New Update: Healthcare Costs Increasing by Over 60% in Some States. Will you be impacted?

What is a Cash Balance Plan and How Does it Work for Jabil Employees?

Healthcare Provider Update: Healthcare Provider for Jabil Jabil employs a diverse range of healthcare providers to support its workforce, focusing on comprehensive health plans that address various medical needs. These providers often include a mix of major national insurance carriers such as UnitedHealthcare, Aetna, and Cigna, which offer extensive networks and accessible care options for employees. Potential Healthcare Cost Increases for Jabil in 2026 As healthcare costs are projected to surge in 2026, Jabil will likely be affected by the anticipated sharp increases in Affordable Care Act (ACA) premiums and medical expenses. With reports indicating that some states may encounter premium hikes exceeding 60%, plus the potential loss of federal subsidies, employees could see out-of-pocket premiums rise significantly-potentially by 75% or more. Coupled with ongoing inflation in medical costs and increasing demand for care, Jabil must strategize to mitigate these financial impacts on employee healthcare benefits in the coming year. Click here to learn more

'Cash balance plans can provide Jabil employees with a unique opportunity to grow their retirement savings through tax-deferred contributions and higher contribution limits, offering an important strategy for those looking to enhance their financial future.' – Wesley Boudreaux, a representative of The Retirement Group, a division of Wealth Enhancement.

'Cash balance plans can offer Jabil employees a powerful tool to build substantial retirement savings with the added benefit of employer-managed investments, promoting a more secure financial future for high-income workers.' – Patrick Ray, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article, we will discuss:

What a cash balance plan is and how it works.
The key benefits and limitations of cash balance plans.
How these plans compare to traditional retirement vehicles like 401ks.

Among the various retirement plan options available today, cash balance plans are becoming better known as a useful instrument for high earners, particularly those employed by large corporations like Jabil. These plans offer significant advantages to those who want to save more than standard retirement vehicles like 401ks or individual retirement accounts (IRAs) allow because they combine features of defined-benefit and defined-contribution plans.

A Cash Balance Plan: What Is It?

A cash balance plan is a type of defined-benefit pension plan in which benefits are represented as an account balance. The primary distinction between it and a defined-contribution plan, such as a 401k, is how the account is funded and maintained, even though it functions similarly. Employer contributions to each participant's account are made annually under a cash balance plan, which offers two different kinds of credits: interest credits and pay credits. Over time, these contributions build up, providing the worker with a predetermined account amount when they retire.

For example, an employee may decide to convert a $500,000 cash balance account into an annuity upon retirement, which would provide a consistent income stream for the duration of their retirement. To continue tax-deferred growth, they can also take a lump sum payment and roll it over into an IRA or another employer-sponsored retirement plan.

Cash balance plans are subject to annual inflation-adjusted contribution restrictions set by the Internal Revenue Service (IRS). A participant who is 62 years of age or older may accumulate up to $3.6 million in their cash balance plan by 2025. This makes it a desirable choice for individuals looking to signficantly grow their retirement savings due to its high cap.

In this article, we will discuss:

What a cash balance plan is and how it works.
The key benefits and limitations of cash balance plans.
How these plans compare to traditional retirement vehicles like 401ks.

A Cash Balance Plan: What Is It?

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Limits on Contributions and Comparison to Conventional Plans

Contribution caps offered by cash balance plans in 2025 are significantly higher than those of 401k plans. While 401ks will require a catch-up contribution of $11,250 for employees aged 60 to 63, cash balance plans offer more flexibility in terms of contribution limitations, especially for high-income earners. These caps often surpass the contribution limits of conventional retirement plans by many times, but they can change depending on variables like age, income, and work history.

Principal Benefits of Cash Balance Plans

1. Tax-deferred growth: Cash balance plan contributions are tax-deferred, which reduces taxable income and provides immediate tax benefits. Participants can build money for retirement and save more on taxes as a result.
2. High contribution limits: Cash balance plans, which are especially advantageous for high-income individuals or those wishing to increase their retirement savings later in their careers, allow contributions far greater than the 401k plan limits.
3. Rollover flexibility: Participants can transfer their cash balance funds into an IRA or another retirement plan when they retire, giving them greater control over how they manage their retirement assets and allowing for ongoing tax-deferred growth.
4. Employer-managed investments: Cash balance programs shift the investment risk to the employer, as opposed to 401k plans, where the employee bears this responsibility. Employees at Jabil, who might not have the time or background to handle their own retirement plans, can feel more at ease knowing the employer manages this process.
5. Federal protection: The Pension Benefit Guaranty Corporation (PBGC) provides federal protection for benefits under cash balance plans, offering an additional layer of assurance.

Possible Drawbacks to Cash Balance Plans

1. Restricted availability: Compared to other retirement plan options, cash balance plans are less accessible. These plans are typically offered by large companies, like Jabil, and may not be available at smaller firms or those without similar pension offerings.
2. Taxation on distributions: Employees will pay taxes on distributions even though contributions are tax-deferred. If the account has grown substantially, this could result in a larger tax obligation upon retirement.
3. Best for high-income workers: Cash balance plans are especially beneficial for high-income workers due to their large contribution limits. The advantages of these plans may not be as noticeable for individuals with lower incomes.
4. Complexity: People who are unfamiliar with pension plan arrangements may find it challenging to understand cash balance plans. It is often recommended to consult a financial advisor to navigate the intricacies and confirm the plan aligns with long-term retirement goals.

