Digestive Healthcare's cash-balance plan offers guarantees

Atlanta-based Digestive Healthcare of Georgia P.C. introduced a cash balance pension plan in 2011, offering it to 16 physician partners and 35 employees, said Gaye Pennington, executive director.

Digestive Healthcare has a total of 135 employees, all of whom are eligible to participate in a defined contribution profit-sharing plan that has been in place since 1996, when the medical group was formed, Ms. Pennington said.

“The doctors wanted to be able to put away more for themselves, of course, and the nice thing about the cash balance plan is that it can be used for non-highly compensated employees as well,” she said. “We have a lot of longevity among our employees, and the doctors wanted to be able to reward those who have been here the longest with another benefit. Tax savings also was a huge motivator.”

When Tri-City Cardiology Consultants P.C. in Mesa, Ariz., added a cash balance plan in 2009, 17 partners and 33 of its 175 employees were selected to participate, CEO Ken Frandsen said.

“It provided an opportunity for our physician partners to save for retirement on a tax-deferred basis,” he said. In addition, “because it is a qualified plan, it provides a greater level of asset protection from any potential lawsuits against the medical group,” Mr. Frandsen said.

Like Digestive Healthcare, Tri-City Cardiology wanted to offer its longtime employees a supplement to its defined contribution plan.

“With the volatility of the stock market, a lot of our 401(k) balances haven't done as well,” Mr. Frandsen said. “This provides for diversification of retirement investments. It's a guaranteed pension. There are not a lot of guarantees anymore.”