Combining Security and Flexibility with Cash Balance Plan
A cash balance plan is a unique retirement savings plan that blends elements of a defined benefit plan with a modern defined contribution plan. It consists of hypothetical individual accounts that grow annually based on a payroll credit (compensation from the employer) and interest credit (from investments). These credits are defined in the plan document.
Defined Benefit Component
Employees accumulate benefits over time based on salary and years of service. This accrual is typically a hypothetical account balance, similar to a defined contribution plan
Defined Contribution Aspect
Employers contribute to these individual accounts, usually as a percentage of the employee’s salary. These contributions earn interest at a predetermined rate, allowing the account balance to grow over time.
Transparency and Portability
Cash balance plans provide clear visibility into the account balance and how it increases with contributions and interest credits. Additionally, employees who leave the company before retirement can often transfer their vested account balance, adding to their overall retirement savings.
Distribution Choices
Participants have options regarding the distribution of their benefits. They can choose a lump sum payment or rollover the money to an IRA account upon termination or retirement. Choose to have the account be distributed in an annuity form of benefit.
For Employers
Predictable Contributions
with Tailored Flexibility
<span data-metadata=""><span data-buffer="">Appreciate the predictability of contributions and have the flexibility to tailor the plan to meet specific objectives
For Employees
Transparent Growth and
Flexible Benefits
Benefit from the transparency of seeing their account balance grow, the potential for account growth over time, and flexibility in how they receive retirement benefits.
Find Out If a Cash Balance Plan is Right For You
Are you a business with consistent cash flow and high profits? Do you face high tax rates while striving for aggressive retirement savings? If you’re an older business owner looking to catch up on retirement planning, or a small business owner eager to contribute significantly to retirement savings, a cash balance plan might be the perfect solution. This modern plan offers the security of a defined benefit while providing the flexibility of individual accounts.