Ford Motor Company (F), The Boeing Company (BA): Cash-Balance Plans May Be The Future

Moreover, there’s no guarantee that an employer will continue offering a cash-balance plan even once it’s established. For instance, International Business Machines Corp. (NYSE:IBM) froze its cash-balance plan five years ago.

Finally, workers need to understand that especially for small businesses, the big incentive for a cash-balance plan is for high-income owner-employees seeking to maximize their own tax-deferred savings. Pension law requires them to offer workers minimum benefits in order to reap those tax savings, but what you get often pales in comparison to the money they’re able to set aside.

Don’t give up on your 401(k)
Whether or not you like 401(k) plans, don’t expect cash-balance plans to be a perfect replacement for them. In the end, the greater flexibility of a 401(k) plan makes it a preferable vehicle for retirement savings for the vast majority of rank-and-file workers, as long as they make the best use of the opportunity 401(k) plans give them.