Question

home / study / business / accounting / accounting questions and answers / seth, who is about 55 years old, runs a local po-boy shop in new orleans. he has several high ... Question: Seth, who is about 55 years old, runs a local Po-Boy shop in New Orleans. He has several high sch... Seth, who is about 55 years old, runs a local Po-Boy shop in New Orleans. He has several high school kids who work for him part time. Seth’s mom, Robin, helps make the best meatballs in the universe and works there full time. Which of the following plans makes the most sense for Seth if he earns about $120,000 and does not want to spend too much on a retirement plan? 1. Money purchase plan. 2. Tandem plan. 3. Cash balance plan. 4. 401(k) / profit sharing plan.

Answer 1

Answer - 3. - Cash Balance Plan

This plan is basically designed for small enterpreneurs and professional who have higher profits and less employees. This plan helps in saving huge taxes and create wealthy retirement gains and reduce employee retirement benefit cost.

As seth's mom also works there, this plan comes with the family contributions also. In it senior member can earn high contributions

This plan can also be taken with 401(k)/Profit sharing plan which becomes combined plan and offers more benfits.