Cash Balance Plans Are On The Rise

Aug 9, 2017 | Cash Balance Plans

According to the new research released in the Kravitz Inc. 2017 National Cash Balance Research Report, the number of new cash balance plans adopted by employers increased 17% in 2015. The popularity of cash balance plans have continued to rise and now account for over 34% of all defined benefit plans (up from 2.9% in 2001).

Cash balance plans allow high-income earners to save more for retirement. They have been a popular choice among medical/dental and law firms. However, the recent findings noted an increasing diversity of companies adopting cash balance plans. According to the Kravitz report, medical/dental and law groups account for about 40% of the cash balance market and are becoming increasingly popular across other industries including technology, retail and manufacturing.

Market volatility and uncertainty over tax rates have not slowed cash balance plan growth. To the contrary, the IRS regulations allowing broader cash balance investment options have contributed to accelerated plan growth. As noted in the NAPA Net article Cash Balance Plans Continue Solid Growth, “The 2006 Pension Protection Act helped paved the way for the growth of cash balance plans by clarifying their legality. More than 75% of existing cash balance plans were established within the past nine years, and while many still have assets under $500,000, this will shift over the next decade as business owners seek to maximize tax-deferred savings for themselves and optimize tax-efficient contributions to employees, according to the (Kravitz, Inc.) report.”

Watkins Ross has been designing and administering cash balance plans to provide strategically targeted benefits and increased tax deferred savings since 1999. If you have additional questions or would like help determining if you should implement a cash balance plan, please contact David Paauwe, MSPA, EA at

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