Implications of MAP-21 for DB plan finance

In this article we project MAP-21interest rates to the end of the decade. We then consider the implications of MAP-21 relief for plan funding and sponsor decisions about the management of plan finance. (For detail on how MAP-21 works, see our article Pension Funding Relief / PBGC Premium Increases.) Cash only MAP-21 affects minimum funding… Read More

Current pension legislative outlook — August 2012

In this article, we briefly cover three topics: (1) decisions with respect to 2011 DB plan contributions and 2012 quarterly contributions; (2) Department of Labor revised guidance on brokerage window disclosure; and (3) the court of appeals decision in Bidwell v. University Medical Center (involving losses in connection with 2008 qualified default investment alternative (QDIA)… Read More

2012 segment rates under MAP-21 released by IRS

On August 16, 2012, IRS issued Notice 2012-55, providing new valuation interest rates for 2012, reflecting changes made by the “Moving Ahead for Progress in the 21st Century Act” (MAP-21). We discuss MAP-21 in our article Pension Funding Relief / PBGC Premium Increases, and we refer you to that article for more detail on how… Read More

Pension funding relief: 2012 benefit restriction issues

The President has signed the “Moving Ahead for Progress in the 21st Century Act” (MAP-21) into law. The new law includes funding relief for defined benefit plan sponsors (in the form of a floor on the interest rate used to calculate DB liabilities) and an increase in Pension Benefit Guaranty Corporation premiums. We discuss MAP-21… Read More

How efficient is the 401(k) system?

Closely linked to the criticism that the 401(k) system is unfair is a criticism that it is inefficient: that it does not do as good a job accumulating retirement savings as could be done. While the “inefficiency” argument is complicated and involves a variety of issues, the elements of the system that have gotten the… Read More

Tax reform and 401(k) fairness

A key element of the debate over comprehensive tax reform and retirement savings tax incentives will be the fairness of the current 401(k) system. In this article we review current fairness arguments and the data that opponents and proponents put forward in support of their views. Upside-down incentives The following is from a 2005 paper… Read More

Pension Funding Relief / PBGC Premium Increases

In what is likely to be the last retirement-related legislation before the November election, Congress approved limited DB funding relief and an increase in Pension Benefit Guaranty Corporation premiums, as “revenue raisers” in a bill that includes transportation legislation and an extension of student loan interest rate relief. In this article we discuss the funding… Read More

How low can you go? Interest rates and DB plans

In this article we discuss the impact of the decline in interest rates on defined benefit plans. We begin with a discussion of what has happened to interest rates over the long- and short-term. Next, we discuss the Federal Reserve’s “Operation Twist” and its effect on interest rates. We then turn to the impact of… Read More

Cash Balance Plan Administration in the 21st Century

It’s Beginning to Look a Lot Like a Defined Contribution Plan As many companies are coming to appreciate the value of the Market Return cash balance plan design, managing economic risk and contribution volatility has become much more realistic. Today’s cash balance plans now work in harmony with 401(k)/Profit Sharing Plans to deliver significant risk… Read More

Cash Balance Plan Design

Creating Pension Stability in a Volatile World It seems almost everyone in the retirement industry is writing about cash balance plan design these days — from actuaries to investment managers to third–party administrators. All agree they are a great way to create additional income deferral for business owners in professional service firms and other owner-operated businesses. High… Read More

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