Cash Balance Plans
What Makes a Cash Balance Plan Different?
Instead of having a retirement investment based on a formula that takes into account, your age, how long you were on the job, and your average salary during your last few years of employment, a cash balance plans allows your employees and your own cash-balance plan to be credited with a set percentage of your salary each year, plus a set interest rate that is applied to your balance.
With a cash balance plan you will get a statement each year that illustrates the hypothetical value of your account along with the sort of monthly income payout that will generate when you retire at 65.
Additionally, a value-add to your employees is that if they choose to leave the company before retirement age, they may take the vested portion of their cash-balance plan as a lump sum and roll it into an IRA.