What Is a Cash Balance Plan?
What Is a Cash Balance Plan?
A Cash Balance Plan is a type of Defined Benefit Plan that operates much differently than other types of retirement plans. It is often referred to as a "Hybrid" plan because it has features of both Defined Benefit and Defined Contribution plans.
Cash Balance Plans are established for the primary benefit of the owners or executives of a company. Only businesses can sponsor a Cash Balance Plan, but any business entity may do so — including sole proprietorships, partnerships, LLCs, S Corporations, and C Corporations.
Each participant has an individual "account" that receives annual contribution credits and interest credits, making it easier for participants to understand their benefit.
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