To no one’s surprise, the recent Kravitz Cash Balance Research Report indicates that the number of new Cash Balance plans increased 17% in 2016, outpacing the 3% growth of 401(k) plans. And also no surprise that 92% of the cash balance plans are sponsored by companies with less than 100 participants.

No surprise because older business owners and professionals have a greater awareness of the  need to accelerate retirement savings. Cash Balance plans can do exactly that providing the opportunity to contribute more than the annual maximum of $54,000 ($59,000 if age 50 or older) to a 401(k)/profit sharing plan.

How much more? That depends on an individual’s age and compensation. For example, a 50-year old could contribute in excess of $160,00 with a projected lump sum benefit at retirement in excess of $2 million.

You can learn more about how Cash Balance Plans work in our blog post, Inside the Actuarial Black Box.

This discussion of Cash Balance pension plans is necessarily brief. It’s provided for general information purposes only and should not be considered tax or legal advice. Employers should always check with a qualified tax advisor for the application of the tax laws to their specific situation.

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