Many business owners and professionals look for retirement plan providers that offer strong investment platforms and administrative support. Fidelity is one of the largest and most trusted names in retirement services, offering an excellent 401(k) platform with low-cost funds and robust tools.
But does Fidelity offer a cash balance plan for small business owners?
In this post, we will discuss Fidelity retirement plan options and offer a few suggestions to maximize your retirement structure. Let’s jump in!
Understanding the Fidelity and Emparion Relationship
Fidelity is known for its advanced technology, wide investment selection, and excellent 401(k) administration tools. Its platform is ideal for business owners who want investment flexibility and strong participant education.
However, while Fidelity manages defined contribution plans like 401(k)s, it does not administer defined benefit plans (such as cash balance plans) to small business owners. They do offer plans for large companies though. Unfortunately, their pricing for these plans is just not economic for small to medium sized businesses.
Emparion works closely with Fidelity to bridge this gap. Under this model, Emparion handles all aspects of the cash balance plan, including design, actuarial calculations, compliance testing, and annual filings.
Meanwhile, Fidelity continues to serve as the investment custodian for both plans. This structure allows clients to maintain one trusted investment platform while leveraging Emparion’s specialized expertise in cash balance plan administration. Contributions, reports, and participant statements are coordinated between the two providers, creating an integrated and compliant retirement plan solution.
How the Cash Balance and 401(k) Combo Works
A cash balance plan is a type of defined benefit plan that presents retirement benefits in the form of a hypothetical account. Each participant receives annual pay credits, along with an interest credit that grows at a predetermined rate.
Although it resembles a defined contribution plan on the surface, it is funded and regulated according to traditional pension rules. This structure allows business owners to make significantly larger, age-based contributions than standard retirement plans.
When a cash balance plan is paired with a 401(k), the employee’s ability to make salary deferrals remains unchanged. Participants can continue contributing the maximum allowable amount through the 401(k) plan without restriction.
However, the employer profit-sharing portion is impacted by defined benefit plan coordination rules. In combined plan arrangements, employer profit-sharing contributions are typically capped at 6 percent of eligible wages to ensure testing compliance.
This combination still provides powerful tax savings opportunities, as the cash balance plan carries most of the employer funding. The 401(k) component supplies elective deferrals and optional matching, while the cash balance plan handles larger, actuarially calculated contributions.
Why Fidelity Does Not Offer Cash Balance Plans
Fidelity focuses primarily on defined contribution plans, which include 401(k)s, 403(b)s, and similar arrangements. These plans are easier to administer because contributions are discretionary and not subject to the same actuarial funding requirements as defined benefit plans. Cash balance plans, however, fall under the defined benefit category, which involves complex funding, actuarial calculations, and IRS compliance.
Because of these complexities, Fidelity does not directly administer small business cash balance plans. They allow clients to establish such plans through an outside administrator, such as Emparion, while maintaining the investment accounts under Fidelity’s platform. This approach allows Fidelity to focus on its strength—investment management—while relying on specialized partners for plan administration.
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For clients, this creates a best-of-both-worlds solution: Fidelity provides top-tier investment capabilities, and Emparion provides actuarial precision and compliance expertise. The collaboration ensures all aspects of the retirement plan are handled efficiently and accurately.
Benefits of Combining Emparion and Fidelity
When Emparion and Fidelity work together, the result is a streamlined retirement plan that combines administrative excellence with strong investment performance. Employers benefit from clear communication, integrated reporting, and a single point of coordination for contributions and participant management. Each organization focuses on its area of expertise, ensuring that all technical, actuarial, and investment details are handled with precision.
The combined solution provides significant advantages for business owners seeking higher retirement savings. The cash balance plan allows for large, tax-deductible contributions, while the Fidelity 401(k) offers flexibility and employee participation options. Together, they create a balanced structure that rewards owners while maintaining fairness and compliance for employees.
