Our philosophy for coverage and nondiscrimination testing has always been “everything passes, some plans just take a little longer to prove it”. That was put to the test recently for one of our law firm clients: an unusually young new partner was causing their §401(a)(4) nondiscrimination test to fail. We emptied the whole toolbox on […]Read More… from Fixing a §401(a)(4) test failure
Category: Cash balance plans
Passing the §401(a)(26) “meaningful benefit” test
Almost every employer-sponsored retirement plan (whether it’s a pension plan or a 401(k) plan) must satisfy certain nondiscrimination tests set forth in the internal revenue code. The IRS mandates these tests to ensure that if an employer is getting retirement plan tax deductions, then the plan should be designed so that benefits are not skewed […]Read More… from Passing the §401(a)(26) “meaningful benefit” test
Threat to Cross-Tested Plans
A Congressional proposal has been introduced that would “severely reduce the attractiveness of cross-tested plans” according to the American Society of Pension Professionals & Actuaries. Cross-tested plans can be used to provide different defined contribution allocations to different groups of employees. Often cash balance plans are aggregated with a defined contribution plan and cross-tested for […]Read More… from Threat to Cross-Tested Plans
The new DB(k) plan
Just ran across this, in Consumer Reports of all places. It’s about the new DB(k) plan, a 401(k)/defined benefit combo that came in as part of the Pension Protection Act of 2006 (PPA), first available in 2010. We’ve never thought the DB(k) would have much appeal, but what do we know? I thought cash balance […]Read More… from The new DB(k) plan
More cash balance plan press coverage
Yet another article on the growing popularity of cash balance plans was featured on the front page of Yahoo! finance this morning. It’s a bit of a generic overview, but gets the point across. One thing to note: the article states that annual interest crediting rates in these plans are guaranteed rates such as 4%, […]Read More… from More cash balance plan press coverage
Cash balance plan surge
I’ve been amazed at how many times this little tidbit about the popularity of cash balance plans has appeared and reappeared in the news. That’s great, because many employers and financial planners are still unaware of what’s possible. It makes sense that a big surge has come since 2001. That was just after the […]Read More… from Cash balance plan surge