One of the advantageous provisions of the Pension Protection Act (PPA) is that it removed some technical obstacles limiting the ability of certain plan sponsors to make large deductible contributions to their defined benefit (DB) and defined contribution (DC) retirement plans. The issue in question is the overall “25% of compensation” limit which is intended […]Read More… from Paying for PBGC coverage
Despite the DOL’s rejection of a previous request by the American Benefit Council for automatic extension of time to file the 2009 Form 5500 until December 31, 2010, the American Society of Pension Professionals and Actuaries (ASPPA) has filed a similar request with the DOL and IRS. With less than two weeks until the filing […]Read More… from Another 5500 Extension Appeal
Freezing a defined benefit (DB) pension plan has become common practice over the past decade. Plan sponsors give many reasons for freezing the DB plan, but one of the most common is that the funding requirements are too expensive and volatile. In a recent article, two actuaries from Milliman dissected a sample pension freeze and […]Read More… from To Freeze or Not to Freeze (A Pension Plan)
The IRS/SSA Reporter newsletter (Fall 2010, page 2) provides some preliminary details regarding the new Form 8955-SSA which will be used by employer-sponsored retirement plans to report participants with deferred vested benefits. This new filing is effective for 2009 plan years and replaces the Form 5500 Schedule SSA. Some highlights from the newsletter: There will […]Read More… from Form 8955-SSA Update
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
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
