Flashcards in Ch. 15 Cash Balance Pension Plan Deck (27):
Cash balance pension plan
a qualified defined benefit plan that provides annual employer contributions at a specified rate to "hypothetical" individual accounts that are set up for each participant
What does the employer guarantee?
Minimum rate of return on each acct
Used when an employer has ____ employees
Used when employees are concerned with the security of their ___ ____
used when the employer has a ___ workforce and most are ____-income
Would it be used if the employer whats to spread admin costs over a relatively large group of employees?
Used when the employer wants to convert an existing defined benefit plan to a plan that....
provides more attractive benefits to younger employees and may lower costs to older employees
Is the plan guaranteed by the PBGC?
are there tax-deferred savings for employees?
Some older employees may be able to use ___ year averaging
Does the employee bear investment risk?
Plan benefits are easily ___ by employer and easily ___ by employees
1. retirement benefit may be inadequate for older plan entrants
2. complex to administer
3. employer bears investment risk which increases costs
There is a _____ _____ account for each participant
At least annually, the employer makes what two types of credits to a pooled single fund?
Pay credit formula is based on what?
Pay credit can be integrated with what to lower employer contributions?
social security payments
An amount of employer guaranteed investment earnings that is credited annually to each employee account
Does the interest credit must follow its formula?
An employer's annual cost for the plan is determined on a ____ basis
How can the costs be controlled?
by choosing the right formula for interest credit
The employer ____ make up the difference if the actual plan earnings fall short of the total interest credits
Do plan participants have investment choices?
Can loans against a participants account be made?
yes but seldom used due to admin problems
is the plan subject to ERISA?
does the plan permit a deemed IRA?