cash balance Investment Strategies

Selecting an investment strategy for a Cash Balance plan is challenging, and requires a very different approach from that of a defined contribution plan. Because the plan must satisfy a guaranteed annual rate of return, the goals of a Cash Balance Plan’s investments often vary greatly from the goals of other types of qualified plans.

The right portfolio for a given plan will take into account not just the Interest Crediting Rate (ICR) but the level of turnover in the company, the predictability of cash flows, company demographics, and the risk tolerance of the owners. The best portfolio modeling is done in coordination with the plan actuary. In addition, the Cash Balance investment manager should consider other investment holdings such as a 401(k) and other qualified retirement plans.

Regulatory changes in 2010 and 2014 opened up many new options for Cash Balance plan investments, requiring innovative new strategies. You can learn more on our plan investments page.

Kravitz works in consultation with our clients and their investment advisors to ensure an appropriate strategy is in place. We can also share customized Cash Balance investment solutions offered through Payden & Rygel and Reliance Trust.

NEW: read a helpful new article by Steve Sansone: Cash Balance Investing in 2016 and Beyond