 Cash Balance contributions are age-dependent. The older the participant, the higher the amount is. The reason for this difference is that an older person has fewer years to save toward the approximate $2.5 million lump sum that is allowed in a Cash Balance plan.
Subject to IRS limits, the actual contribution is determined by a formula specified in the plan document. It can be either a percentage of pay or a flat dollar amount.
What are the distribution options upon retirement or termination of employment?
Cash Balance assets are portable. When participants terminate employment, they become eligible to receive the vested portion of their account balances, as determined by the plan's vesting schedule. The vested accounts in a Cash Balance plan can be paid as lump-sum distributions or annuities. Lump sum distributions can be rolled over to an IRA or another qualified retirement plan.
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