Cash Balance Plans
1. DB plan in nature
1).Employer bears the investment risk.
2).Not start-up plans but rather are traditional DB plans that have been converted in order to gain some of features of a DC plan.
2. With DC plan characteristics
1).A personalized account balance that shows the current value of participant’s accrued benefit.
-- Annual contribution credit: a percentage of pay based on age.
-- Earning credit: a percentage increase in the account balance based on LT- interest rate.
2).More transparent.
3).Facilitate portability to a new plan.