Cash balance plan surge

I’ve been amazed at how many times this little tidbit about the popularity of cash balance plans has appeared and reappeared in the news. That’s great, because many employers and financial planners are still unaware of what’s possible.

It makes sense that a big surge has come since 2001.   That was just after the §415(e) limits on combined DB/DC plans were repealed and we started setting up new cash balance plans.  Before, you couldn’t have both the maximum contribution to a DC plan and the maximum benefit from a DB plan.

Now you can, and that works especially well for multiple-owner firms (like law firms, medical groups etc.) who want to get past the maximum DC contribution ($49k this year).  Some firms can deduct an additional $100k or more per owner.