LOS ANGELES--(BUSINESS WIRE)--Kravitz today released the 2016 National Cash Balance Research Report, showing a 19% increase in the number of new Cash Balance retirement plans and a rise in assets to $1 Trillion. These milestones cap a decade-long trend of double-digit annual growth, with Cash Balance plans becoming an increasingly important sector of the retirement market and traditional defined benefit plans declining. Cash Balance plans now make up 29% of all defined benefit plans, up from 2.9% in 2001.
There were 15,178 Cash Balance plans active in 2014, the most recent year for which complete IRS reporting data is available. This 19% year-over-year increase surpassed industry projections and significantly outpaced the 401(k) market which showed just a 2% increase in new plans, despite positive economic trends and job growth.
“With 401(k) contributions limited to $18,000 and tax rates increasing, Cash Balance plans are an increasingly popular choice for many employers,” said Dan Kravitz, President of Kravitz. “They can typically double or even triple their tax-deferred savings while enhancing retirement benefits for employees, a key factor for attracting top talent in a competitive hiring market.”
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 2016 National Cash Balance Research Report:
- Small businesses drive Cash Balance growth: 91% of Cash Balance Plans are in place at firms with fewer than 100 employees.
- Companies more than double contributions to employee retirement savings when adding a Cash Balance plan: the average employer contribution to staff retirement accounts is 6.5% of pay in companies with both Cash Balance and 401(k) plans, versus 3.1% of pay in firms with 401(k) alone.
- Recent IRS regulations allowing broader Cash Balance investment options are driving rapid growth: the ‘Actual Rate of Return’ option and other new investment choices approved in the 2010 and 2014 Cash Balance regulations are making Cash Balance more flexible and more appealing to employers by removing many funding issues.
These and other highlights of the 2016 National Cash Balance Research Report will be discussed in an upcoming Cash Balance Outlook 2016 webcast led by Dan Kravitz on Tuesday, August 2 at 10 a.m. Pacific. Registration is free and open to anyone interested in learning more about Cash Balance Plans.
Download the 2016 National Cash Balance Research Report: https://www.cashbalancedesign.com/wp-content/uploads/2016/07/NationalCashBalanceResearchReport2016.pdf
Register for the Cash Balance Outlook 2016 webinar: https://attendee.gotowebinar.com/register/8465167885808017155
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 1,300 plans, including more than 700 Cash Balance plans, helping over 150,000 people retire successfully. Headquartered in Los Angeles, Kravitz has offices in New York, Chicago and Atlanta, with satellite offices in 11 other states. Visit CashBalanceDesign.com.
