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A cash balance plan is a defined benefit retirement plan that maintains hypothetical individual employee accounts like a defined contribution plan.The hypothetical nature of the individual accounts was crucial in the early adoption of such plans because it enabled conversion of traditional plans without declaring a plan termination.
The cash balance plan typically offers a lump sum at and often before normal retirement age. However, as is the case with all defined benefit plans, a cash balance plan must also provide the option of receiving the benefit as a life annuity. The amount of the annuity benefit must be definitely determinable as per IRS regulation 1.412-1.
The firm was founded in 1944 by H. Charles "Chick" Kwasha and Maurice Lipton. [citation needed] Kwasha Lipton is best known for creating a special type of defined benefit pension plan called a cash balance plan, which it designed for the employees of Bank of America in 1985.
And your employer will likely give you free money if you start chipping in to your 401(k) plan. Remember, investing for retirement is a long game. Start early and stay consistent with an ...
Some plans offer a grace period into the new year or allow rolling over a portion to next year, but many follow a strict "use it or lose it" policy. FSA funds cover a broader range of health ...
A defined contribution (DC) plan is a type of retirement plan in which the employer, employee or both make contributions on a regular basis. [1] Individual accounts are set up for participants and benefits are based on the amounts credited to these accounts (through employee contributions and, if applicable, employer contributions) plus any investment earnings on the money in the account.
There are certain advantages in tax planning when the cash method of accounting is used: for instance, payment of business expenses may be accelerated before year end, in order to maximize tax deductions, whereas billings for services may be postponed to after year end, so that payments won't be received until the new year, thus postponing tax ...
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