Which of the following is a key advantage of a Cash Balance Plan for younger workers?

A Cash Balance Plan offers a particularly appealing advantage for younger workers due to the way benefits accrue over time. In this type of plan, a participant's account grows at a predetermined rate, which means that younger employees can see a significant increase in their benefits during the early years of their careers. This early accumulation is beneficial as it helps younger workers build a financial foundation for retirement sooner rather than later.

Since a Cash Balance Plan is designed to credit benefits at a consistent rate, younger employees are able to take advantage of the compounding of those benefits over a longer time period, leading to potentially greater retirement savings when compared to traditional pension plans that may favor older workers with higher benefits as they near retirement. This aspect of more rapid accrual during the early years is what makes such plans advantageous for younger employees, encouraging them to stay with the employer longer to reap the rewards of their contributions.