Tax hikes and small business confidence drive double-digit growth,
report showsSmall businesses drive Cash Balance growth: 87% of Cash Balance
Plans are in place at firms with fewer than 100 employees.
Assets approaching $1 trillion: companies contributed $31.2
billion to Cash Balance plans in the most recent year, for a total of
$858 billion in Cash Balance assets nationwide.
Companies more than double contributions to employee retirement
savings when adding a Cash Balance Plan: the average employer
contribution to staff retirement accounts is 6.3% of pay in companies
with both Cash Balance and 401(k) plans, compared with 2.6% of pay in
firms with 401(k) alone.
Actual Rate of Return plans gain popularity:IRS regulations
released in 2010 allow many alternatives to traditional safe harbor
rates. Many larger Cash Balance plans are now using ‘Actual Rate of
Return’ to reduce investment risk for the employer. See page 10 of our
report for more information.
Regional concentration:New York and California dominate with
23% of all Cash Balance plans, while the fastest growth is occurring
in Texas and Florida.
Top 10 lists highlight strategic importance of Cash Balance Plans
at Fortune 100 companies and professional service firms: many
leading national law firms and medical groups offer Cash Balance
Plans, along with a number of Fortune 100 companies. Our report
includes Top 10 lists of the largest plans by asset size and sector.
LOS ANGELES & NEW YORK--(BUSINESS WIRE)--
today released the 2014
National Cash Balance Research Report, showing a 22% increase in
new plans for the most recent year. The number of new Cash Balance Plans
continues to grow faster than all other sectors of the retirement plan
market, including 401(k) plans, which increased just 1% despite
continuing economic recovery.
There were 9,648 Cash Balance Plans active in 2012 (the most recent year
for which complete IRS reporting data is available), up from 7,926 in
2011. This 22% increase was significantly higher than industry
projections of 15% growth. Cash Balance plans continue rapidly replacing
traditional defined benefit plans. They now make up 25% of all defined
benefit plans, up from 2.9% in 2001.
“Cash Balance Plans are an ideal solution for business owners who
need to catch up on retirement savings and significantly reduce their
tax liability,” said Dan Kravitz, President of Kravitz. “These
popular hybrid plans can also be highly appealing to employees, helping
companies to attract and retain top talent.”
Also known as “hybrid” plans, Cash
Balance Plans combine the high contribution limits of traditional
defined benefit plans with the flexibility and portability of a 401(k).
Key findings from the 2014
National Cash Balance Research Report:
These and many other highlights of the 2014 National Cash Balance
Research Report will be discussed in an upcoming Cash
Balance Outlook webinar led by Dan Kravitz on Thursday, July 17 at
10 a.m. Pacific. Registration is free and open to anyone interested in
learning more about Cash Balance Plans.
Download the 2014 Cash Balance Research Report: http://cashbalancedesign.com/articles/documents/NationalCashBalanceResearchReport2014.pdf
Register for the Cash Balance Outlook 2013 webinar: https://www1.gotomeeting.com/register/877270704
For more information, call Dan Kravitz at 818-379-6162 and visit www.CashBalanceDesign.com.
About Kravitz: Since 1977, Kravitz
has brought its clients the latest in design, administration, and
management of corporate retirement plans. The company designed its first
Cash Balance Plan in 1989. Today Kravitz administers over 1,200 plans,
including more than 500 Cash Balance Plans, helping over 150,000 people
retire successfully. Headquartered in Los Angeles, Kravitz has offices
in New York and satellite offices in nine states. Visit www.CashBalanceDesign.com