11 04, 2019

Treasury and IRS move backward by giving a green light to offering retiree pension buyouts

2019-04-11T08:57:10-07:00April 11th, 2019|Categories: Pension Funding|Tags: , , |

Recently, the IRS walked back protections that limited a company’s ability to offer a lump-sum payout for the monthly benefit provided by its defined-benefit pension plan. This strategy of offering lump sums allows companies to reduce their liabilities before purchasing a group annuity from an insurance company — a process known as “de-risking.” This de-risking strategy made the headlines in the U.S. in 2012 with an initiative by General Motors GM wanted to transfer its liability for retiree benefits to [...]

31 07, 2015

Use of excess DB plan assets for health care extended to 2025

2015-07-31T23:13:28-07:00July 31st, 2015|Categories: Defined Benefit Plans|Tags: , , , |

Excess defined benefit plan assets can now be used to pay for retiree health care and life insurance through 2025. President Barack Obama on Friday signed a short-term highway funding bill approved by the Senate Thursday and earlier in the week by the House that allows more time for using those assets. The highway bill provision adds four years to the expiration date of Internal Revenue Code Section 420(b), which allows defined benefit pension plans that would remain funded [...]

28 07, 2015

IRS Shuts Down Pension Plan De-Risking Technique of Offering Lump Sums to Retirees in Pay Status

2015-07-28T22:50:14-07:00July 28th, 2015|Categories: Pension Funding|Tags: , , |

In an unexpected development, the Internal Revenue Service (IRS) recently issued Notice 2015-49, which essentially prohibits qualified defined benefit pension plans from offering retirees who are in pay status an option to convert their annuities into immediate lump sums. The notice refers to these offers as “lump sum risk-transferring programs.” Over the past few years, many plan sponsors have made or considered these types of offers as one technique for “de-risking” their qualified pension plans. A lump sum distribution [...]

16 04, 2015

IRS Extends Temporary Nondiscrimination Relief For Closed Defined Benefit Plans

2015-04-16T16:45:01-07:00April 16th, 2015|Categories: Defined Benefit Plans|Tags: , |

In Notice 2015-28, the IRS extended the temporary nondiscrimination relief originally provided in Notice 2014-5 for certain “closed” defined benefit pension plans. Closed defined benefit pension plans are defined benefit plans that provide ongoing accruals but have been amended to limit those accruals to some or all of the employees who participated in the plan on a specified date. The employees to whom the defined benefit plan is closed are often generally covered by a defined contribution plan maintained by [...]

19 02, 2015

PBGC, IRS Request Input on Multiemployer Plan Guidance

2015-02-19T23:17:30-08:00February 19th, 2015|Categories: PBGC|Tags: , , |

Regulators are looking for input from stakeholders in the multiemployer retirement plan industry before issuing guidance about the recently passed Multiemployer Pension Reform Act of 2014 (MPRA). In a request for information (RFI) from the Pension Benefit Guaranty Corporation (PBGC), the agency is asking for input about expanded rules for partitions and mergers of multiemployer plans. Section 122 of MPRA replaced the multiemployer partition rules under Section 4233 of the Employee Retirement Income Security Act (ERISA) with new rules. [...]

15 07, 2014

Longer life expectancies raise sponsor liabilities

2014-07-15T20:25:07-07:00July 15th, 2014|Categories: Defined Benefit Plans|Tags: , , , |

Defined benefit pension plan sponsors use mortality tables for a variety of purposes, including calculating lump sum distributions and minimum contribution requirements. The IRS mandates the mortality tables that plan sponsors must use when calculating lump sum distributions and minimum contributions obligations. Currently, plan sponsors must use the RP-2000 mortality table to determine present value lump sum conversions and minimum contributions. The Society of Actuaries published RP-2000, and it is based on data from over 20 years ago. Given that the RP-2000 data [...]

20 06, 2014

IRS approves New York Times adjustable pension plan

2014-06-20T21:15:07-07:00June 20th, 2014|Categories: Retirement|Tags: , , |

The IRS approved the Newspaper Guild of New York and New York Times’ application to begin an adjustable pension plan that will allow the newspaper company to keep a defined benefit plan structure, said Bill O’Meara, president of the guild. In November 2012, the guild and the Times concluded collective bargaining and agreed to freeze the $275 million defined benefit plan and replace it with a new adjustable pension plan. The new plan structure, which shares the investment risk [...]

25 03, 2014

Helping DB, DC and 403(b) Plans Comply with ERISA

2014-03-25T17:31:37-07:00March 25th, 2014|Categories: 401(k), Defined Benefit Plans|Tags: , , , , , |

Financial and retirement services provider Prudential has released a checklist to help plan sponsors of defined benefit (DB), defined contribution (DC) and 403(b) retirement plans to better comply with the Employee Retirement Income Security Act (ERISA). “We know how important it is for plan sponsors to comply with ERISA and the ever-changing reporting and disclosure requirements mandated by the federal government,” say the authors of Prudential’s Compliance Checklist for 2014. “The checklist incorporates DB, DC and 403(b) requirements and [...]

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