Archives: Resources
Nondeductible IRAs
What is a Nondeductible IRA? A Nondeductible IRA is like a Traditional IRA in all respects but one: An individual cannot take a tax deduction for contributions made to the IRA. Who can set up a Nondeductible IRA? An individual can set up a Nondeductible IRA if that person is covered by a pension, 401(k) […]
International Differences in Poverty Rates
The data in the Country Comparisons chart comes from Table 1 of a study done for the Organization for Economic Co-operation and Development (OECD) called the Luxembourg Study. The study was done by Professor Timothy Smeeding in 2005 to compare poverty rates among older persons. The LIS team compiled micro-data from different surveys in order […]
Rollover IRAs
What is a Rollover IRA? In a retirement plan that permits an individual to withdraw money when changing jobs or retiring, that person can postpone paying income taxes on the amount distributed if the money is transferred into a Rollover IRA (or into another retirement plan). An individual can also transfer money from one IRA […]
Pension Inequities Targeting Women
Private Retirement Plans Inequity: A wife will lose her right to a share of the money in her husband’s 401(k) plan if her husband leaves the job that sponsors the plan and cashes out the account or rolls it over into an IRA. The wife’s consent is not required. With 401(k) money increasingly becoming the […]
A New Type of Savings Plan: The Roth 401(k)
What is the Roth 401(k)? In 2001 Congress passed the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) which in part created a new form of retirement savings plan called a Roth 401(k). The Roth 401(k) is a new type of savings plan combining a traditional 401(k) with a Roth IRA. Employers were […]
A Look at 401(k) Plan Fees
Federal Pension Insurance Protections
In 1974, Congress created a federal pension insurance program for certain private retirement plans. This program is administered by the Pension Benefit Guaranty Corporation (PBGC). What plans are protected by the PBGC? Most traditional private pension plans, commonly known as defined benefit plans, are protected by the PBGC, but not all. For example, certain plans covering […]
Benefit Cutbacks in Single Employer Plans
Starting in 2008 some underfunded pension plans sponsored by a single employer became subject to restrictions on benefits. These benefit restrictions were implemented by the Pension Protection Act of 2006 (PPA), which Congress passed to shore up the funding of traditional private sector defined benefit pension plans. This fact sheet explains the four basic benefit restrictions under […]
How Well-Funded is Your Pension Plan?
Thanks to the Pension Protection Act of 2006, people covered by a traditional defined-benefit pension plan should now receive a pension funding notice every year, which gives workers an idea of how well-funded their plan is. However, if a funding notice is not available, it is possible to get a rough idea of the financial […]
Defined Benefit Plans and the PBGC
Background Currently, 44 million private sector workers and retirees are covered by traditional pension plans. Companies are required to contribute enough money to these plans over time to pay the benefits promised by these plans. Sometimes the amounts contributed, plus investment earnings, are inadequate, or a company becomes financially troubled, and the plan is closed […]
Can Your Pension Plan Afford To Give COLAs?
Over time, pensions shrink in value due to inflation. To see how inflation has affected your pension, use the Census Bureau’s Inflation Calculator. If your pension plan is overfunded – that is, its assets (the amount in the plan) are greater than its obligations (the amount it must pay in pension benefits), your plan may […]
Q-SERPs
How Companies Manipulate the Law to Fund Executive Pay Packages with Workers’ Pension Money In 2008, the Wall Street Journal exposed an unethical practice in which companies use pension plans that are set up for their rank-and-file workers to finance extravagant retirement benefits for a small number of high-paid executives.1 This practice is a clear manipulation […]
