Cash-balance Plan
Definition of "Cash-balance plan"
Hybrid pension plan that provides for the employer to contribute annually a hypothetical percentage, usually 4 to 5%, of the employee's salary to a hypothetical account. This employee's account is then credited with a hypothetical annual interest rate generally tied to the 30-year United States Treasury rate. If the employee should change employment, the account balance can be transferred to an individual retirement account (IRA), subject to certain restrictions peculiar to each employer. For example, some employers restrict the withdrawal of a terminating employee to an amount no greater than the employee's one-year salary with the account's balance to be paid out as a monthly income benefit. When the employee retires at age 65 most of these plans have a five-year vesting requirement.
Popular Insurance Terms
Same as term Annual Statement: report that an insurance company must file annually with the State Insurance Commissioner in each state in which it does business. The statement shows the ...
Expense of defending a lawsuit. To mount a legal defense against civil or criminal liability, a defendant faces expenses for lawyers, investigation, fact gathering, bonds, and court costs. ...
Clause in an insurance policy that describes the administration and submission of claims procedure. ...
Time frame during which an annuitant makes premium payments to an insurance company. The obligations of the company to the annuitant during this period depend on whether a pure annuity or ...
Vehicle for the deferring of unneeded current income for a later date, such as retirement, providing the following benefits: There is no tax on earnings of the plan until distributed; ...
Period, set by law, after which a damage claim cannot be made. Limits are set by individual states and usually range from one to seven years. ...
Individual receiving medical treatment who is not required to be hospitalized overnight. ...
Provision found in juvenile insurance that waives the premiums due on the insured child's policy provided that the payor of the premiums becomes totally disabled or dies before the child ...
Long-term investment plan strategy under which all of the investor's investable assets are divided into predetermined proportions among several different types of securities. In theory, ...
Have a question or comment?
We're here to help.