{"id":1034,"date":"2019-07-05T15:31:08","date_gmt":"2019-07-05T15:31:08","guid":{"rendered":"http:\/\/enteravalon.com\/southport\/?page_id=1034"},"modified":"2019-07-09T18:11:31","modified_gmt":"2019-07-09T18:11:31","slug":"cash-balance-plans","status":"publish","type":"page","link":"http:\/\/enteravalon.com\/southport\/cash-balance-plans\/","title":{"rendered":"Cash Balance Plans"},"content":{"rendered":"<p>[et_pb_section fb_built=&#8221;1&#8243; _builder_version=&#8221;3.25.3&#8243; background_color=&#8221;#000000&#8243; background_image=&#8221;http:\/\/enteravalon.com\/southport\/wp-content\/uploads\/2019\/07\/Cash-Balance.jpg&#8221; background_position=&#8221;top_center&#8221; background_blend=&#8221;luminosity&#8221; min_height=&#8221;382px&#8221; custom_padding=&#8221;20vh||20vh&#8221;][\/et_pb_section][et_pb_section fb_built=&#8221;1&#8243; _builder_version=&#8221;3.25.3&#8243; background_color=&#8221;#f5eee0&#8243;][et_pb_row _builder_version=&#8221;3.25&#8243;][et_pb_column type=&#8221;4_4&#8243; _builder_version=&#8221;3.25&#8243; custom_padding=&#8221;|||&#8221; custom_padding__hover=&#8221;|||&#8221;][et_pb_text _builder_version=&#8221;3.25.3&#8243; header_font=&#8221;|600|||||||&#8221; header_text_align=&#8221;center&#8221; header_text_color=&#8221;#044d7c&#8221; header_font_size=&#8221;70px&#8221;]<\/p>\n<h1>Cash Balance Points<\/h1>\n<p>[\/et_pb_text][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=&#8221;3.25.3&#8243;][et_pb_column type=&#8221;4_4&#8243; _builder_version=&#8221;3.25.3&#8243;][et_pb_text _builder_version=&#8221;3.25.3&#8243; header_font=&#8221;||||||||&#8221; header_3_font=&#8221;Poppins||||||||&#8221; header_3_line_height=&#8221;1.5em&#8221;]<\/p>\n<h3>A cash balance plan is a defined benefit plan that defines the promised benefit in terms of a stated account balance or \u201chypothetical account\u201d instead of a monthly pension payable at specific retirement age.<\/h3>\n<p>[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=&#8221;1&#8243; _builder_version=&#8221;3.25.3&#8243;][et_pb_row column_structure=&#8221;1_2,1_2&#8243; _builder_version=&#8221;3.25.3&#8243;][et_pb_column type=&#8221;1_2&#8243; _builder_version=&#8221;3.25.3&#8243;][et_pb_text _builder_version=&#8221;3.25.3&#8243; text_font=&#8221;Poppins||||||||&#8221; header_2_font=&#8221;Poppins||||||||&#8221;]<\/p>\n<h2>Pros<\/h2>\n<ul>\n<li>\n<p class=\"m_-1333727289574157297font_8\"><span face=\"arial, sans-serif\" style=\"font-family: arial, sans-serif;\">Substantial benefits can be provided and accrued within a short time \u2013 even with early retirement<\/span><\/p>\n<\/li>\n<li>\n<p class=\"m_-1333727289574157297font_8\"><span face=\"arial, sans-serif\" style=\"font-family: arial, sans-serif;\">Employers can contribute (and deduct) more than under other retirement plans<\/span><\/p>\n<\/li>\n<li>\n<p class=\"m_-1333727289574157297font_8\"><span face=\"arial, sans-serif\" style=\"font-family: arial, sans-serif;\">Easier for participants to understand because benefits are expressed in hypothetical account balances<\/span><\/p>\n<\/li>\n<li>\n<p class=\"m_-1333727289574157297font_8\"><span face=\"arial, sans-serif\" style=\"font-family: arial, sans-serif;\">Vesting can follow a variety of schedules from immediate to spread out over three years<\/span><\/p>\n<\/li>\n<li>\n<p class=\"m_-1333727289574157297font_8\"><span face=\"arial, sans-serif\" style=\"font-family: arial, sans-serif;\">Benefits