Affirmed that cash balance plans do not violate age discrimination laws (as long as Participants are fully vested within three years of service and as long as the account Balance of an older employee compared with that of a similarly situated younger employee is equal to or greater than the younger employee's balance). A revised the rules to eliminate a problematic "whipsaw" effect that led to inconsistent calculations of lump-sum payouts. These changes established the cash balance plan as a legally recognized financial tool and opened the way for a flood of new clients. Setting up a cash balance plan has become easier and much more popular now that there were clear-cut rules in place. Thanks to the Pension Protection Act, cash balance plans have become a valuable and practical option for small business owners. According to Kravitz, Inc., the number of cash balance plans in America has more than tripled since the implementation of the Pension Protection Act. The number of cash balance plans increased by over 14 percent in 2016 alone, and the value of total assets in cash balance plans is over $1 trillion. Exciting New Options: IRS Regulations (2010 and 2014) The 2006 legislation clarified the legal status of cash balance plans and significantly increased their popularity, but it didn't change much when it came to plan design and implementation. In 2010 though, the IRS released a new set of cash balance regulations that allowed for remarkable new flexibility in plan design. For the first time, plan designers could really tweak options like interest crediting rates. Before the 2010 regulations, most plans relied on the 30- year Treasury bond rate, which didn't allow for a lot of flexibility. After 2010, many more businesses took advantage of options like fixed rates and the Actual Rate of Return when determining the interest paid out to participants. This change allowed plan designers to create more dynamic and specialized plans for clients. Additional regulations in 2014 introduced new investment flexibility and interest-crediting rate options. Perhaps most importantly, the 2014 regulations also permitted multiple investment strategies within a single
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