NationsBank Corp., Charlotte, N.C., has converted its defined benefit plan into a cash balance plan, the first known to give employees a one-time choice of rolling over their 401(k) account balances into the cash balance plan.
The bank's new plan also allows employees to invest the 401(k) rollover assets - along with NationsBank's contributions to the cash balance plan and the pension benefit they had accrued under the earlier defined benefit plan - in any of the 11 investment choices offered.
Accounts are credited with the returns of those options, rather than a fixed rate as is usually done in cash balance plans.
The bank is retaining its 401(k) plan, and has expanded the investment choices to mirror the 11 choices offered through the cash balance plan. Employees who have transferred assets into the pension plan will have an opportunity to rebuild their 401(k) nest eggs.
The bank's defined benefit plan had assets of $1.9 billion as of Sept. 30, 1997, and its 401(k) plan had assets of $2.9 billion, according to P&I estimates.