Cash balance plans are a type of defined benefit plan in which the company makes contributions on behalf of all participants.
What sets these plans apart is they offer much higher contribution limits than a 401(k)—especially for older participants, who can contribute more than $200,000 a year after age 55—and provide a guaranteed retirement benefit.
A participant’s contributions also grow tax-deferred at a set interest rate, typically 4% to 5%, rather than based on investment performance.
If you're curious if a cash balance plan is right for your business, review this helpful article.