Direct Recognition Variable Investment Plan vs. Cash Balance Plan
Pension plans are not created equal
Cash balance plans and other defined benefit plans offer successful business owners opportunities to save on taxes and create retirement income streams for plan participants. However, cash balance plans have limitations and risks that Direct Recognition Variable Investment Plans (DR-VIPs) don’t have. There is a way to avoid 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 have the potential to save more for retirement. USI Consulting Group’s (USICG’s) DR-VIP is a business-smart solution for mitigating plan sponsor liabilities, putting plan assets under participant control and continuing tax-deductible contributions.
See for yourself: Cash balance plan limitations & the DR-VIP difference
| Plan Features | DR-VIP | Cash Balance Plans |
| Maximum Contribution Per Person | $300,000 +/- | $300,000 +/- |
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Tax Deductible Contributions |
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Tax Deferred Accumulations |
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Contribution Certainty |
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Mitigate Underfunding Liability |
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Mitigate Overfunding |
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Direct Recognition |
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No Caps or Floors on Investment Returns |
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Daily Valuation |
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Fully Automated |
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What is a suitable business profile for DR-VIP?
Partners over 40 years of age making over $500,000
Partners looking for additional tax-deductible contributions2 in excess of the direct contribution plan limit
Currently offer 401(k) plan
Looking for additional investment flexibility
Mitigation of liabilities related to retirement plan investment performance
Access detailed comparison charts for traditional Cash Balance plan and Market Rate Cash Balance plan.
How USICG Can Help
To learn more about our Direct Recognition Variable Investment Plan, please visit our DR-VIP FAQs page, contact your USICG representative or reach out to us directly at VIPNewBizSupport@usi.com.
This information is intended for educational purposes only and should not be construed as an offer to buy or sell any product or strategy. You should contact your Financial Advisor with questions regarding your individual circumstance. | Neither USI nor its affiliates and/or employees/agents/representatives offer investment advice to plan participants. | 1024.S0426.0033
Additional information
