Cash Balance Pension Plan - 401k Glossary

Cash Balance Pension Plan is a Defined Benefit Plan account which is credited by a Participant's Employer by depositing a set percentage of the employee's wage + Interest Charges into the account. Since a Cash Balance Pension Plan is a defined benefit plan, the profits and losses made in the portfolio of investments chosen is beared solely by the employer. The plan's funding limits, funding requirements and types of investments and their levels of risk is chosen by the employer.

Defined Benefit Plan?

Defined Benefit Pension Plans are the traditional pension plans where both you and your employer withhold a certain amount of your gross wage, manage it until retirement and this guarantees you a specified monthly income for life, upon your official retirement. The total monthly payment you will receive depends on how long you have worked, and how big your pension nest egg is... (Read Full)