Each year, defined benefit (DB) pension plan sponsors must pay pension insurance premiums to the Pension Benefit Guaranty Corporation (PBGC). In light of large PBGC premium rate increases in 2013 and future years, plan sponsors should carefully evaluate their options before proceeding with their next premium payment. Background There are two components to annual PBGC […]
By Mark Schulte
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Posted in Cash balance plans, Defined benefit plans, PBGC, Private pensions
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Also tagged cash balance plan, funded status, interest rate stabilization, MAP-21, PBGC, pension, pension relief, qualified plans, qualified retirement plan
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January 30, 2013 – 4:54 pm
In what has become an annual rite of winter, the PBGC recently released PBGC Technical Update 13-1 extending relief from the proposed amendments to the reportable events regulations for certain small pension plans. However, unlike previous years’ relief, the new technical update provides guidance for all plan years after 2012 (or until new proposed or […]
January 16, 2013 – 2:28 pm
Pension discount rates continued to drop during 2012 and plan sponsors should prepare for yet another potential upward spike in balance sheet liabilities for the fiscal year ended December 31, 2012. Using the Citigroup Pension Liability Index (CPLI) and Citigroup Pension Discount Curve (CPDC) as proxies, pension accounting discount rates may decrease by roughly 35 […]
October 18, 2012 – 1:43 pm
The IRS just announced the 2013 retirement plan benefit limits and we’re seeing some modest increases from 2012. What does it all mean for employer-sponsored retirement plans? This post analyzes the practical effects for both defined contribution (DC) and defined benefit (DB) plans, followed by a table summarizing the limit changes. Changes affecting both DB […]
By Mark Schulte
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Posted in 401(k) plan, Cash balance plans, Defined benefit plans, Defined contribution plans, Private pensions, profit sharing plan, Public pensions
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Also tagged 401(k), 401(k) plan, cash balance plan, pension, profit sharing plan, qualified plans, qualified retirement plan, retirement deduction
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The “Moving Ahead for Progress in the 21st Century” (MAP-21) legislation signed into law last week included significant pension law changes. These included good news and bad news for sponsors of defined benefit pension plans. The good news is that MAP-21 provided some relief from the historical low interest rate environment. The funding segment interest […]
January 5, 2012 – 11:08 am
Pension discount rates have plummeted over the past few months and plan sponsors should prepare for a potential upward spike in balance sheet liabilities for the fiscal year ended December 31, 2011. Using the Citigroup Pension Discount Curve (CPDC) as a proxy, pension accounting discount rates could decrease by 100 basis points (or more). This […]
December 12, 2011 – 8:48 am
Almost a year to the day after providing relief for the 2011 plan year, the PBGC released PBGC Technical Update 11-1. This notice provides guidance for the 2012 plan year on how to comply with the proposed amendments to the reportable events regulations. Summary of Important Guidance Similar to the prior pronouncements, the new Technical […]
November 25, 2011 – 11:44 am
Negative asset performance and declining valuation interest rates during 2011 will cause some pension plans to face benefit restriction issues for the first time in 2012. Potential repercussions include limits on accelerated distributions (lump sums), restrictions on plan amendments increasing the value of benefits, mandatory benefit accrual freezes and restrictions on unpredictable contingent event […]
November 9, 2011 – 8:44 am
Freezing or terminating a defined benefit (DB) pension plan can have unforeseen implications for a company’s profit sharing plan. This is especially true if the plans are top-heavy or rely on IRS cross-testing methods (e.g., professional firm cash balance plans). This post explores changes to minimum profit sharing benefits that occur when plan sponsors freeze […]
By Mark Schulte
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Posted in 401(k) plan, Cash balance plans, Defined benefit plans, Defined contribution plans, Private pensions, profit sharing plan
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Also tagged cash balance plan, cross testing, nondiscrimination, pension, plan termination, profit sharing plan, qualified plans
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October 21, 2011 – 8:16 am
The IRS recently released the October interest rates for pension plans. What do they hold in store for plan sponsors? This post summarizes some of the important rates along with our observations. Funding Segment Rates The interest rates used to determine pension plan liabilities for IRS funding purposes are composed of three segment rates (unless […]
