In this article we discuss the risks to plan sponsors presented by a “traditional” cash balance plan — that is, a plan that provides interest credits based on an IRS-approved fixed income yield. We assume a general familiarity with how cash balance plans work. Cash balance plans were developed in the 1980s as a ‘hybrid’… Read More
In June, 2011, the International Accounting Standards Board (IASB) finalized new rules for pension accounting internationally (IAS 19). We provided, at that time, an article reviewing the new IASB rules in detail. Since IASB’s action, the question of whether the US Financial Accounting Standards Board (FASB) would adopt new pension accounting rules, perhaps modeled on… Read More
On March 14, 2012 the Senate passed the Highway Investment, Job Creation and Economic Growth Act of 2012 (S. 1813). The bill now goes to the House, which has been working on its own highway bill, although passage is not expected in the immediate-term. S. 1813 includes defined benefit funding relief that may be useful… Read More
Part 1 — — Provider-sponsor disclosure rules The regulation adds an elaborate set of fee disclosure requirements for the availability of the ERISA exemption for service providers. Violations are subject to ERISA sanctions (including an excise tax on the provider) for prohibited transaction violations. Summary — · The rules for single provider arrangements are… Read More
In this current outlook we review retirement benefits-related proposals in the Administration’s fiscal year 2013 budget; the introduction in the House of a concurrent resolution affirming the importance of tax incentives for retirement savings; DB funding “relief” included in the Senate Highway Bill; and (very briefly) the re-introduction of Auto IRA legislation in the House…. Read More
For a variety of reasons, many sponsors of defined benefit (DB) plans have decided to freeze their plans in favor of new or expanded defined contribution (DC) plans. Others are considering this strategy. One of the common causes for going this route has been rising and volatile cash and accounting costs and liabilities. The hope… Read More
By sponsoring a retirement plan, a company may assume a variety of risks in exchange for benefits it hopes to gain for its business, such as a more productive workforce. For purposes of this discussion, a “risk” is the potential that an outcome will be different from its “expected” value and have negative consequences. Differences… Read More
Planning for retirement presents a host of risks for employees. Are they saving enough? Are their investmentsappropriate and efficient? Will they retire when and how they desire? Will their retirement assets last for the rest of their lives? Explore alternative retirement strategies and help your employees navigate risk with our Market Return Cash Balance Plan…. Read More
On September 15, 2011, House Majority Leader John Boehner called for the “Super Committee” (the committee authorized by the debt ceiling compromise) to “develop principles for broad-based tax reform that will lower rates for individuals and corporations while closing deductions, credits, and special carveouts in our tax code. Tax reform should deal with the whole… Read More
On June 16, 2011, the International Accounting Standards Board (IASB) released final amendments to IAS 19 Employee Benefits. The new rule dramatically revises accounting for defined benefit plans, moving plan sponsors away from the current approach, which involves considerable “smoothing” of period-to-period measurements. It does not, however, require marking to market DB performance in operating… Read More
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