Are Cash Balance Plans New?
Cash balance plans were first introduced in 1985, when BankAmerica Corporation converted its traditional defined benefit plan into a cash balance plan. Since that time, an estimated 400 to 600 large and mid-sized employers have implemented cash balance plans covering an estimated 7 million people. Colleen T. Congel, Cash Balance Pension Plans Draw Both Praise, Criticism,Daily Tax Rep. (BNA) Mar. 3, 1999, at J-1. The cash balance plan is one of several trendy hybrid plans which have been created, or revived, to address changes in the American work force. Due to recent controversies, cash balance plans have become the most notorious of the chic pension plans. • What Is A Cash Balance Plan? A cash balance plan is a defined benefit plan that looks like a defined contribution plan. • How Does A Cash Balance Plan Work? Typically, each cash balance plan participant has a hypothetical, or nominal, account. (There is not any one cash balance plan design. The account-based defined benefit plan i
