cash balance plans

A cash balance plan is a type of retirement plan where your employer guarantees a specific account balance, which grows annually with interest and employer contributions. It’s like a simplified version of a pension plan, combining features of traditional pensions and 401(k)s. The employer credits a set percentage or amount to your account each year, plus interest. You can typically access the funds upon retirement, often as a lump sum or annuity. Cash balance plans offer predictable retirement savings, potential tax benefits, and are primarily used by large or high-earning employers to provide retirement security for employees.