Administrative Requirements and Cost - DB plans are often perceived as more complex and more expensive to administer because they require actuarial work and PBGC premiums. DC plans are perceived as less complex and less costly to administer. A cash balance plan is a defined benefit plan that looks to participants like a defined contribution plan because benefits are expressed in the form of an account balance. In a cash balance plan, nominal accounts are established for each participant. Benefits are portable since they are typically available as a lump sum at termination and retirement and can be rolled over like other qualified plan distributions.
Participants earn benefits evenly over their working careers.
The employer controls the investment direction of plan assets and can take advantage of investment strategies that may yield more than the promised interest credits. Range of contribution levels and no contribution if the plan is overfunded. Plan design flexibility to provide early retirement subsidies or reward selected groups of employees. Plan must meet minimum funding requirements of a DB plan. Employer is at risk for the promised interest credit regardless of actual investment results.