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 San Antonio, TX (Texas), as well as nationally. Pinnacle specializes in retirement plan design, administration and actuarial consulting.
What is a Cash Balance Plan?
A cash balance plan is a hybrid between a traditional defined benefit plan and a defined contribution plan. Essentially, it is a defined benefit plan that looks like a defined contribution plan (to the employee/participant).
In a cash balance plan, the benefit is defined as a theoretical account balance (TAB) at time of separation, as opposed to a periodic benefit payment in a traditional defined benefit plan. The TAB is a paper account only, meaning the plan’s assets are not actually divided into individual accounts.
The TAB gets credited with two contributions:
- Contribution (pay) credits
- Flat dollar, percentage of pay, or combination
- Analogous to contribution in a defined contribution plan
- E.g., 2% of compensation not to exceed $1,000, or 50% of compensation not to exceed $125,000
- Interest credits
- Analogous to investment return in defined contribution plan
- But they are defined under the terms of the plan
To learn more about cash balance plans and to see if your firm can benefit from one, contact Pinnacle Plan Design.
Contact: Third Party Administrator San Antonio
Pinnacle Plan Design is proud to offer retirement plan administration services in San Antonio, TX (Texas), and surrounding areas including Kirby, Schertz, Hondo, Leon Valley, New Braunfels, San Marcos, Converse, Pleasanton, Kyle, Live Oak, and Universal City.