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A Fast Track for New Cash Balance Plans

A new report notes that the number of new cash balance plans surged 32% in 2013, dwarfing new plan adoption.

According to Kravitz’s 2015 National Cash Balance Research Report, there were 12,721 cash balance plans active in 2013, the most recent year for which complete IRS reporting data is available, a pace that the firm says more than doubled industry projections of 15% growth. Kravitz notes that cash balance plans now make up 28% of all DB plans, compared with just 2.9% in 2001.

The report also noted that:

  • The median asset size of a cash balance plan is $482,077; the average is $75 million.

  • 31% of cash balance plans have assets over $1 million.

  • 89% of cash balance plans are in place at firms with fewer than 100 employees.

  • Cash balance plan assets are approaching $1 trillion ($952 billion) in the most recent year.

  • Companies contributed $35.8 billion to cash balance plans in the most recent year.

  • The average employer contribution to staff retirement accounts is 6.3% of pay in companies with both cash balance and 401(k) plans, versus 2.8% of pay in firms with only 401(k) plans.

  • California and New York State account for 23% of all new cash balance plans, followed closely by Illinois and Ohio.

  • Minnesota is a new regional powerhouse, with close to 50% year-over-year growth in new plans.

  • States with high concentrations of medical specialty groups and thriving small business environments typically show the highest annual growth in new cash balance plans.

  • Manufacturing firms now account for 7% of all cash balance plans, while medical and dental groups account for 38% of all cash balance plans nationally.