In Conclusion

Cash balance plans offer a unique and effective means for Jabil employees to build up sizable retirement funds. These plans combine elements of defined-benefit and defined-contribution plans, offering significant tax-deferred contributions, excellent federal protection, and a high degree of investment management assurance.

Although typically available at larger companies like Jabil, cash balance plans are particularly suitable for high-income earners who are looking to enhance their retirement funds. Despite their complexity, for those who qualify, these plans present an attractive option due to their potential for significant retirement accumulation. They can serve as an effective tool for securing a comfortable retirement, whether used alone or in conjunction with other retirement vehicles.

Before determining whether a cash balance plan is the best option for your financial future, it is essential to comprehend the precise terms, conditions, and tax ramifications, just like with any other retirement plan. You may confirm that your retirement plan aligns with your long-term goals and objectives by speaking with a financial advisor.

Cash balance plans may provide Jabil employees with a dependable source of retirement income, especially for those nearing retirement. These plans allow participants to begin collecting benefits as early as age 55, compared to other retirement savings options that require waiting until age 59½ to access funds without penalties. This flexibility, combined with the plan’s high contribution limits and tax benefits, makes cash balance plans a desirable choice for employees looking to improve their retirement strategy.

By combining features of both defined-benefit and defined-contribution plans, a cash balance plan is an effective retirement savings tool. With its larger contribution limits, government guarantees, and tax-deferred growth, it offers a dependable means for employees at Jabil to build significant retirement savings. Explore the advantages and challenges of this growing retirement plan today and consider how it can boost your long-term financial wellbeing.

Sources:

1. Tergesen, Anne. 'The Retirement-Savings Weapon Doctors and Lawyers Use to Build Wealth.' Wall Street Journal , 14 Mar. 2025, www.wsj.com/personal-finance/retirement/cash-balance-plans-retirement-high-earners-71bfed2e?utm_source=chatgpt.com .

2. Chubb, Chad. 'Cash Balance Plan Explained: Maximize Tax Savings and Build Wealth.' WealthKeel , 10 Apr. 2025, www.wealthkeel.com/blog/cash-balance-plan-retirement/?utm_source=chatgpt.com .

3. 'Cash Balance Pension Plans: A Complete Guide.' October Three , 10 months ago, www.octoberthree.com/articles/cash-balance-pension-plans-a-complete-guide/?utm_source=chatgpt.com .

4. 'Cash Balance Plan vs. 401(k): A Simple Comparison.' Emparion , 7 months ago, www.emparion.com/cash-balance-plan-vs-401k/?utm_source=chatgpt.com .

5. 'Cash Balance Pension Plans: A Complete Guide.' October Three , 10 months ago, www.octoberthree.com/articles/cash-balance-pension-plans-a-complete-guide/?utm_source=chatgpt.com .

How does Jabil Circuit ensure the long-term sustainability of its Pension Scheme, and what role do the trustees play in this? In what ways does the investment strategy align with Jabil Circuit's overall business goals and the financial security of its employees?

Jabil Circuit Sustainability of Pension Scheme: Jabil Circuit ensures the long-term sustainability of its pension scheme by setting clear investment objectives that align with the interests of its members and beneficiaries. The trustees, operating under Jabil Pension Trustees Limited (JPT), focus on meeting the scheme's obligations and achieving asset returns above gilts over the long term, while balancing risk control and return generation. The investment strategy is designed to be consistent with return assumptions used by the scheme actuary, considering Jabil's interests in employer contribution payments.

What are the primary objectives of the investment policy for the Jabil Circuit Pension Scheme, and how do these objectives impact the decision-making process regarding asset allocation and risk management? Additionally, how do Jabil Circuitâ€™s obligations to its beneficiaries shape these objectives?

Investment Policy Objectives: The primary objectives of Jabil Circuit's pension scheme investment policy are to meet the scheme's obligations to beneficiaries and to achieve long-term asset returns above gilts. These objectives influence decision-making in asset allocation and risk management by ensuring a balance between risk control and return generation. Jabil Circuit's obligations to beneficiaries shape these objectives by prioritizing financial security and the interests of the members.

Can you elaborate on the Environmental, Social, and Governance (ESG) policies of Jabil Circuit and how these policies influence investment decisions made by the Jabil Circuit Pension Scheme? In what ways does Jabil Circuit engage with its investment managers to uphold these ESG principles?

ESG Policies Influence: Jabil Circuit incorporates Environmental, Social, and Governance (ESG) policies into its investment decisions through a structured policy that includes climate change considerations. This policy guides the trustee's engagement with investment managers, ensuring ESG factors are considered in the investment process. Regular reviews and training provided by Mercer help reinforce these principles and ensure they are integrated into the pension scheme's investment strategy.

