401(k)?
Yes. Many owners pair the two to raise their total annual contributions.
What happens if profits drop one year?
Cash balance plans are often most suitable when income is steady, because the business commits to contributions each year. Plan design can build in some flexibility, but contributions aren't a year-to-year choice the way profit sharing is.
How can tax-loss harvesting help when I sell my business?
Losses harvested in the years before a sale can carry forward and offset capital gains from the sale. Because California taxes capital gains as ordinary income, this can matter more here than in many states. How much you harvest depends on market conditions, and harvesting generally defers taxes rather than eliminating them.
Do you also help with my company's 401(k) plan?
Yes. Plan benchmarking, advisor searches, and RFP support have their own page: 401(k) Plan Reviews.
Related services
Put more of what your business earns to work.
We'll look at your income, business, and investments together. Then we'll map out where a cash balance plan, tax-loss harvesting, or a sale plan could help.
Serving business owners throughout Orange County
See every Orange County city I serve
- Aliso Viejo
- Anaheim
- Brea
- Buena Park
- Costa Mesa
- Cypress
- Dana Point
- Fountain Valley
- Fullerton
- Garden Grove
- Huntington Beach
- Irvine
- La Habra
- La Palma
- Laguna Beach
- Laguna Hills
- Laguna Niguel
- Laguna Woods
- Lake Forest
- Los Alamitos
- Mission Viejo
- Newport Beach
- Orange
- Placentia
- Rancho Santa Margarita
- San Clemente
- San Juan Capistrano
- Santa Ana
- Seal Beach
- Stanton
- Tustin
- Villa Park
- Westminster
- Yorba Linda
Plus unincorporated communities including Coto de Caza, Ladera Ranch, Midway City, Rossmoor, and Trabuco Canyon.
Important information
This information is for general educational purposes only. It is not a recommendation or individualized investment, tax, or legal advice.
Tax information is general, based on current federal and California law, and subject to change.
Plan contribution limits depend on plan design, age, and compensation, and require coverage of eligible employees. Consult a third-party administrator.
Contribution illustrations are hypothetical, prepared with a third-party administrator for illustration only, and are not a guarantee of plan results.
Tax-loss harvesting may not be appropriate for all investors, is subject to wash sale rules, and may lower cost basis, increasing taxes when holdings are sold later. Harvesting applies only to taxable accounts.
Direct indexing involves minimums and costs, and may track its index differently than a fund.
Wells Fargo and Company and its Affiliates do not provide tax or legal advice. This communication cannot be relied upon to avoid tax penalties. Please consult your tax and legal advisors to determine how this information may apply to your own situation. Whether any planned tax result is realized by you depends on the specific facts of your own situation at the time your tax return is filed.
Initial reviews and consultations are offered at no cost and with no obligation. If you decide to open an account or use advisory services, applicable fees and expenses will be explained to you in advance.
The Qualified Plan Financial Consultant (QPFC) credential is awarded by the National Association of Plan Advisors (NAPA) and requires passing a proctored exam, agreeing to NAPA's Code of Professional Conduct, and completing annual continuing education. Holding the QPFC does not by itself make an advisor a fiduciary to a retirement plan. Whether Wells Fargo Advisors serves a plan in a fiduciary capacity depends on the services and agreement selected.
Links to third-party websites are provided for your convenience. Wells Fargo Advisors is not responsible for the content of those websites.