do not have to be dependent upon asset returns<\/span><\/p>\n<\/li>\n<\/ul>\n<p>[\/et_pb_text][\/et_pb_column][et_pb_column type=&#8221;1_2&#8243; _builder_version=&#8221;3.25.3&#8243;][et_pb_text _builder_version=&#8221;3.25.3&#8243; text_font=&#8221;Poppins||||||||&#8221; header_2_font=&#8221;Poppins||||||||&#8221; locked=&#8221;off&#8221;]<\/p>\n<h2>Cons<\/h2>\n<ul>\n<li>\n<p class=\"m_-1333727289574157297font_8\"><span face=\"arial, sans-serif\" style=\"font-family: arial, sans-serif;\">Most expensive form of plan<\/span><\/p>\n<\/li>\n<li>\n<p class=\"m_-1333727289574157297font_8\"><span face=\"arial, sans-serif\" style=\"font-family: arial, sans-serif;\">Most administratively complex plan<\/span><\/p>\n<\/li>\n<li>\n<p class=\"m_-1333727289574157297font_8\"><span face=\"arial, sans-serif\" style=\"font-family: arial, sans-serif;\">In almost all years, a contribution must be made<\/span><\/p>\n<\/li>\n<li>\n<p class=\"m_-1333727289574157297font_8\"><span face=\"arial, sans-serif\" style=\"font-family: arial, sans-serif;\">Employee benefits cannot be retroactively reduced<\/span><\/p>\n<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=&#8221;1&#8243; module_id=&#8221;our-process&#8221; _builder_version=&#8221;3.22.3&#8243; custom_padding=&#8221;0|0px|28px|0px|false|false&#8221;][et_pb_row use_custom_gutter=&#8221;on&#8221; gutter_width=&#8221;1&#8243; custom_padding=&#8221;0|0px|0|0px|false|false&#8221; make_equal=&#8221;on&#8221; module_id=&#8221;retirement-planning&#8221; _builder_version=&#8221;3.25&#8243;][et_pb_column type=&#8221;4_4&#8243; _builder_version=&#8221;3.25&#8243; custom_padding=&#8221;5vh||5vh|&#8221; custom_padding__hover=&#8221;|||&#8221;][et_pb_accordion open_toggle_text_color=&#8221;#044d7c&#8221; open_toggle_background_color=&#8221;#ffffff&#8221; closed_toggle_text_color=&#8221;#044d7c&#8221; closed_toggle_background_color=&#8221;#ffffff&#8221; icon_color=&#8221;#044d7c&#8221; _builder_version=&#8221;3.25.3&#8243; toggle_font=&#8221;Poppins||||||||&#8221; toggle_text_align=&#8221;left&#8221; toggle_font_size=&#8221;26px&#8221; body_font=&#8221;||||||||&#8221; body_font_size=&#8221;18px&#8221; body_line_height=&#8221;1.5em&#8221; border_width_all=&#8221;0px&#8221; border_color_all=&#8221;#d8bc88&#8243; border_width_bottom=&#8221;2px&#8221; custom_padding=&#8221;||&#8221;][et_pb_accordion_item title=&#8221;Who Contributes&#8221; open=&#8221;on&#8221; _builder_version=&#8221;3.25.3&#8243; title_text_shadow_horizontal_length=&#8221;0em&#8221; title_text_shadow_vertical_length=&#8221;0em&#8221; title_text_shadow_blur_strength=&#8221;0em&#8221; closed_title_text_shadow_horizontal_length=&#8221;0em&#8221; closed_title_text_shadow_vertical_length=&#8221;0em&#8221; closed_title_text_shadow_blur_strength=&#8221;0em&#8221; custom_padding=&#8221;3vh||3vh&#8221;]<\/p>\n<div><span face=\"arial, sans-serif\" style=\"font-family: arial, sans-serif;\">Generally, the employer makes the most contributions. Sometimes, employee voluntary contributions may be permitted.