DR-VIP vs. Cash Balance Plans

Defined Benefit Pension Plans Are Not Created Equal
Cash balance plans and defined benefit (DB) plans offer successful business owners opportunities to save in taxes and create retirement income streams for plan participants. However, cash balance plans have limitations and risks that Direct Recognition Variable Investment Plans (DR-VIP) don’t have. There is a way to avoid being trapped by cash balance plan limitations; by terminating a cash balance plan and starting up a DR-VIP, participants can gain access to their investments before retirement age and take advantage of even more benefits. It’s Chernoff Diamond’s business-smart solution for eliminating plan sponsor liabilities, putting plan assets under participant control and continuing tax deductible contributions.

DR-VIP Retirement Plans Give You More

Plan Features DR-VIP Cash Balance Plans
Maximum Contribution Per Person $300,000 +/- $300,000 +/-
Tax Deductible Contributions
Tax Deferred Accumulations
Contribution Certainty
Optional Auto-Adjust Contributions
No Underfunding Liability
No Overfunding
Direct Recognition
No Crediting Limitations
Daily Valuation
Fully Automated

Suitable Profile for DR-VIP Retirement Plans

  • Companies with partners/shareholders/senior management earning more than $400,000 per annum and looking to contribute $100,000/yr. to 401(k), profit sharing and/or VIP plan
  • Firms seeking increased contribution and investment flexibility, administrative simplicity and elimination of all liabilities related to investment performance

To learn more about Direct Recognition Variable Investment Plans, please visit our DR-VIP FAQs page. You may also contact one of our Retirement Plans Consultants today at 516-683-6100 or by email at 411Pensions@ChernoffDiamond.com.