Archives: Resources
Transfer of Excess Pension Assets to Multiemployer Health Plans
The Pension Protection Act of 2006 will allow multiemployer plans to transfer excess assets into the plan paying for current retiree health care. Generally employers may not withdraw assets from a plan and such a transfer would constitute a prohibited transaction imposing strict penalties on the plan sponsor. The current law provides an exception to […]
Transfer of Pension Assets to Health Plans: Single Employer Plans
The Pension Protection Act of 2006 will allow single employer plans to transfer more of their “excess” assets to pay for their retiree health insurance costs. Employers maintaining single employer defined benefit plans have been permitted to transfer excess plan assets to pay for future retiree health benefits when the plan is overfunded by more than […]
Access to Multiemployer Plan Information
The Pension Protection Act of 2006 requires multiemployer plans to furnish participants and beneficiaries with certain financial information upon written request. All private retirement plan participants can request copies of their plans’ annual financial reports. Plan administrators must file the annual financial report called a Form 5500 seven months after the end of a plan […]
Individual Benefit Statements
The Pension Protection Act of 2006 requires plans to provide periodic benefit statements to individuals entitled to benefits from private retirement plans. Previously, the law generally required pension and profit-sharing plans to give information to people about their benefits if they requested this information in writing. Under the PPA, traditional pension plans are required to automatically […]
Faster Vesting for Profit Sharing Plans
The Pension Protection Act of 2006 will shorten the length of time required to vest in the contributions that employers make to profit sharing and certain other defined contribution plans. Currently, employees can forfeit all employer contributions to most private retirement plans if they work for an employer (or employers) contributing to the plan for fewer than […]
Increase in Saver’s Credit
The Saver’s Credit is a tax credit up to $1,000 for voluntary contributions made to personal retirement accounts such as IRAs, and 401(k) plans. The Credit benefits low-income individuals by crediting up to 50% of personal retirement savings and thereby lowering the individual’s tax liability. For example a jointly filing married couple making less that […]
Company Stock Investments in 401(k) Plans
The Pension Protection Act of 2006 changed the law to allow employees to shift company stock that employers have contributed to their 401(k) accounts to other investments. Many employers match their employees’ contributions to 401(k) plans with stock in their own companies. Some of these companies require the employees to hold onto the company stock until they reach […]
Automatic Enrollment in 401(k)s
The Pension Protection Act of 2006 relieves employers who automatically enroll employees into 401(k) plans from certain “non-discrimination” rules that would otherwise apply. Most 401(k) plans require employees to affirmatively choose to put money into a 401(k) plan. In recent years, some employers have instituted “automatic enrollment,” which means that they withhold a certain percentage […]
Benefit Cutbacks in Multiemployer Plans
The Pension Protection Act of 2006 permits certain underfunded multiemployer plans to eliminate subsidized early retirement, subsidized joint and survivor, lump sum and other benefits. A provision in the pension law known as the anti-cutback rule prohibits plans from reducing or eliminating certain already-earned benefits. These include special early retirement benefits, such as 30-and-out pensions, and unreduced widows and widowers benefits. […]
New Combination Plan
The Pension Protection Act of 2006 establishes a new kind of hybrid pension plan for employers with 500 or fewer employees. The new “DB(k) plan” combines a traditional defined benefit pension plan with a 401(k) savings plan. The DB(k) plan provides a low employer-paid guaranteed lifetime monthly retirement benefit that can be supplemented by voluntary tax deferred contributions by employees. […]
Permanent Increase in Contribution Limits
The Pension Protection Act of 2006 makes increased contribution limits for 401(k) plans and IRAs permanent. In 2001, Congress passed the Economic Growth and Tax Relief Reconciliation Act (EGTRRA), which, among other things, increased the contribution limits to 401(k) and 403(b) plans and Individual Retirement Accounts. In 2001, the maximum individual contribution to an employer sponsored 401(k) or […]
Women’s Railroad Retirement Reforms
The Pension Protection Act of 2006 requires the payment of benefits to the former wives of railroad employees when the employees reach retirement age, and after their deaths. Payment of “Tier I” benefits when employees’ reach retirement age Under prior law “Tier I” Railroad Retirement benefits (which are similar to Social Security benefits) could not be paid to divorced wives of […]
