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
Endorsement to a property insurance policy providing all risks coverage for insured property. Excluded properties include residences, farms, and manufacturing properties. This endorsement ...
Act that provides new funding for the Bank Insurance Fund and enhances the safety and soundness of the financial system. The FDICIA includes the Foreign Bank Supervision Enhancement Act ...
Coverage of the employer for all employees on a blanket basis, with the maximum limit of coverage applied to any one loss without regard for the number of employees involved. Both ...
Insurance coverage that protects a company's and/or individual's assets against financial loss resulting from acts of confiscation, expropriation, or nationalization by a foreign ...
Annual report to policyholders of certain cash value life insurance products and annuities to inform them of the value of the investment portion of their contracts. Buyers of whole life ...
Contract sold by insurance companies that pays a monthly (quarterly, semiannual, or annual) income benefit for the life of a person (the annuitant). The annuitant can never outlive the ...
Process under which terminally ill people sell their life insurance policy for value thereby excluding the policy from being subject to the transfer for value under the three-year rule. ...
Reduction of private pension benefits to avoid "duplication" of Social Security benefits, according to a formula. Many pension plans "offset," or reduce, monthly pension benefits by a ...
Restriction on the benefit that owners and other highly compensated individuals may receive from a qualified pension or other employee benefits. The U.S. Tax Code requires that benefits ...
Have a question or comment?
We're here to help.