Innovations in Planning

Cash Balance Retirement Plans Grow 22% While 401(k) Market Remains Flat

Tax hikes and small business confidence drive double-digit growth, report shows

Jul 1, 2014 – LOS ANGELES & NEW YORK–(BUSINESS WIRE)–Kravitz today released the 2014 National Cash Balance Research Report, showing a 22% increase in new plans for the most recent year. The number of new Cash Balance Plans continues to grow faster than all other sectors of the retirement plan market, including 401(k) plans, which increased just 1% despite continuing economic recovery.

There were 9,648 Cash Balance Plans active in 2012 (the most recent year for which complete IRS reporting data is available), up from 7,926 in 2011. This 22% increase was significantly higher than industry projections of 15% growth. Cash Balance plans continue rapidly replacing traditional defined benefit plans. They now make up 25% of all defined benefit plans, up from 2.9% in 2001.

Catching up

“Cash Balance Plans are an ideal solution for business owners who need to catch up on retirement savings and significantly reduce their tax liability,” said Dan Kravitz, President of Kravitz. “These popular hybrid plans can also be highly appealing to employees, helping companies to attract and retain top talent.”

Also known as “hybrid” plans, Cash Balance Plans combine the high contribution limits of traditional defined benefit plans with the flexibility and portability of a 401(k).

Key findings from the 2014 National Cash Balance Research Report:

  • Small businesses drive Cash Balance growth: 87% of Cash Balance Plans are in place at firms with fewer than 100 employees.
  • Assets approaching $1 trillion: companies contributed $31.2 billion to Cash Balance plans in the most recent year, for a total of $858 billion in Cash Balance assets nationwide.
  • Companies more than double contributions to employee retirement savings when adding a Cash Balance Plan: the average employer contribution to staff retirement accounts is 6.3% of pay in companies with both Cash Balance and 401(k) plans, compared with 2.6% of pay in firms with 401(k) alone.
  • Actual Rate of Return plans gain popularity: IRS regulations released in 2010 allow many alternatives to traditional safe harbor rates. Many larger Cash Balance plans are now using ‘Actual Rate of Return’ to reduce investment risk for the employer. See page 10 of our report for more information.
  • Regional concentration: New York and California dominate with 23% of all Cash Balance plans, while the fastest growth is occurring in Texas and Florida.
  • Top 10 lists highlight strategic importance of Cash Balance Plans at Fortune 100 companies and professional service firms: many leading national law firms and medical groups offer Cash Balance Plans, along with a number of Fortune 100 companies. Our report includes Top 10 lists of the largest plans by asset size and sector.
Also known as “hybrid” plans, Cash Balance Plans combine the high contribution limits of traditional defined benefit plans with the flexibility and portability of a 401(k)

These and many other highlights of the 2014 National Cash Balance Research Report will be discussed in an upcoming Cash Balance Outlook webinar led by Dan Kravitz on Thursday, July 17 at 10 a.m. Pacific. Registration is free and open to anyone interested in learning more about Cash Balance Plans.

Download the 2014 Cash Balance Research Report here

Register for the Cash Balance Outlook 2013 webinar





About Kravitz
Since 1977, Kravitz has brought its clients the latest in design, administration, and management of corporate retirement plans. The company designed its first Cash Balance Plan in 1989. Today Kravitz administers over 1,200 plans, including more than 500 Cash Balance Plans, helping over 150,000 people retire successfully. Headquartered in Los Angeles, Kravitz has offices in New York and satellite offices in nine states. Visit