Cash balance plans
offer owner-employees in professional practices a vehicle to defer tax on income well in excess of the annual contribution limits of traditional Sec.
With an increasing number of attorneys bumping up against their maximum contributions for 401(k) and profit sharing plans, more law firms are turning to Cash Balance Plans
to help shareholders/partners increase their pre-tax contributions," says Dan Kratvitz, President of Encino, California's Kravitz Inc.
An alternative to termination began in the mid 1980s with the introduction of cash balance plans
by the Bank of America.
In "Somewhere in the Middle: Cash Balance Plans
," Paul Zorn discusses one option--establishing a cash balance plan
--and explains the implications of this choice.
The percentage of cash balance plans
among both large and small employers is increasing, and this second edition reference supports the trend with updates on regulations and court rulings, treasury and IRS concerns, and details on risk mitigation and management strategies.
As defined benefit plans have become less prevalent, they have been replaced by defined contribution or cash balance plans
IN THE PAST COUPLE DECADES, MANY companies have converted their traditional pension plans to cash balance plans
in order to make benefits more predictable.
Cash balance plans
look like DC plans to employees but operate like a DB pension for employers.
Retirement plans pose major risks for employers as companies join the trend of migrating from traditional company-paid pension plans, to 401(k) and cash balance plans
Not created equal: Fully insured and cash balance plans
Despite this uncertainty, cash balance plans
remain a small spring of vitality in the defined benefit plan world.
The arrangement also provides a minimum benefit for hybrid defined benefit plans, such as cash balance plans
, which is a minimum percentage of contributions on a sliding scale that goes up by age.