Cash Balance Plan Conversion -- Making a Choice as to How to Proceed (Posted April 15, 2006) Technical Tip 64: The following question and answer are from the DOL/EBSA website: If my employer gives me a choice of staying with the old formula or converting to the new cash balance plan formula, how do I make the right choice? DOL Response: The right choice for you and your family may be affected by a wide range of factors. For example, in making this choice you should take into account your retirement expectations, when you intend to begin receiving your benefits, and the chance that your needs might change. In analyzing any choice presented under your plan, you will want to compare all the terms and options available to you under the cash balance package with those currently available to you. It is important for you to consider each option under each plan formula. You will also want to consider the specifics of your retirement benefit, such as how your accrued benefit (including the value of any early retirement subsidy) is defined under each formula, the current value of your accrued benefit under each formula, and its value as an annuity at normal retirement age, or as a lump sum distribution. You may also want to take into account how your choice will affect survivor benefits. You should also compare the value of other related benefits that may be offered under either choice. For instance, some traditional pension plans provide for an offset or subsidy if you retire prior to the age at which your Social Security benefits commence, or offer credit for service also covered by a disability benefit plan. In making your decision, you should pay attention to any time limits that may apply and any waivers you may be requested to sign. Finally, you need to consider how long you have been with your employer and whether or not you expect to stay employed with your current employer or change jobs in the future. You may want to consult a professional advisor for assistance in making your choice. Comment by the RLR&C ERISA attorneys: Because of the controversy surrounding conversion to cash balances plans, we are providing a series of DOL questions and answers from their website concerning cash balance plans. These tips form a predicate for understanding the complex issues facing the DOL with respect to cash balance plans, including age discrimination and cut back in accrued benefits. View all Tips © 2012 Reish Luftman Reicher & Cohen, a Professional Corporation Important notice: Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner's situation. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of your situation.