How do climate change considerations factor into Jabil Circuit's investment approach, particularly in the context of the Pension Scheme? What measures does Jabil Circuit take to assess and manage climate-related risks associated with its investment portfolio?

Climate Change Considerations: Climate change is a significant factor in Jabil Circuit's investment approach, particularly for the pension scheme. The trustees undertake climate scenario modeling and stress testing annually, aligning the investment portfolio with climate-related financial disclosure recommendations and the Paris Agreement objectives. This approach helps manage climate-related risks and ensures the portfolio is positioned to handle various climate scenarios.

What strategies does Jabil Circuit employ to communicate and engage with employees regarding their pension benefits and retirement options? How can employees participate in discussions about changes or updates to the Jabil Circuit Pension Scheme?

Employee Communication and Engagement: Jabil Circuit employs strategies to actively engage with employees regarding their pension benefits and retirement options. Regular reporting and updates are provided, and employees have opportunities to participate in discussions about changes to the pension scheme. This open communication ensures employees are well-informed and can make knowledgeable decisions about their retirement planning.

In the context of the current IRS limits for 2024, how does Jabil Circuit assist employees in understanding their retirement savings options, particularly in relation to contributions to the Pension Scheme? What resources are available for employees to navigate these changes?

Understanding Retirement Savings Options: In light of the current IRS limits for 2024, Jabil Circuit assists employees by providing resources and guidance on retirement savings options, particularly concerning contributions to the pension scheme. Educational materials and support systems are in place to help employees understand how these changes affect their retirement planning and contributions.

How does the Jabil Circuit Pension Scheme address the issue of responsible investing, and what are the specific exclusions that have been put in place? How does Jabil Circuit balance ethical investment practices with the need for financial returns?

Responsible Investing: Jabil Circuit addresses responsible investing through clear exclusions and ethical investment practices within its pension scheme. The scheme excludes investments in controversial and civilian weapons and tobacco from its active fixed income funds. This approach balances ethical considerations with the need for financial returns, adhering to broader corporate responsibility standards.

What is the frequency and nature of the reporting provided to Jabil Circuit regarding the performance of the Pension Scheme investments? How does this reporting influence the strategic decisions made by the trustees in managing the scheme?

Investment Performance Reporting: The frequency and nature of reporting on the pension scheme's investment performance involve regular updates from Mercer, the investment consultant. These reports influence the trustees' strategic decisions by providing insights into asset performance, risk management, and compliance with investment objectives. This systematic reporting ensures that the trustees are well-informed to manage the scheme effectively.

How has the trustee board of the Jabil Circuit Pension Scheme evolved over time, and what qualifications or experiences do board members bring to their roles? In what ways do these factors contribute to effective oversight of the Pension Scheme?

Evolution and Qualifications of Trustee Board: The trustee board of the Jabil Circuit Pension Scheme has evolved to include members with specific qualifications and experiences that contribute to effective oversight. Regular training sessions and strategic reviews help trustees stay informed and capable of managing complex investment decisions, ensuring the pension scheme is managed with expertise and due diligence.

How can employees contact Jabil Circuit to learn more about their specific benefits under the Pension Scheme and to seek guidance during the retirement process? What channels are available for employees to access this information effectively?

Contacting Jabil Circuit for Pension Benefits: Employees seeking information about their benefits under the Jabil Circuit Pension Scheme can contact the human resources department or designated pension scheme administrators. Multiple channels, including direct consultations, informational seminars, and online resources, are available to ensure employees have effective access to guidance throughout their retirement process.

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.

Name of Plan: Jabil Pension Plan Years of Service Qualification: 5 years of service (as per the document, page 14) Age Qualification: Age 55 (document, page 14) Pension Formula: Calculated based on years of service and average salary over the final 5 years (document, page 15) Name of Plan: Jabil 401(k) Plan Eligibility: All full-time employees who have completed 30 days of service (document, page 22) Employer Match: Jabil matches up to 4% of employee contributions (

Restructuring and Layoffs: In 2023, Jabil announced significant restructuring plans aimed at optimizing their global operations. This included a reduction in workforce by approximately 5% in certain divisions to streamline operations and improve efficiency. This move is a response to shifting market demands and an effort to remain competitive in the evolving economic landscape. It's crucial to monitor these changes due to their potential impact on employee job security and company performance amid the current economic and investment climate.

Jabil offers stock options with a standard vesting period of four years. Stock options are granted to executives and key employees. Jabil’s RSUs RSUs at Jabil typically vest over three to four years and are performance-based. These are available to senior management and selected key employees.

Healthcare Benefits: Jabil typically offers a range of healthcare benefits including medical, dental, and vision insurance. Coverage options may include various plan tiers, such as HMO, PPO, or high-deductible health plans (HDHPs). Wellness Programs: The company often provides wellness programs which can include fitness reimbursements, mental health support, and employee assistance programs (EAPs). Acronyms and Terms: Common acronyms such as HMO (Health Maintenance Organization), PPO (Preferred Provider Organization), EAP (Employee Assistance Program), and HDHP (High-Deductible Health Plan) are used in their benefits communication.