Online cash balance record keeping products

[Tom]

We have a large client that will be opening a new CB plan for 2026. They recently closed a former CB plan.  It was managed and record kept in the traditional way. Now the CEO would like to investigate online record keeping products for the new CB plan.  Does anyone know of a CB record keeping product?

The CEO would like participants to be able to access their balance throughout the year. Their plan plan credits actual earnings between 0 and 5.5% annually. How would actual earnings be credited during the year?  The plan sponsor historically pre-funds large amounts to the plan monthly.  How would that get credited to participants? The plan requires 1000 hours teach year to receive a contribution credit. This could work reasonably if the plan is funded once after the end of the year, and then actual earnings within the allowable range are credited. 

I can see some advantages with distributions - online application, notification to the Trustee to approve.  The spousal waiver witness/notary could be a complication.  To make it work, the plan sponsor may need to change how it has operated in the past.  Plus there are record keeping fees which will eat away at the low earnings needed by a CB plan. The plan has operated very well under the traditional arrangement but technology sounds appealing more to some than others.

Comments, product recommendations, experiences are appreciated.

Tom

[justanotheradmin]

The accrued benefits (balances) the participants see on their statements (or a participant website) are hypothetical. The actual amount of $$ invested in the plan's trust is different, and rarely exactly equals the accrued benefits. 

Unless the plan's document calls for something more frequent than annual (some do say monthly or quarterly), the hypothetical balances only would be updated once a year. 

The amount the employer deposits - has nothing to do with how much interest is credited and when, to the participant's accrued benefit hypo balance. 

Actual earnings - is not a common plan design for cash balance plans for a variety of reasons - what interest credit rate does the CB document say? 

There is not recordkeeping in the same sense that there would be for a 401(k) or 403(b) plan. 

[justanotheradmin]

also - how recently did they close the prior CB plan? why did they close it? will there be lifetime 415 limits that the new plan has to track/consider? 

[Effen]

There are market based cash balance plans and variable investment plans that can be daily record kept like a DC plan.  Participants can log in to a website and see their the value of their account at any time.  The design can be cost prohibitive for smaller groups, but for larger groups, or HCE only designs, they work very well.  

My firm specialize in the variable design.  This is not technically a "cash balance" plan, but relies on a different section of the IRC.  There are some problems with market based cash balance - especially around NDT, which is why we prefer the variable design.

PM me is you would like additional information.  

[ERISA_Guy]

The client's goal is likely to allow a way for participants to have their hypo account balance online so they can "see" it,  so it feels more real, so that the "retirement readiness" algorithms can include that balance in their projections.

This can be done by adding the plan as "trustee directed" at the same recordkeeper who does the clients 401k.  

it would not be updated more frequently than now: annual determination, annual crediting.  It would just be visible.

The fiduciary aspect would be "can the CB investment advisor use the fund lineup to create a portfolio?"  if you can get buy in there, this is a good way to accomplish your goal.

[amanda22]

Given actual earnings and the 1,000-hour requirement, a constantly updated balance could create more confusion than value. I’d probably look for a recordkeeper that can give participants online access to an estimated or periodically updated balance while keeping the actual annual crediting process unchanged.

That gets the CEO most of what he wants without rebuilding a process that already works.