News & Information

 

FEATURED PRODUCT

5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.

Learn More »

CCH® PENSION — 04/16/10

Cash Balance Pension Plans Surge In Popularity: 359% Increase In Six Years

from Spencer’s Benefits Reports: There were 4,797 cash balance plans active in 2007 (the most recent year for which IRS pension plan data is available), up from 1,337 in 2001. That represents a 359% increase, according to a new national research report from retirement plan consultant Kravitz. “More business owners than ever are seeking to accelerate retirement savings and reduce taxes by adding a cash balance plan,” said firm president Dan Kravitz. “Many employers can double their own pre-tax retirement savings and affordably enhance benefits for their employees at the same time.”

Other highlights from the Kravitz Cash Balance Research Report include these:

• Small and mid-size businesses drive cash balance plan growth: 80% of cash balance plans are in place at firms with less than 100 employees. The majority of cash balance plans (63%) have fewer than 36 participants.

• Plan combinations are a key strategy: 79% of cash balance plans are combined with a profit sharing or 401(k) plan, and more than half of those plans use new comparability rules.

• Medical groups adopt cash balance plans at higher rates: Medical and dental groups account for 34% of cash balance plans, followed closely by other professional, scientific and technical companies at 12%. Legal and financial service firms account for 8% each.

• Regional concentration: California and New York account for 26% of all cash balance plans, with Ohio, New Jersey, and Illinois close behind.

“We believe cash balance plans represent a tremendous growth opportunity for retirement professionals, and we will continue to serve as a resource,” said Mr. Kravitz.

For more information, visit http://www.kravitzinc.com/.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

Visit our News Library to read more news stories.