There’s been a lot of discussion recently about whether the automatic enrollment feature in many 401(k) plans actually leads to lower overall retirement savings rates. This blog post gives a brief overview of the issue and proposes a couple of solutions to combat automatic enrollment inertia and enhance employee engagement in the retirement plan. Background: [...]
GASB 45 requires a complete actuarial valuation of public retiree health plans to be completed every 2 to 3 years (depending on number of plan members), and sponsors usually don’t look forward to the administrative hassles of their next study. However, there are several situations where a new valuation could be advantageous and, likely, mandatory. [...]
Most large retirement plans don’t worry about the maximum pension deduction limit because the plan benefits (and related contributions) are often well below the IRS limits. However, small- and medium-sized retirement plans can unknowingly run into the limits. This post summarizes important deduction pitfalls to be aware of. Self-employment “earned income” limit [§404(a)(8)]. For self-employed [...]
The IRS finally released the 2009 Form 8955-SSA used for reporting participants with deferred vested pension benefits. They also extended the deadline for the 2009 and 2010 filings from August 1, 2011 to January 17, 2012. Here are links to: 2009 Form 8955-SSA (fill-in the box version) Instructions for Form 8955-SSA Employee Plans News with [...]
The 2010 Form 5500-EZ (with instructions) is now available for “one-participant” retirement plans. Sponsors and practitioners have waited months for the release of these forms. The filing deadline is July 31, 2011 (without extensions) for calendar year plans, or 2 1/2 months later with extensions. The documents are available here: 2010 Form 5500-EZ 2010 Form [...]
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 [...]
Many small pension plans are exempt from PBGC pension insurance coverage. These include “substantial owner” plans, where all participants in the plan own (directly or indirectly) more than 10% of the corporation’s stock. This post highlights what happens when the classification of a “substantial owner” plan changes, and what happens next. We often see “substantial [...]
The IRS recently released a draft version of the new Form 8955-SSA. We’ve been reporting in previous posts about the new Form 8955-SSA filing requirements and additional details provided by the IRS. Now, they’ve lifted the veil on what the form will actually look like. Here are a couple of quick observations of what’s changed [...]
Employers who offer retiree health benefits to their employees have something new to think about: How will proposed Medicare reforms impact my plan and its costs? Although changes to the Medicare system are likely a long way off, Medicare reform is a hot topic lately and changes to the program could have a dramatic effect [...]
If your 401(k) plan is failing the Actual Deferral Percentage (ADP) test, then it’s time to consider some plan design changes. You need to figure out a way to encourage non-highly compensated employees (NHCEs) to save more retirement money in their 401(k) accounts while keeping benefit costs under control. This post will guide plan sponsors [...]
