Recent Developments

by | Jan 27, 2015 | Institutional Services

Cash balance features added to prototype plans

Until recently, cash balance defined benefit (DB) plans have been available only as individually designed plans. On January 23, 2014, the Internal Revenue Service (IRS) announced that a preapproved DB plan program with cash balance features will be developed. Under Announcement 2014-4, preapproved DB cash balance plans will be available for the next six-year remedial amendment cycle, which is expected to occur sometime between early 2017 and a date two years later in 2019. The next six-year remedial amendment cycle incorporates changes enacted by the Pension Protection Act of 2006 (PPA).

Plan sponsors currently using individually designed cash balance plan documents may want to consider switching to the new preapproved PPA documents when the next preapproved DB plan amendment cycle begins. Although the next six-year amendment cycle may seem far away, current sponsors of individually designed cash balance plans can benefit from these changes sooner. The IRS will permit plan sponsors to stay on their existing documents until the PPA restatement cycle begins.

To do so, a cash balance plan sponsor may complete an IRS Form 8905, Certificate of Intent to Adopt a Pre-approved Plan. Form 8905 must be completed before the deadline for the next individually designed restatement cycle has passed.

Cycle C cash balance plans, which were originally required to submit a determination letter request prior to January 31, 2014, received an extension until March 31, 2014. The deadline for Cycle D plans is January 31, 2015, and the Cycle E plan deadline is January 31, 2016.

Announcement 2014-4 also extended the submission deadline for preapproved PPA DB plan documents from January 31, 2014, to February 2, 2015.

Latest From The Blog


Our Services

Investment Management

Tailor portfolios to your needs and goals.

Retirement Planning

Investing and saving wisely is vital to success in retirement.

Financial Planning

Navigating the complexities of your financial affairs can be simplified.

Tax Management

Help to increase the amount you “take home”.

Estate Planning

Protect your loved ones and make sure your legacy endures.

Executive Compensation Analysis

Simplify the many options and decision points of executive compensation plans.

Education Planning

Confidently plan for your children’s future.

Charitable Giving

Give in a tax-smart, simple way.

*Please Note: Limitations.  The scope of services to be provided depends upon the terms of the engagement, and the specific requests and needs of the client. BFSG does not serve as an attorney, accountant, or insurance agent.  BFSG does not prepare legal documents or tax returns, nor does it sell insurance products.  Please Also Note: Different types of investments involve varying degrees of risk.  Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended and/or undertaken by BFSG) or any financial planning or consulting services, will be profitable, equal any historical performance level(s), or prove successful.

Sign Up For Our Newsletters

(They're great, we promise)

Connect With Us

Financial Services Group BBB Business Review