Since the first cash balance plan was established in 1985, many employers, both large and small, have adopted this plan design for their defined benefit plan. The cash balance plan design offers many elements of a defined contribution plan within the framework of a defined benefit plan. The decision to establish a new cash balance plan, or convert an existing plan to a cash balance plan, must be made after considering the plan’s effect on both the employer and the participants.
This issue brief provides an overview of cash balance defined benefit plans from both the employer and employee perspective.
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