Cash-balance plans had record growth, with the number of plans in the U.S. increasing an average of 20% each year since 2001, according to a study from Kravitz, a firm that designs and administers cash-balance plans.
When including cash-balance plans among all defined benefit plans, 13.5% of all DB plans were cash-balance plans in 2009, compared to 2.9% in 2001; that percentage is expected to increase to 15% for 2010, according to the Kravitz study.
As of Dec. 31, 2009, the most recent data available, there were 5,840 cash-balance plans with 10.5 million participants and $606 billion in assets, the study found.
The study was based on Form 5500 filings for U.S. cash-balance plans since 2001. Most of the plans, 89%, were combined with 401(k) plans. The median asset size in 2009 was $539,000, with 8% holding assets over $100 million, and 34% over $1 million.
The biggest growth spurt came after the Pension Protection Act of 2006, which clarified IRS approval of the plans. “That made a lot more employers comfortable,” said President Dan Kravitz in an interview. He predicted even more growth following IRS rules out last October that expanded options for the guaranteed interest credit offered under such plans.
