Miriam Rozen, of Financial Planning Magazine, writes that cash-balance retirement plans are surging in popularity following a favorable IRS ruling.  Her article begins as follows:

A recent favorable IRS ruling has generated some buzz on cash-balance retirement plans, and advisors should expect their popularity to rocket among business-owning clients and other highly paid professionals.

These plans allow highly compensated participants to accelerate tax-deferred savings at a much higher rate than is possible with more common 401(k) plans.

While 401(k)s, like other defined-contribution plans, can help clients shelter compensation from taxes, the plans must follow federal limits for participants’ annual pretax contributions: $18,000 in 2015 for those under age 50 and $24,000 for those above.

In contrast, participants in cash-balance plans, which have defined benefits, need not adhere to any government-set maximums for their annual pretax contributions. Instead, maximum pretax contributions are calculated for each participant based on age and earnings, and according to a preset targeted return on the plan’s assets.

Read the full article at Cash-Balance Plans Surge | Financial Planning.

Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal.