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 [...]
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 [...]
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) [...]
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 [...]
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 [...]
This just in: President Obama signed the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act today. Title I of the Act is about Medicare physician reimbursements, and Title II is about pension funding relief. The funding relief is in the form of extended shortfall amortization periods. Employers who choose to can [...]
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 [...]
Here’s a link to a presentation I gave to an accounting firm and some of their clients yesterday. It is geared towards plan sponsors and gives a high-level overview of the basis for calculating pension liabilities. The presentation also reviews and compares various pension liability results so that plan sponsors can better understand what all [...]
In an earlier post, we highlighted how the PBGC was rejecting a number of 2009 pension insurance premium filings because plan sponsors had completed the forms incorrectly. New rules effective in 2009 allow plan sponsors to make an election to use an Alternative Premium Funding Target (APFT) instead of the Standard Method. Many plan sponsors [...]
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 [...]
