6 Questions
What is a cash balance formula?
A formula that defines benefits based on your account balance, allowing you to take the entire value of your cash balance benefit with you when you leave the company
How is the value of your cash balance account calculated?
Opening/account balance + Pay credits + Interest credits = Closing Balance
How are interest credits calculated and applied in the cash balance formula?
The monthly interest crediting rate is derived from the average annual yield on the 30-year U.S. Treasury bond at the end of the third full business week of the month immediately prior to the quarter in which such monthly interest credit is to apply, subject to a minimum rate of 4% and a maximum rate of 9%
What are the two subaccounts that make up a participant's Cash Balance Account if they were in the plan prior to January 1, 2014?
One subaccount represents the account balance as of December 31, 2013 and the other subaccount represents the monthly Pay Credits and Interest Credits
When do Pay Credits get allocated to a participant's Cash Balance Account?
At the end of each month in which the participant is an eligible employee and receives Eligible Total Pay
What percentage of monthly eligible pay is allocated as Pay Credits to a participant's Cash Balance Account if they are 50 to 64 years old and have worked for the company for 10 years?
6%
Test your knowledge on how cash balance formulas work with this informative quiz! Learn about the benefits of a cash balance plan and how it differs from a traditional pension plan. Explore the components of a cash balance formula and discover how it can impact your retirement savings. This quiz is perfect for anyone interested in understanding the ins and outs of cash balance plans.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
