# Frequently asked questions

> Short answers to the questions advisors and owners ask most.

Source: https://askactuary.com/faq  
Author: Mike Rutkowski, FSA, EA, MSPA

Short answers to the questions we hear most from advisors, CPAs, and owners. Each links to the page with the full explanation.

### Can I have a Cash Balance plan with no employees?

Yes. Owner-only plans are common and the simplest to run. Sole proprietors, partnerships, S corporations, and C corporations can all sponsor one. A spouse who works in the business will generally participate too.

### How much can I contribute?

It depends mostly on age, pay, and how many years remain before you reach the 415(b) cap. Older owners with high pay can often contribute several hundred thousand dollars a year. The [calculator](https://askactuary.com/calculator) shows the cap and a level contribution to reach it.

### Can I skip a year?

Not entirely. Each year has a minimum required contribution. The range gives room to contribute less in a slow year, a cushion from earlier years can lower the minimum, and pay credits can be reduced going forward by amendment. See [Timing and changing contributions](https://askactuary.com/contribution-timing).

### What happens if the investments lose money?

Participants' accounts still grow at the plan's interest crediting rate. The shortfall raises the employer's required contributions over the next several years. See [Investments and risk](https://askactuary.com/investments).

### What does a plan cost to set up and run?

Once you request a proposal we provide a full illustration and fee schedule. Fees are very low relative to the tax benefits of the plan.

### How is a Cash Balance plan different from a traditional pension?

Both are defined benefit plans. A traditional plan states the benefit as a monthly pension at retirement. A Cash Balance plan states it as an account balance, which is easier for participants to understand and usually costs less to provide for younger staff.

### Can my spouse participate?

Yes, if your spouse works in the business and receives reasonable pay for that work. Their benefit has its own 415(b) limit, which can roughly double what a household can set aside.

### Can I roll the money to an IRA when I'm done?

Yes. Lump sums are usually rolled directly to an IRA or another qualified plan, which keeps them tax-deferred. Married participants need spousal consent first. See [Leaving and plan termination](https://askactuary.com/distributions-at-termination).

### What happens if I sell the business?

The plan is usually terminated before the sale closes and the accounts are paid out. A buyer can also agree to take over the plan. Plan for this early, because termination takes several months.

### Is the money protected from creditors?

Qualified plans generally have strong protection, especially in bankruptcy. The details depend on whether the plan covers employees and on state law, so confirm with an attorney for a specific situation.

### Do I need a 401(k) as well?

No, but it usually helps. Owners keep their deferrals and catch-up, and profit sharing is the cheapest way to meet the staff testing requirements. See [Pairing with a 401(k)](https://askactuary.com/cash-balance-and-401k).

---

Educational information only. Not tax, legal, or investment advice, and not an actuarial valuation.
Questions for the author: https://askactuary.com/get-started · Full guide index: https://askactuary.com/llms.txt