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Cash balance pension plan becoming more popular with companies


POSTED: Monday, May 6, 2013 - 6:32pm

UPDATED: Tuesday, May 7, 2013 - 12:09pm

Many companies are offering another retirement plan for their employees.

It's called the cash balance pension plan.

The cash balance pension plan is becoming very popular.

The plan's expenses, unlike a 401k, are solely on the employer.

The employee does not contribute directly to the plan or have anything deducted from their paycheck as with traditional pension plans.

Instead the amount of total benefits that an employee is hypothetically eligible for is expressed as an account balance.

"This could be somewhat of a hybrid between the two and open up the doors for a pension plan for employees who may not of had one," said Jay Oliver financial adviser at Rose Point Capital.

The participant is guaranteed a benefit based on the account balance and not on a series of monthly payments.

According to Sage Advisor, your company contributes money into a hypothetical account for each employee based on a set interest crediting rate and a percentage of the employee's annual salary.

 Oliver says many employers choose this plan over a traditional defined benefit pension because the liability to the employer is less.

''Rather than them obligated to pay an income to the retiree for life, for instance their obligation is to provide this lump sum payment at retirement so their liability is limited to that payment rather than a stream of payments over the lifetime of an employee at retirement.

Oliver also says if you leave a company before retirement age, you can take the contents of your cash balance plan as a lump sum and roll over those amounts into an IRA.


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So what would be the tax repercussions?

There is also another retirement plan. It was developed during the depression if 1930 called the mattress plan.

Investors, after having the banks collapse and all their savings gone, and after the government had confiscated all their gold, decided to HIDE THEIR MONEY. Yes they saved and hit it so no bank nor government would get it.

See the 401, 403, IRA, etc... are all accessible by the government and what you put in it can be taken away.

Argentina 10 years ago took all their retirements just that way and now, due to mismanagement, all the money is GONE. Just as all the money in Social Security is GONE and there is just IOUs to future generations.

Remember that when you do a retirement plan. The Democrats just might take it all and spend it while saying how you need to pay your 'fair share' (but Al Gore can keep his 200 million.)

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