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A cash balance plan is a defined benefit plan that looks like a defined contribution plan.
A cash balance plan can be designed so that, unlike in a traditional defined benefit plan, key employees or business partners with the same pay and service receive the same contribution and benefit payout from the plan regardless of differences in their ages.
Because a cash balance plan is a defined benefit plan, the contribution for a participant can be substantially larger than the maximum contribution to a defined contribution plan – depending upon the age of the participant, as much as three or four times larger.