There are a number of potential issues a plan sponsor may face if they use the investment rate of return as the plan’s interest crediting rate.
Cash Balance Plans
Are you a member of a medical practice group, a partner in a multi-generational family-owned business, or the owner or shareholder of a single-member S-Corp with large S-Corp distributions? A cash balance plan may be the perfect fit for you. Cash balance plans allow high-income earners to benefit beyond the limitations of a profit sharing plan or typical 401(k) by providing a principal credit and interest credit each year within an individual “hypothetical” account. Each cash balance plan maintains a set of funding limits, requirements, and risks outlined in the plan documents; maximum allocation limits typically exceed limits in defined contribution plans. Learn more about cash balance plans, including details about annuity forms of payment, tax-deferred savings, and minimum funding requirements by browsing our cash balance plan articles on the Watkins Ross blog. Interested in discovering how a cash balance plan can enhance your retirement plan benefits? Connect with the Watkins Ross cash balance plan administration team to capitalize on our decades of experience designing and administering cash balance plans for a variety of business types and industries.
Cash Balance Plan Considerations
The number of new Cash Balance Plans continues to rise each year. Here are a few cash balance plan considerations as a popular retirement plan vehicle.
Defined Benefit Plans’ Actuarial Equivalence Under Attack: Reasonable Becomes Unreasonable (Opinion)
Recent class action lawsuits are targeting the reasonability of actuarial equivalence factors used in defined benefit plans.
Who Retains The Beneficiary Forms?
A beneficiary form determine who is entitled to the defined contribution retirement plan benefits upon the death of a participant. Is your form current?
Is Your Business a Good Candidate for a Cash Balance Plan?
Cash balance plans allow high-income earners to save more towards retirement than a defined contribution plan. For example, in a defined contribution plan, the maximum annual additions are limited to $56,000 per year (as indexed). However, since the annual allocation...
Sufficient Tax Withholding from Pension Payments
The IRS urges everyone (including retirees) to use their Withholding Calculator to determine if they have sufficient tax withholding from pension payments.
Cash Balance Plans Continue Outpacing 401(k) Plan Growth
The number of new cash balance plans adopted by employers increased 15% in 2016 (the most recent year that full 5500 data is available), compared to a 1% growth in 401(k) plans. Why have cash balance plans experienced so much growth? Several factors contributed to the...
Who Should Consider a Cash Balance Plan?
Cash balance plans may allow high-income earners to save more towards retirement. So, who should consider a cash balance plan?
How to Submit a Federal Withholding Tax Deposit
Although you cannot mail a check for a federal withholding tax deposit, there are a few options to submit these payments to the IRS electronically.
Questions to Ask When Choosing an Actuary For Your Cash Balance Plan
Accurate administration of a Cash Balance Plan is critical! The following questions can help you when choosing an actuary for your cash balance plan.