09/12/11

Restrictions on Shutdown Benefits

Shutdown benefits are special benefits that some plans provide for workers at a plant or facility that closes. These benefits are especially important to workers who have not yet reached retirement age, but are not in a position to change careers or relocate for work. Shutdown benefits bridge the gap between the time when a […]


09/12/11

Restrictions on Benefit Improvements

The rules prohibit plans from adopting changes that would increase the cost of the plan if it is less than 80 percent funded or if such changes would cause the plan to become less than 80 percent funded. The following changes are prohibited: Increases in benefits Establishing new benefits such as special early retirement benefits […]


09/12/11

Restrictions on Payment of Lump Sums and Accelerated Benefits

A plan is not allowed to pay lump sums if the plan is less than 60 percent funded. A plan subject to this restriction can only pay a monthly benefit equal to a lifetime monthly annuity. If the plan is more than 60 percent funded but less than 80 percent funded, a plan with a […]


09/12/11

Restrictions on Earning Future Pension Benefits

If a plan is less than 60 percent funded in any year, employees will not earn any pension benefits for that year even though they continue working in jobs covered by the plan. At retirement, the employees will receive the benefits they earned up to the point when the benefit accruals stopped. Employers can reinstate […]


01/13/11

Interest Rates For Lump Sums

The Pension Protection Act of 2006 changes the interest rates used to calculate lump sum distributions, also known as cashouts. Many traditional defined benefit plans permit retirees to choose to take a single lump sum payment rather than a lifetime monthly annuity. If a lump sum is selected, the interest rate used to calculate the amount of […]


01/13/11

Pension Funding Notices

The Pension Protection Act of 2006 requires both single and multiemployer defined benefit pension plans to provide annual plan funding notices. These funding notices inform pension plan participants about the financial status of their pension plans. Under prior law, all private retirement plans were required to provide overviews of their financial status to employees in […]


01/13/11

Increase in Maximum Bond Amount

The Pension Protection Act of 2006 increases the bond requirement for people handling private retirement plan money. All individuals with control over retirement plan assets and other plan fiduciaries must be bonded.  The bond, which must represent at least 10 percent of a plan’s assets, is used to protect the plan from fraud committed against the plan by […]


01/13/11

Increased Penalties for Coercive Interference with Pension Rights

The Pension Protection Act of 2006 increases penalties for coercive interference with pension rights. The private pension law makes it unlawful for anyone to use fraud, force, violence or threat of violence to restrain, coerce, or intimidate a retirement plan participant or beneficiary for the purpose of interfering with or preventing the exercise of any right under the […]


01/13/11

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 […]


01/13/11

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 […]


01/13/11

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 […]


01/13/11

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 […]