Cash Balance Defined Benefit Plans

There is a variation of the traditional defined benefit plan called a cash balance defined benefit plan. This hybrid plan contains elements of both a defined benefit plan and a 401(k) plan. Instead of a guaranteed benefit, each year the company sets aside a dollar amount attributed to your individual retirement account and applies either a fixed or a variable rate of interest to the deposit. The value of this account then becomes your retirement plan after you vest, which is in five years. (more…)