By David Gensler, President
Cash balance plans are the fastest-growing retirement plan in the country—flooding a market saturated with 401(k) profit-sharing plans, which are on a flat to slightly downward trajectory. According to market research, cash balance plans—hybrids of defined benefit (DB) and defined contribution (DC) plans—increased in number by 500 percent during the 10-year period ending in 2011.
So, what’s the big deal with cash balance plans? In a nutshell, they offer business owners the opportunity to avail themselves of considerably higher tax deductible contribution limits compared to 401(k) plans, reducing their tax bill and allowing them to accumulate more retirement wealth at an accelerated rate.