Cash Balance Plan, contributions & distributions question

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Ninjadoc
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Joined: Fri Aug 07, 2020 8:19 pm

Cash Balance Plan, contributions & distributions question

Post by Ninjadoc »

I have a question regarding how cash balance plans are typically run regarding contributions or distributions. Within in a multi-person cash balance plans, there will be a variety of contribution amounts between each person/employer (depending on age, desired amount to contribute, etc) as well contributions on behalf of all employees. Let's say the growth of the plan does not equal the target rate, for example 4%, and it is determined that increased contributions are required to make up the difference. Would the total extra contribution required be split up evenly among all participants/employers, or be proportional to the amount you have invested in the plan? (So the more you have invested, the more you are responsible for the catch up contribution).

Alternatively, when the plan closes, I assume the amount of gains you receive would be proportional to the amount you've invested over the life of the plan?

Thanks!
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