<\/span><\/div>\n<div><\/div>\n<p>[\/et_pb_accordion_item][et_pb_accordion_item title=&#8221;Contribution and Benefit Limits&#8221; open=&#8221;off&#8221; _builder_version=&#8221;3.25.3&#8243; title_text_shadow_horizontal_length=&#8221;0em&#8221; title_text_shadow_vertical_length=&#8221;0em&#8221; title_text_shadow_blur_strength=&#8221;0em&#8221; closed_title_text_shadow_horizontal_length=&#8221;0em&#8221; closed_title_text_shadow_vertical_length=&#8221;0em&#8221; closed_title_text_shadow_blur_strength=&#8221;0em&#8221; custom_padding=&#8221;3vh||3vh&#8221;]<\/p>\n<p><span>Benefits provided under the plan\u00a0<\/span><span><a href=\"https:\/\/www.irs.gov\/Retirement-Plans\/Plan-Participant,-Employee\/Retirement-Topics-Defined-Benefit-Plan-Benefit-Limits\" rel=\"noopener undefined noreferrer\" target=\"_blank\">are limited<\/a><\/span><span>.\u00a0 Generally, the benefit limits are higher than those allowed in Defined Contribution Plans.\u00a0\u00a0 An Enrolled Actuary is needed to determine the Contribution and Benefit Limits<\/span><\/p>\n<p>[\/et_pb_accordion_item][et_pb_accordion_item title=&#8221;Filing Requirements&#8221; open=&#8221;off&#8221; _builder_version=&#8221;3.25.3&#8243; title_text_shadow_horizontal_length=&#8221;0em&#8221; title_text_shadow_vertical_length=&#8221;0em&#8221; title_text_shadow_blur_strength=&#8221;0em&#8221; closed_title_text_shadow_horizontal_length=&#8221;0em&#8221; closed_title_text_shadow_vertical_length=&#8221;0em&#8221; closed_title_text_shadow_blur_strength=&#8221;0em&#8221; custom_padding=&#8221;3vh||3vh&#8221;]<\/p>\n<div><span face=\"arial, sans-serif\" style=\"font-family: arial, sans-serif;\">Annual filing of Form 5500 is required.\u00a0 An enrolled actuary must sign the Schedule SB of Form 5500.<\/span><\/div>\n<p>[\/et_pb_accordion_item][et_pb_accordion_item title=&#8221;In-service Withdrawals&#8221; open=&#8221;off&#8221; _builder_version=&#8221;3.25.3&#8243; title_text_shadow_horizontal_length=&#8221;0em&#8221; title_text_shadow_vertical_length=&#8221;0em&#8221; title_text_shadow_blur_strength=&#8221;0em&#8221; closed_title_text_shadow_horizontal_length=&#8221;0em&#8221; closed_title_text_shadow_vertical_length=&#8221;0em&#8221; closed_title_text_shadow_blur_strength=&#8221;0em&#8221; custom_padding=&#8221;3vh||3vh&#8221;]<\/p>\n<div>\n<div><span face=\"arial, sans-serif\" style=\"font-family: arial, sans-serif;\">Generally, a defined benefit plan may not make in-service distributions to a participant before age 62.<\/span><\/div>\n<\/div>\n<p>[\/et_pb_accordion_item][et_pb_accordion_item title=&#8221;How do cash balance plans differ from 401(k) plans?&#8221; open=&#8221;off&#8221; _builder_version=&#8221;3.25.3&#8243; title_text_shadow_horizontal_length=&#8221;0em&#8221; title_text_shadow_vertical_length=&#8221;0em&#8221; title_text_shadow_blur_strength=&#8221;0em&#8221; closed_title_text_shadow_horizontal_length=&#8221;0em&#8221; closed_title_text_shadow_vertical_length=&#8221;0em&#8221; closed_title_text_shadow_blur_strength=&#8221;0em&#8221; custom_padding=&#8221;3vh||3vh&#8221;]<\/p>\n<div><span face=\"arial, sans-serif\" style=\"font-family: arial, sans-serif;\">Cash balance plans are defined benefit plans. In contrast, 401(k) plans are defined contribution plans. There are four major differences between typical cash balance plans and 401(k) plans:<\/span><\/div>\n<div><span class=\"m_-1333727289574157297wixGuard\"><span face=\"arial, sans-serif\" style=\"font-family: arial, sans-serif;\"><\/span><\/span><\/div>\n<ol class=\"m_-1333727289574157297font_8\">\n<li>\n<p class=\"m_-1333727289574157297font_8\"><span face=\"arial, sans-serif\" style=\"font-family: arial, sans-serif;\"><span>Participation<\/span>\u00a0\u2013\u00a0Participation in typical cash balance plans generally does not depend on the workers contributing part of their compensation to the plan; however, participation in a 401(k) plan does depend, in whole or in part, on an employee choosing to contribute to the plan.