Pinnacle Plan Design is a third party administrator (TPA) for employer-sponsored qualified retirement plans. We are proud to offer retirement plan administration services in Charlotte, NC, (North Carolina), as well as nationally. Pinnacle specializes in retirement plan design, administration and actuarial consulting.
Cash Balance Plan FAQs
What is a cash balance plan? A cash balance plan is a defined benefit plan where the benefit for the participant is defined in terms of a “hypothetical account balance” instead of a periodic benefit (as is the case in a traditional defined benefit plan).
Why a defined benefit plan? A DB plan provides larger (additional) limits than DC plans (100% of comp, $61,000 for 2022). Sample DB contributions: age 40: $105,000, age 50: $170,000, age 60: $285,000 (Assumes adequate compensation, service and participation to support max dollar benefit).
How does a cash balance plan work? In general terms, the cash balance plan document will define groups of participants and their “pay Credit”. This pay credit might be defined as a percentage of compensation or a dollar amount (or some combination of both). For example, the pay credit may be the lesser of 3% of period compensation or $1,000.
In addition to the pay credits, the hypothetical accounts are credited with interest at the interest crediting rate defined in the plan document. Typical rates include Treasury Rates or a fixed rate (or some combination of both). For example, the interest crediting rate may be the lesser of a fixed rate or an index.
Does a cash balance plan make the DC plan obsolete? No. The DC plan is an important part of the design.
What does the participant receive each year? The participant statement provided to the participant looks similar to a DC statement.
Contact: Third Party Administrator Charlotte
Pinnacle Plan Design is proud to offer retirement plan administration services in Charlotte, NC, (North Carolina), and surrounding areas including Cornelius, Davidson, Fort Mill, Harrisburg, Huntersville, Indian Trail, Matthews, Mint Hill, Mooresville, Pineville, Waxhaw, and Weddington.