Structuring Cash Balance Pension Plans and Conversions: Tax Benefits for Principals and Employees

Course Details
- smart_display Format
Live Online with Live Q&A
- signal_cellular_alt Difficulty Level
Intermediate
- work Practice Area
ERISA
- event Date
Tuesday, August 12, 2025
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
-
This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE course will provide ERISA counsel and advisers with a thorough and practical guide to structuring cash balance pension plans and converting current defined benefit plans to cash balance plans. The panel will detail optimal scenarios for establishing a cash balance plan, identify risks in structuring a plan, and discuss critical features to include in any cash balance plan document in light of IRS guidance.
Faculty

Ms. Sunderland provides specialized legal counsel to businesses, tax-exempt and government entities, third-party administrators, and multiemployer plans on employee benefits, executive compensation, and tax-related matters, ensuring compliance with the Internal Revenue Code, ERISA, COBRA, the Affordable Care Act, Mental Health Parity Act, and other benefit and tax related laws. She also provides legal solutions for HR executives, in-house counsel, and benefits administrators who manage and sponsor 401(k) plans, pension programs, group health plans, and executive compensation structures. Ms. Sunderland represents employers and plan sponsors in state and federal agency enforcement actions as well as conducts voluntary employee benefit plan and fiduciary corrections. She serves corporate leadership, HR executives, and in-house counsel to mitigate legal exposure, implement fiduciary best practices, and comply with evolving employee benefits laws and regulations. Ms. Sunderland also provides proactive guidance on corporate transactions and M&A due diligence, ensuring seamless transitions for employee benefit plans and risk assessments for acquiring entities.

Mr. Loftus has 26 years of experience providing retirement consulting services to plan sponsors that include publicly traded companies, privately held corporations, large and small public sector employers, and notforprofit corporations. His experience includes all aspects of pension and retiree healthcare projects, including actuarial valuations under ERISA, defined benefit plan administration, benefit calculations, plan design studies, experience studies, funding and accounting projection studies, nondiscrimination testing, and accounting disclosure statements under U.S. accounting standards. Mr. Loftus has also completed valuations of Other PostEmployment Benefits (OPEB) under Governmental Accounting Standards (GASB) Statements 74 and 75, including transition from GASB Statements 43 and 45. Prior to joining Milliman, he led the consulting line of business while simultaneously serving as subject matter expert to the company’s pension risk transfer line of business with over $3B of transactions.
Description
For many businesses, particularly closely held firms and professional practices, establishing a new cash balance plan, or converting a traditional defined benefit pension plan to a cash balance pension plan, may offer significant potential advantages, both in terms of current tax benefits and increased retirement accruals. However, a cash balance plan should be carefully constructed to help mitigate legal and financial risks while maximizing tax benefits and retirement savings.
A cash balance pension plan is a defined-benefit pension plan under which an employer credits a participant's account with a defined percentage of the employee's compensation or other specified principal amount plus an interest credit amount. By using a cash balance plan, principals of professional firms and well established closely held businesses may be able to significantly increase their retirement savings and realize greater current-year tax benefits.
Additionally, plan sponsors may want to consider ways they may structure the plan investments so the performance of the trust assets reasonably approximates the plan's specified interest credits. Employee benefits counsel can help ensure that plans are designed and documents are drafted to support plan compliance and risk mitigation strategies related to funding and interest crediting.
Listen as our experienced panel provides a practical and in-depth guide to structuring cash balance pension plans.
Outline
I. Advantages of cash balance plans
II. Structure of cash balance plans
III. Setting principal credits
IV. Setting interest credits
V. Ideas on plan asset investments
VI. Timing of distributions
VII. Special considerations on cash balance conversions
Benefits
The panel will review these and other key issues:
- Funding requirements for cash balance plans
- Ideal profiles for firms contemplating a cash balance plan
- Structuring plan investments to avoid a mismatch between the plan's interest credits and actual trust returns
- IRS audit targets and areas of concern
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