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
Facility that provides short periods of stay for a terminally ill person in a homelike setting for either direct care or respite. A "terminally ill" person has a life expectancy of six ...
Company organized with the business objective of providing claims adjustment services to insurance companies that do not have an internal claims department. ...
Insurance company that is licensed by a state to market and service particular lines of insurance in that state. ...
Clause in an insurance policy stipulating that the benefits under the policy will accrue to the right of the insured. For example, if the insured leaves a violin at a repair shop and that ...
Social insurance that provides benefits to temporarily disabled workers in a few states. Five states require employers to pay cash benefits if workers are disabled. They are Rhode Island, ...
Index that reflects changes in industrial output by manufacturers, mines, electric utilities, and natural gas utilities. This is a monthly index published by the Federal Reserve. ...
Group that monitors government health insurance programs. Authorized by the 1972 amendment to the Social Security Act, PSROs were set up to cut costs and minimize abuses by checking on the ...
Insurance for which (1) an application has been filed but the first premium has not yet been paid or (2) a life insurance policy that has not yet been delivered to an insured. ...
Insurance company that is organized under the state laws by which the company is licensed and that is called a domestic insurer. Also, this insurance company may be chartered and licensed ...
Have a question or comment?
We're here to help.