A cash balance plan is an employer-sponsored plan that guarantees a certain account balance in retirement, based on years of service and salary.
An employer contribute to an account on behalf of each employee. An employee is guaranteed those contributions plus a certain interest credit at either a fixed or variable rate.
There is no requirement that all employees participate in cash balance plan. The lower of 40% of non-excludable employees or 50 participants must receive benefit from plan.
Only businesses can sponsor a Cash Balance pension Plan. Your employer will contribute to the cash balance plan.
Cash balance plan has no contribution limits. The yearly cap for a cash balance pension varies according to your income, age, target date, and fund balance.
Plans offer you choose between lump-sum payment and monthly payout or annuity. You can take plan with you if you leave for another job & roll the funds into an IRA.