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Creating More Flexibility in Cash Balance Plan Contributions
DWC Link to more items from this source
Mar. 18, 2020

"Although there are no set guidelines from the IRS as to how often a cash balance formula can be amended, a generally accepted rule of thumb is to limit it to no more than one change every three years.... You also have some flexibility in terms of when you deposit your contribution to the plan.... Combining that with the ability to amend your formula provides a bit of a cushion in the event that cash is tight.... [O]nly W-2 compensation paid to the shareholders is considered plan compensation.... [T]his nuance can provide added flexibility in that the company can adjust the allocation between W-2 and distributions."

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