Cash balance plan

A cash balance plan is a kind of savings plan that helps people save up money for their retirement. Think about it like a piggy bank that you put money into each week, except it's your employer who puts the money into the piggy bank for you instead.

Here's how it works: every year, your employer puts a certain amount of money into your cash balance plan account. This money is based on a percentage of your salary, and it grows over time as you stay with your employer. The money in your account earns interest, just like when you put coins into your piggy bank.

When you retire, you can take the money out of your cash balance plan account as a lump sum, which means you get all the money at once. Or, you can choose to receive the money as a monthly paycheck, kind of like getting an allowance. This money can help you live your life when you're no longer working and earning a paycheck.

Because your employer is responsible for funding your account, you don't have to worry about investing the money yourself or making any risky decisions. And because the money in your cash balance plan account is guaranteed, you can be sure that you'll have a certain amount of money waiting for you when you retire.

Overall, a cash balance plan is a way for your employer to help you save for your future, and it's a good way to make sure you have some money waiting for you when you're ready to retire.