As mentioned in our July lump sum interest rate post, many defined benefit (DB) plan sponsors are considering lump sum payouts to their terminated vested participants as a way of “right-sizing” their plan. The ultimate goal is to reduce plan costs and risk. The IRS recently released the November 2013 417(e) rates, which will be […]Read More… from Preview of 2014 Lump Sum Interest Rates
Many defined benefit (DB) plan sponsors are considering lump sum payouts to their terminated vested participants as a way of reducing plan costs and risk. This post shares a brief update of the interest rates used to calculate deferred vested lump sums and the impact it could have on potential lump sum payout strategies. Background […]Read More… from Lump Sum Interest Rate Update – June 2013
In last week’s blog post covering nondiscrimination testing pitfalls for soft-frozen pension plans, we discussed how defined benefit (DB) plans that are closed to new participants can run afoul of the IRC §410(b) minimum coverage rules. Today’s post discusses how small DB plans closed to new entrants can also have difficulties passing the IRC §401(a)(26) […]Read More… from Small Closed DB Plans Need to Monitor §401(a)(26) Status
Many defined benefit (DB) pension plans were closed to new entrants over the past several years. Oftentimes, these plan closures were done with a focus on short-term cost control without understanding some of the long-term compliance implications. Then, one day, the plan sponsor gets an unwelcome surprise from their actuary – their DB plan is […]Read More… from Beware Nondiscrimination Pitfalls for Frozen Pension Plans
During the plan termination process, one issue often overlooked is the consequences of investment risk prior to paying out benefits. This can lead to disastrous results. Benefits may be fully-funded when the termination decision is made, but significant contributions will be required if assets are not invested conservatively and a market downturn occurs prior to […]Read More… from Pension Plan Termination Investment Strategies
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)
