The Federal Reserve has posted the November Treasury interest rates. The 10 year constant maturity yield is 2.76%, which is near a record low. This rate is the basis for many cash balance plan interest crediting rates. Perhaps this low growth rate will inspire plan sponsors to change the interest credit index. This is allowed […]Read More… from Cash Balance Interest Credits: Rates Near Record Lows
As we speculated a few weeks ago, the IRS has extended the deadline for plan sponsors to amend their plan documents to comply with certain law changes under PPA and WRERA. Notice 2010-77 essentially just adds a year to the previously extended deadlines from Notice 2009-97. These extensions may be a moot point for many […]Read More… from Explanation of 436 and Hybrid Plan Amendment Extensions
The IRS just published the retirement plan limits for 2011. Most of the limits for retirement plans are unchanged – again. They’re the same as 2009 and 2010: Maximum annual pension plan benefit $195,000 Maximum annual addition for defined contribution plans 49,000 Maximum 401(k) elective deferral 16,500 Maximum catchup contribution (age 50 and over) 5,500 […]Read More… from 2011 IRS Pension Limits and Social Security Wage Base
We’ve been waiting quite a while for some official guidance on many of the technical issues involved with cash balance and other hybrid retirement plans. Last week we received final regulations for some issues, and proposed regulations for others. This post focuses on what constitutes a Market Rate of Return. A brief recap: typically a […]Read More… from Final Hybrid Plan Regs: Market Rate of Return
We’re starting to see a lot of interest from prospective cash balance plan (CBP) clients as we march towards the end of 2010. Small and midsize businesses are attracted to the large retirement deduction opportunities of CBPs. After explaining the technical details of these plans, prospective clients invariably ask the question: What are the fees […]Read More… from Cash Balance Plan Fees
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 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
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
We’ve been blogging lately on technical cash balance plan topics like meaningful benefits and fixing test failures. But we’ve been light on basics. You can see a basic cash balance plan explanation on our website: what they are, when they’re a good fit, and a simple example. That should relieve any brain cramps from the […]Read More… from Cash balance plan basics
