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Cash Balance Plans

936 Views | 0 Replies | Last: 3 yr ago by ATXAdvisor
aa4136
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Can someone help me understand the risk / benefit for such plans for retirement savings? They are offering this option at my work and it seems like a great option to reduce tax burden beyond maxing out the 401K, backdoor Roth, and HSA.

Anything I should be wary of or ask about?
ATXAdvisor
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AG
When I hear "Cash Balance Plan", I assume that to be a defined benefit pension plan that all eligible employees would be participants in. You wouldn't have a choice in the matter as the participant. The assets in these plans are generally protected from creditors, and governed by ERISA. Eventually, participants can elect a monthly benefit or a lump sum payment when they terminate employment.

Your question implies you are being given a choice. That sounds like a non-qualified deferred compensation plan. Those typically offer SELECT employees an opportunity to defer income but the assets are generally subject the the company's ongoing viability and not protected from creditors.
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