Interest credits given under a cash balance plan are not related to the actual investment yield of the plan’s assets. The employer assumes the risk of any trust fund earnings shortfall or losses that are in excess of the actuarially determined amount required to fund the plan.
Looks like we will either get a very conservative rate or the risk of underfunding won’t be as “minor” as has been claimed.
Also some other tidbits from the safe harbor requirements:
All employees for the plan year must receive the same percentage of plan year compensation or the same dollar amount.
Use a set dollar contribution for each uniform unit of service performed by the employee.
No employee contributions are allowed in the Cash Balance Plan.
Some of this could probably be changed, but it certainly weighs heavily on the side of the plans all being mandatory.