Cash Balance Plans 101

Broadridge

Cash balance retirement plans have been around since the 1980s but didn’t gain traction until 2006, when some regulatory questions surrounding them were resolved. They are generally understood to be extremely advantageous to a very specific portion of investors, but their relative structural complexity (compared to 401(k)s and IRAs), regulatory concerns, tax implications and the challenge of educating less sophisticated clients leave many advisors feeling intimidated by them. And unfortunately, those who understand cash balance plans the best often approach them from an advanced or overly technical viewpoint which tends to create still more confusion. As a result, many who would be perfect candidates for cash balance plans are never given the opportunity to consider them as an option.

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