Defined Benefit – including Cash Balance, 412(i) Plans

Known as the traditional pension plan, a Defined Benefit Plan promises the participant a specified monthly benefit at retirement. Often the benefit is based on factors such as the participant’s salary, age, and the number of years the participant has worked for an employer. Goldleaf Partners expertly manages all technical and administrative aspects of defined benefit plans, backing them with local service.

Cash Balance Plan

A cash balance plan is a defined benefit plan that includes elements similar to a defined contribution plan. The benefit amount is computed based on a formula using contributions and earning credits, and each participant has a hypothetical account. Cash balance plans are more likely than traditional defined benefit plans to make lump-sum distributions. A cash balance plan also has some profit-sharing like features.

412(i) Plan

A 412(i) is a retirement plan that combines pension payouts and life-insurance protection. There is no investment flexibility. By law, the plan is funded entirely with insurance and annuity contracts.

Plan Advantages:

• Employers can contribute (and deduct) more than under other types of retirement plans.
• Significant benefit accumulation is possible in a relatively short period of time.
• Substantial benefits can be provided, even with early retirement.
• Vesting can be immediate or spread out over a seven-year period.
• Benefits are not dependent on asset returns.
• The plan provides a predictable benefit.
• The plan can be used to promote certain business strategies by offering subsidized early retirement benefits.