A recent article by Vanguard addresses the apparent tradeoff of interest rate risk for investment risk when converting a traditional pension plan to a cash balance pension plan. A couple of quick thoughts on this topic: This is likely true for a traditional corporate pension plan where the plan sponsor has to worry about the […]Read More… from Cash Balance Plan Investment Risk
Cash balance plans can serve a multitude of purposes in partnerships and similar firms. We traditionally see them as retirement tools that allow shareholders to make very large tax-deductible retirement contributions while at the same time providing meaningful benefits to their employees. In this standard scenario, each individual partner is generally responsible for funding their […]Read More… from Cash Balance Plans as Buy-Out Tools
One confusing aspect of pension plan terminations is when the plan sponsor’s reporting obligation for the plan ends. Often there is the perception that a short plan year occurs during the year of plan termination, even if benefits are not distributed at that time. This post will clarify a few items with regard to short […]Read More… from Plan Termination Year vs. Short Plan Year
A while back I read a blog post titled “The Beer Napkin Annuity” (BNA) that I found intriguing (if nothing else, the name is catchy). The basic premise was that perhaps we could adjust our retirement tax deduction rules to transfer some deduction opportunities traditionally reserved for defined benefit (DB) plans to defined contribution (DC) […]Read More… from Retirement Deduction Limits and Employee Risk
GASB 45 requires the measurement of public employers’ retiree health liabilities and many plan sponsors are now entering their second cycle of GASB 45 actuarial valuations. These calculations are highly dependent upon the actuarial assumptions selected by the plan sponsor. Therefore, it’s a good idea to review these assumptions at each valuation cycle. Many times, […]Read More… from GASB 45 Demographic Assumption Review
It was a bit of a longshot to begin with, but the American Benefits Council’s proposal for a blanket extension for filing of 2009 Forms 5500 until December 31, 2010 (or 9 1/2 months after the end of the plan year, if later) was recently rejected by the DOL. As the DOL mentions in their […]Read More… from Rejection of 2009 Form 5500 Filing Relief
One of the hurdles that business owners face when exploring a cash balance plan is deciding whether the cost of the plan justifies the cash balance deduction opportunities. It is a bit of a balancing act, but this post will review one such cost: the IRS “gateway contribution” for cross-tested cash balance plans. The IRS […]Read More… from Cash Balance Gateway Contributions
This just in: President Obama signed the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act today. Title I of the Act is about Medicare physician reimbursements, and Title II is about pension funding relief. The funding relief is in the form of extended shortfall amortization periods. Employers who choose to can […]Read More… from Pension funding relief bill signed today
As we’ve mentioned in previous posts, there has been a lot of press this year about cash balance plans and how they can provide great retirement deferral opportunities for certain types of plan sponsors: law firms, physicians groups, and small employers. However, there is the occasional case of buyer’s remorse with these plans so I […]Read More… from Cash Balance Plans: Eyes Wide Open
Here’s a link to a presentation I gave to an accounting firm and some of their clients yesterday. It is geared towards plan sponsors and gives a high-level overview of the basis for calculating pension liabilities. The presentation also reviews and compares various pension liability results so that plan sponsors can better understand what all […]Read More… from Pension Liability Primer
