Cash Balance Plans Grow 17%, 401(k) Growth Flat
Cash balance plans are the fastest growing industry in the retirement plan market, according to a study from Kravitz, a leading Cash Balance firm.
The study found Cash Balance plans have surged since 2001, with double-digit growth annually. Cash balance plans increased 17% as compared with 3% with 401(k) plans. The Kravitz study also found small businesses are helping to drive the growth, with 92% of Cash Balance Plans in place at firms with fewer than 100 employees.
The reason for the surge? Kravitz says it’s due to rising taxes, the appeal of “hybrid” plans, legislative changes -- the 2006 Pension Protection Act affirmed the legality of Cash Balance plans and IRS Cash Balance regulations in 2010 and 2014 expanded investment options, also media coverage of Baby Boomer’s lack of preparing for retirement has led to older business owners to accelerate savings and maximize qualified plan contributions.