engineered financial strategies

Cash Balance Plan Design

Cash Balance Plans

Many owners and partners are looking for larger tax deductions and accelerated retirement savings. Cash Balance plans may be the perfect solution for them. Also known as “hybrid” plans, they combine the high contribution limits of traditional defined benefit plans with the flexibility and portability of a 401(k).

Thanks to regulatory and legislative changes in 2006, 2010 and 2014, Cash Balance plans have become the fastest growing sector of the retirement plan market, as thousands of professionals and successful business owners across the country adopt these plans each year.

A Cash Balance plan is a defined benefit plan that specifies both the contribution to be credited to each participant and the investment earnings to be credited based on those contributions. Each participant has an account that resembles those in a 401(k) or profit sharing plan. Those accounts are maintained by the plan actuary, who generates annual participant statements.

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