A cash balance plan is a type of defined plan that has the characteristics of a defined contribution plan. Each year a participant's account is credited with a pay credit card and an interest card. The pay credit is dependent upon each participant's compensation. The Growth of the participant's accounts depends on the pay credits that the employer contributes. A cash balance offers more profitability than traditional pension plans since participants can take his/her vested account as a lump sum upon termination of employment.
