Has anyone heard of this product, or anything similar? The marketing material describes a Cash Balance with self-direction of investments. "It is a defined benefit plan that acts like a super 410(k) profit sharing plan...". Self-direction of investments in a db plan used to be an oxymoron. When did that change?

Who is it from?

Invariably these are schemes created in an effort to try and sell more product. Many do not stand scrutiny. Those that do are usually those that are an old standard wrapped in some meaningless packaging so as to give some claim to a Trade Name or some other proprietary item.

I would venture that this plan works as follows:

1) Super-low Normal Retirement Age in plan (say age 30 and 1 Year of Service)

2) Plan allows for distributions after attainment of Normal Retirement Age

3) Obviously DC 415 limits don't apply so participant gets dollar amount in excess of $41k credited to his cash balance each year.

4) At end of year, since Participant is "past" his Normal Retirement Age, he elects to receive his credit and roll it to an IRA or another plan, and hence is on his merry way...

... and the organization pushing it just happens to be a financial institution where the participant can have his IRA.

BTW, don't be surprised if some insurance or annuity product is present.

I think PWC actually set up such a "second generation" cash balance plan for its employees. That design and also some allegations as to questionable testing practices for its 401(k) plan are the subject of a participant suit described in this link:

http://sfgate.com/cgi-bin/article.cgi?file...0912EST0037.DTL

And, PWC purportedly put one in for Bank of America

also:

http://www.gottesdienerlaw.com/news/pdf/co_12_2_04.pdf

This probably is not like the products described above, but the idea of "hypothetical" participant direction in a cash balance plan has been arround for at least five or six years.

Assuming that the DRIVE program meets the IRS requirements for backloading, nondiscrimination, cashouts under 417(e), 415 and does not discriminate in benefit accrual on account of age then it is a good idea. How are investment gains treated for the purpose of benefit accrual? Do they increase the accrued benefit at NRA? By the way, what kind of an opinion letter is provided by the sponsor/promoter regarding compliance of the DRIVE program with the qualification requirements of the IRC?