Did you know a recent research report indicates that the number of new Cash Balance plans increased 17% outpacing the 3% growth of 401(k) plans? Moreover, 92% of the cash balance plans are sponsored by companies with less than 100 participants.
A cash balance plan is a defined benefit plan in which an employer credits a pay credit and an interest credit to the participant account. It also allows employees to contribute more toward retirement than with only a 401(k) plan or other retirement plans for small businesses.
Here we have listed a few reasons to add a cash balance plan to your plan services.
But, cash balance plans are not right for all companies since the plan must be funded on an annual or more frequent basis. The employers choosing this plan should have a stable cash flow and profitability to meet its funding requirements. Talk to your 401k plan administrator to know more.