Cash balance plans continue to grow at a pace higher than other sectors of the retirement plan market, with a 21% increase in the number of plans in 2010, according to a report from Kravitz Inc., a firm that designs and administers cash balance plans.
The number of 401(k) plans in 2010 shrank by 1%, according to the report.
Sixteen percent of all defined benefit plans were cash balance plans as of Dec. 31, 2010, up from 13.5% the year before, according to the Kravitz report. The report also projects that percentage would rise to 20% by the end of 2011 based on current growth rates and industry data.
As of Dec. 31, 2010, the most current data available based on Form 5500 filings, there were 7,064 active cash balance plans with 11.1 million participants and a total of $713 billion in assets.
Much of the growth of the previous several years was due to the passage of the Pension Protection Act of 2006, which clarified IRS approval of the plans, according to the report.
Further regulations have helped define the appeal of the cash balance plan, according to Dan Kravitz, president of Kravitz Inc.
“After the PPA was passed, the IRS in October 2010 issued cash balance regulations ... that enhanced these plans for plan sponsors,” said Mr. Kravitz in a telephone interview.