The table below summarizes how responsibilities are divided between Fidelity and Emparion in this combined plan approach.
| Function | Fidelity’s Role | Emparion’s Role |
|---|---|---|
| Plan Type Managed | 401(k) plan and profit-sharing administration | Cash balance plan setup and administration |
| Investment Platform | Provides investment funds, account access, and participant statements | Coordinates investment strategy with actuary and custodian |
| Compliance Testing | Handles 401(k) testing if applicable | Performs cross-testing and combined plan compliance |
| Annual Reporting | Prepares and files 401(k) Form 5500 | Prepares cash balance plan Form 5500 and actuarial report |
| Participant Services | Provides online access and statements to employees | Issues annual participant benefit statements for the cash balance plan |
This structure provides clarity and efficiency, reducing confusion about responsibilities and ensuring full compliance with IRS and Department of Labor rules.
Advantages of the Cash Balance + 401(k) Combo
Combining a cash balance plan with a 401(k) allows business owners to significantly increase retirement contributions and reduce taxable income. The cash balance plan provides large, age-weighted contributions, while the 401(k) offers flexible employee deferrals and profit-sharing. When used together, they form a comprehensive and tax-efficient retirement package.
Because the two plans are tested together, a Safe Harbor 401(k) structure is often used to simplify compliance. This ensures the plan automatically passes certain IRS tests and allows owners to defer the maximum allowable amount each year. Fidelity’s platform supports Safe Harbor 401(k) arrangements, making the integration straightforward for businesses that also implement an Emparion-managed cash balance plan.
Is a Cash Balance or Defined Benefit Plan Right For You?
The combination also offers strong employee benefits. Staff members receive consistent contributions in both plans, promoting retention and satisfaction. Owners, meanwhile, can achieve their goal of accelerating retirement savings and optimizing tax deductions.
Implementation Process with Fidelity and Emparion
Setting up a combined cash balance and 401(k) plan through Fidelity and Emparion is straightforward with professional guidance. The process begins with a plan design consultation where contribution goals, employee demographics, and funding preferences are reviewed. Emparion then prepares the plan documents, performs actuarial calculations, and ensures the cash balance plan meets IRS compliance standards.
Fidelity’s role begins with establishing the 401(k) platform and investment accounts. They handle participant onboarding, contributions, and investment options for the defined contribution portion of the plan. Emparion coordinates directly with Fidelity to ensure that both plans align properly for combined testing and reporting.
Once implemented, the plans operate together seamlessly. Employers make contributions to both plans according to annual funding requirements, and employees access their 401(k) accounts directly through Fidelity’s user-friendly portal. The integration ensures efficiency and minimizes administrative burden for the business owner.
Key Benefits of Fidelity and Emparion
Employers who choose Fidelity and Emparion gain a combination of investment flexibility, administrative strength, and technical expertise. The collaboration provides the resources of a large financial institution along with the personalized attention of a specialized plan administrator. This structure is particularly valuable for small to mid-sized professional firms that want sophisticated retirement planning without excessive complexity.
Here are some of the key benefits of using Fidelity and Emparion together:
- Access to Fidelity’s broad investment lineup and advanced 401(k) technology
- Comprehensive cash balance plan design and compliance by Emparion
- Integrated reporting and coordinated contribution management
- Ability to make large, tax-deductible contributions through the cash balance plan
- Simplified compliance using Safe Harbor 401(k) structures
- Consistent employee communication and easy participant access
- Streamlined administration across both retirement plans
These combined strengths create an efficient, scalable retirement solution that can grow with your business and adapt to changing needs.
Key Takeaways
While Fidelity does not directly offer cash balance plan administration, it remains one of the best platforms for 401(k) management. When paired with Emparion’s actuarial and compliance expertise, business owners gain a complete retirement strategy that maximizes tax benefits and investment opportunities. The collaboration allows each provider to focus on its strengths—Fidelity for investments and technology, Emparion for plan design and administration.
This partnership gives employers access to the same level of quality and precision found in large corporate retirement plans, scaled appropriately for smaller professional practices. For firms seeking to reduce taxes, increase retirement savings, and maintain regulatory compliance, the Fidelity and Emparion combination offers a clear advantage.
In today’s complex retirement environment, choosing the right partners is essential. Working with Fidelity and Emparion ensures that every aspect of your cash balance and 401(k) strategy is handled efficiently, accurately, and with your long-term goals in mind.
