cash balance plan

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Cash Balance Plan

A pension plan that combines features of a defined-benefit plan and a defined-contribution plan. Like a defined-benefit plan, a cash balance plan guarantees the pensioner a certain benefit upon retirement. That is, the amount one receives from a cash balance plan does not vary according to the performance of some portfolio. Like a defined-contribution plan, the employer agrees to place a certain percentage of one's salary into the plan each year, and accounts are created on an individual basis. A cash balance plan can be rolled over into another account if the employee changes jobs. As a result, it is relatively popular with younger workers.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

cash balance plan

A qualified employer pension plan in which the employer guarantees a contribution level and minimum rate of return.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

Cash balance plan.

A cash balance retirement plan is a defined benefit plan that has many of the characteristics of a defined contribution plan.

The benefit that you'll be entitled to builds up as credits to a hypothetical account. The hypothetical account is credited with hypothetical earnings, based on a percentage of your current pay.

These plans are portable, which means you can roll them over from one employer to another when you change jobs. That makes them popular with younger and mobile workers.

But they are often unpopular with older workers whose employers switch from a defined benefit to cash balance plan because their pensions may be less than with traditional defined benefit plans.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
Circuit Court of Appeals--agreed with its own earlier reformation of Cigna Corp.'s cash balance pension plan, and the Appellate Court decided the lower court had discretion to reform it.
He has performed internal financial reviews and is responsible for the development of financial, HR and organization policies and procedures, corporate risk management, ownership transition plans and the implementation of a Cash Balance Pension Plan. He designed and implemented a new 401(k) plan including plan provider and broker relationships, investment committee management and the guidance of fiduciary responsibilities.
A cash balance pension plan is a qualified defined benefit plan that provides for annual employer contributions at a specified rate to hypothetical individual accounts that are set up for each plan participant.
While public pension funds have not been particularly active in the recent surge in cash balance pension plan conversions, there are signs suggesting that some level of interest might be developing.
Final regulations for acceptable ways employers can add interest to employees' cash balance pension plan accounts were listed as a priority in the agency's 2011 through 2012 Priority Guidance Plan.
So, for example, if your firm is moving to a cash balance pension plan, you can provide the requisite information and worksheets to guide your workers toward informed decisions.
Cash Balance Pension Plan. The business makes annual contributions at a specified rate to individual accounts set up for each plan participant.
Cash Balance Pension Plan. In this defined benefit plan that looks like a defined contribution plan, the employer creates "phantom" accounts for employees and credits them with an annual contribution.
DATAIR Employee Benefit Systems, Inc., announced the addition of 2012 Cycle A Cash Balance Pension Plan Documents ( to its Plan Document System, and also has redesigned its summary plan description to a Q&A format.
In a cash balance pension plan, an individual "account" is established for each plan participant.