No vote for retirement alone.

The lack of cash over cap makes the MBCBP at risk to IRS limit changes. Not to mention the 6.5% target rate is well below the market average of 10%. Delta’s eventual 18% DC with cash over cap with optional spillover into a MBCBP is a better retirement option.

I fail to see what is so great about our retirement to make all the concessions worthwhile.

https://www.emparion.com/cash-balanc...43.4%20million.

What is the IRS limit for a cash balance plan?

Cash balance plans are a type of defined benefit plan. But they have a few differences compared to a traditional defined benefit structure.

For a self-employed business owner who wants to contribute the maximum lifetime limit to a cash balance plan, the owner’s annual tax-deductible contributions to the plan will generally range from $100,000 to $300,000 annually (depending on income and the owner’s age). The annual contribution is generally not fixed and will go up or down depending on a variety of criteria.

The goal is to generate a certain benefit at retirement age. Essentially a cash balance plan is aiming for a retirement amount down the road.

This is in contrast to how a 401(k) works. A 401(k) plan establishes the maximum contribution upfront. They both are retirement savings vehicles. They just go about it a little differently.

Once money is contributed to a 401(k) plan, the account balance could grow to millions of dollars or in theory it could go to zero! For plan compliance purposes, it doesn’t really matter.

Just give us a little information and we’ll get you a custom illustration in 24 hours.
FREE Illustration ❯A cash balance plan doesn’t really have an annual contribution limit like a 401(k). This is because it is trying to reach a specific amount upon retirement (typically at 62 years old).

The amount of money in the plan at retirement is dependent on certain things. But mostly it depends on your average compensation. Assuming maximum compensation, you can have about $3.4 million upon retirement. A nice chunk of money.

As an example, the maximum annual contribution for a 401(k) plan is $61,000 ($67,500 for age 50+) for 2023. However, the maximum cash balance plan contribution is as high as $420,000.

Are the contributions age-weighted?

But the nice part about the plans is that you can contribute more as you get older. So annual contributions will increase with age and higher compensation.

Here’s a closer look at how it works…

Let’s assume for example that there are two hypothetical employees who each make $40,000 annually. One of the employees is age 36 and the other is age 56. In theory, they would both have the same retirement balance at 62 years old.

But the 36 year old has many more years until retirement, as compared to the 56 year old. As such, the company would have to contribute a smaller annual amount.

However, the 56-year-old is just 6 years away from retirement age. Accordingly, the company has to make larger contributions to reach the same retirement goal.

This is why the plans can work so well. Most business owners tend to have higher income the older they get. Combine this with the age weighting of the plans and you get the point. Large tax deductible contributions above $100,000 are the norm.

Is there an age limit for cash balance plans? A plan can restrict employees under the age of 21 and can have a one year waiting period for new employees (with the plan entry being January 1st or July 1st).

6.5% target rate is a sales job. Actual avg returns for MBCBPs are usually about half of that. 3.5% is more realistic for planning purposes.

Because we are expected to follow and believe what we are told at the road show as fact. "the company came to the table with everything they had and because of your overwhelming strike vote." Yeah right.

The retirement scope, and the changes to vacation, reserve, LCA lines are just a few that earned my NO vote. I guess this means that I will suffer and not know what to do. as PM said my NO vote will lead to "what next" or RB sending out angry fastread that his scope concessions are not ******

I do not care how nice or not nice of guys they are, but this TA is beyond a disappointment.

Care to share the source of this?
My understanding of a MPCBP is that it's MARKET based..... meaning that it's invested in various vehicles that (hopefully) increase in value in response to the traditional market forces that have consistently produced long-term gains. The performance of each individual MPCBP would be completely dependent on the choices the managers of that plan make regarding investment of the principle. So, how can you (or your source) make a statement that appears to indicate all MBCBPs perform the same way?

because it’s only going to be something like 60% stocks and 40% bonds, and it’s going to be managed extremely conservatively

IRS limit changes have always gone up. They rise in relation to inflation and increasing wages. They don't go down. 2023 401k went form 6,0000 in 2022 to 66,000 2023. Big jump.