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The cash balance strategy is a retirement plan that ties the employer's contributions to the employee’s account balance. Essentially, it is a defined contribution plan with features of both 401(k) and traditional pension plans. The advantages are that employees have more control over their retirement investments and the total cost to employers for this type of plan may be lower than other types because it provides fewer benefits.

However, there are disadvantages as well: if an employee leaves before they reach vested status (which could be as little as 3 years), then they forfeit all future employer contributions; unlike pensions, which guarantee lifetime income even if you live beyond your expected lifespan, these funds will exhaust by age 70 or 75; and like all investment options in general, there are no guarantees of what will end up in the account.

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