Cash Balance Retirement Plans Double Projected Growth Rate

National Research Report Shows 21% Increase in New Plans, 18% Increase in Assets

LOS ANGELES & NEW YORK--()--Kravitz today released the 2012 National Cash Balance Research Report, which indicates a 21% annual increase in new Cash Balance Plans, almost double the previous year’s 11% growth rate. Cash Balance Plans continue to outpace all other sectors of the retirement plan market, including 401(k) plans, which showed a 1% decline in the same period.

There were 7,064 Cash Balance Plans active in 2010 (the most recent year for which IRS reporting data is available), up from 1,337 in 2001, representing 810% growth in a under a decade. There are now 11.1 million participants in Cash Balance Plans nationally, with $713 billion in total plan assets.

“Business owners are increasingly choosing Cash Balance Plans as a strategy to accelerate retirement savings, enhance employee benefits, and gain a buffer against market fluctuations,” said Dan Kravitz, President of Kravitz. “IRS regulations released in October 2010 added flexibility for plan sponsors, so we expect this growth rate to continue accelerating.”

Also known as ‘hybrids,’ Cash Balance Plans combine the high contribution limits of traditional defined benefit plans with the flexibility and portability of 401(k) plans. Many business owners can double their tax-deferred retirement savings while increasing contributions to employee accounts, strengthening staff retention and recruitment.

Other highlights from the 2012 National Cash Balance Research Report include:

  • 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% of pay in companies with both Cash Balance and 401(k) plans, compared with 2.3% of pay in firms with 401(k) alone.
  • Stalled economy no deterrent to adoption of new plans: between 2008 and 2010, there was a 38% increase in new Cash Balance Plans, despite the lingering recession and stalled recovery.
  • Small businesses are driving Cash Balance growth: 84% of Cash Balance Plans are in place at firms with fewer than 100 employees.
  • California and New York have the highest number of plans, while the fastest growth is in Florida, Texas and Michigan: California and New York together account for 23% of all Cash Balance Plans nationally, but the fastest growth in new plans has been in Florida, Texas and Michigan.

These and other highlights of the 2012 National Cash Balance Research Report will be discussed in an upcoming live webinar led by Dan Kravitz on Thursday, August 9. Registration is free and open to anyone interested in learning more about Cash Balance Plans.

Click to download the 2012 Cash Balance Research Report

Click to register for the Cash Balance Outlook 2012 webinar

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 300 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.

Contacts

Kravitz Inc.
Daniel Kravitz, President
818-379-6162
dkravitz@kravitzinc.com

Release Summary

Kravitz released the 2012 Cash Balance Research Report: results show a 21% annual increase in new Cash Balance Plans (double last year's growth rate), and contrasting with a 1% decline in 401k plans

Contacts

Kravitz Inc.
Daniel Kravitz, President
818-379-6162
dkravitz@kravitzinc.com