The Federal Reserve’s “Operation Twist” is intended to boost consumer spending, but it could cause lots of problems for defined benefit pension plans who haven’t adopted a liability-driven investment (LDI) strategy. Here’s what plan sponsors need to consider: 1. If long-term interest rates drop due to “Operation Twist”, then pension liabilities will likely increase and [...]
In this post we highlight three new PBGC premium relief items: 1. Seven Day Rule – for waiver of late premium penalties in 2011 and later. 2. “Alternative” premium method election relief – for 2010 and later years. 3. Waiver of certain “alternative” method penalties – for 2008 and 2009. Below is a detailed summary [...]
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 [...]
We all knew this day would come, and now it’s here. New applications for the Early Retiree Reinsurance Program (ERRP) will be received only until 5 pm on Thursday, May 5th. The last time we blogged about this, the ERRP money was going fast. Now the urgency is clear. So if you’ve been thinking about [...]
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 [...]
