The number of cash balance plans has nearly quadrupled since 2001, according to a new report.
Published by Louis Kravitz & Associates Inc., Encino, Calif., the report finds that 4,797 cash balance pension plans were active in 2007 (the most recent year for which IRS pension plan data is available), up from 1,337 in 2001. This represents a 359% increase over the 6-year period.
Cash balance pension plans use a year by year funding formula, rather than a formula that assumes employees will spend most of their careers at a single employer.
“More business owners than ever are seeking to accelerate retirement savings and reduce taxes by adding a cash balance plan,” says Kravitz President Dan Kravitz. “Many employers can double their own pre-tax retirement savings and affordably enhance benefits for their employees at the same time.”
Among the report’s other findings: