Structuring Cash Balance Pension Plans: Maximizing Tax Benefits and Limiting Risks

Designing the Cash Balance Benefit Formula, Managing the Interest Crediting Rate with Plan Investment Returns

Recording of a 90-minute premium CLE webinar with Q&A

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Conducted on Tuesday, March 21, 2017

Recorded event now available

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Course Materials

This CLE course will provide ERISA counsel and advisors with a thorough and practical guide to structuring hybrid cash balance pension plans and converting current defined benefit plans to cash balance plans. The panel will detail optimal scenarios for establishing a cash balance plan, identify interest rate and other risks in structuring a plan, and discuss critical features to include in any cash balance plan document in light of recent IRS guidance.


For many businesses, particularly closely held firms and professional practices, establishing a new cash balance plan, or converting a traditional defined benefit pension plan to a cash balance pension plan, can provide significant advantages, both in terms of current tax benefits and increased retirement accruals. However, a cash balance plan should be carefully constructed to limit exposure to legal and financial risks while maximizing tax benefits and retirement savings.

A cash balance pension plan is a defined-benefit pension plan under which an employer credits a participant’s account with a defined percentage of the employee’s compensation, or other specified principal amount, plus an interest credit amount. By using a cash balance plan, principals of professional firms and well-established closely held businesses can significantly increase their retirement savings and realize greater current-year tax benefits.

Additionally, plan sponsors may want to consider ways to structure the plan investments so the performance of the trust assets approximates the plan’s specified interest credits. Employee benefits counsel can help ensure that plans are designed and documents are drafted so that the plan and plan sponsor can manage this interest rate risk.

Listen as our experienced panel provides a practical and in-depth guide to structuring cash balance pension plans.



  1. Advantages of cash balance plans
  2. Structure of cash balance plans
  3. Setting principal credits
  4. Setting interest credits
  5. Ideas on plan asset investments
  6. Timing of distributions
  7. Special considerations on cash balance conversions


The panel will review these and other key issues:

  • Funding requirements for cash balance plans
  • Ideal profiles for firms contemplating a cash balance plan
  • Structuring plan investments to avoid a mismatch between the plan’s interest credits and actual trust returns
  • IRS audit targets and areas of concern


Mark L. Lofgren
Mark L. Lofgren

Groom Law Group

Mr. Lofgren focuses his practice on employee benefits law, specializing in the design and operational issues for...  |  Read More

Andrew Ferguson, FSA, EA
Andrew Ferguson, FSA, EA

Altman & Cronin Benefit Consultants

Mr. Ferguson is a Fellow of the Society of Actuaries, an Enrolled Actuary, a Fellow of the Conference of Consulting...  |  Read More

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