<\/span><\/p>\n<\/li>\n<li>\n<p class=\"m_-1333727289574157297font_8\"><span face=\"arial, sans-serif\" style=\"font-family: arial, sans-serif;\"><span>Investment Risks<\/span>\u00a0\u2013\u00a0The investments of cash balance plans are managed by the employer or an investment manager appointed by the employer. The employer bears the risks of the investments. Increases and decreases in the value of the plan\u2019s investments do not directly affect the benefit amounts promised to participants. By contrast, 401(k) plans often permit participants to direct their own investments within certain categories. Under 401(k) plans, participants bear the risks and rewards of investment choices.<\/span><\/p>\n<\/li>\n<li>\n<p class=\"m_-1333727289574157297font_8\"><span face=\"arial, sans-serif\" style=\"font-family: arial, sans-serif;\"><span>Life Annuities<\/span>\u00a0\u2013\u00a0Unlike 401(k) plans, cash balance plans are required to offer employees the ability to receive their benefits in the form of lifetime annuities.<\/span><\/p>\n<\/li>\n<li>\n<p class=\"m_-1333727289574157297font_8\"><span face=\"arial, sans-serif\" style=\"font-family: arial, sans-serif;\"><span>Federal Guarantee<\/span>\u00a0\u2013\u00a0Since cash balance plans are defined benefit plans, the benefits promised by cash balance plans are usually insured by a federal agency, the Pension Benefit Guaranty Corporation (PBGC). If a defined benefit plan is terminated with insufficient funds to pay all promised benefits, the PBGC has authority to assume trusteeship of the plan and to begin to pay pension benefits up to the limits set by law. Defined contribution plans, including 401(k) plans, are not insured by the PBGC.<\/span><\/p>\n<\/li>\n<\/ol>\n<p>[\/et_pb_accordion_item][\/et_pb_accordion][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=&#8221;3.25.3&#8243; min_height=&#8221;70px&#8221;][et_pb_column type=&#8221;4_4&#8243; _builder_version=&#8221;3.25.3&#8243;][et_pb_divider show_divider=&#8221;off&#8221; _builder_version=&#8221;3.25.3&#8243;][\/et_pb_divider][\/et_pb_column][\/et_pb_row][\/et_pb_section]<\/p>\n","protected":false},"excerpt":{"rendered":"<p>An overview of cash balance plans and how they work.<\/p>\n","protected":false},"author":3,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"_et_pb_use_builder":"on","_et_pb_old_content":"","footnotes":""},"class_list":["post-1034","page","type-page","status-publish","hentry"],"_links":{"self":[{"href":"http:\/\/enteravalon.com\/southport\/wp-json\/wp\/v2\/pages\/1034","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/enteravalon.com\/southport\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"http:\/\/enteravalon.com\/southport\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"http:\/\/enteravalon.com\/southport\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"http:\/\/enteravalon.com\/southport\/wp-json\/wp\/v2\/comments?post=1034"}],"version-history":[{"count":4,"href":"http:\/\/enteravalon.com\/southport\/wp-json\/wp\/v2\/pages\/1034\/revisions"}],"predecessor-version":[{"id":1124,"href":"http:\/\/enteravalon.com\/southport\/wp-json\/wp\/v2\/pages\/1034\/revisions\/1124"}],"wp:attachment":[{"href":"http:\/\/enteravalon.com\/southport\/wp-json\/wp\/v2\/media?parent=1034"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}