There’s a new retirement plan design available, and it’s called a DB(k) Plan. What exactly is it?
As the name and visual metaphor suggest, it’s a combination retirement plan that allows an employer to provide both 401(k) benefits and pension benefits (traditional defined benefit or Cash Balance).
DB(k) Plans were added to the Pension Protection Act of 2006 which added Section 414(x) to the Internal Revenue Code. While these plans were made effective on and after January 1, 2010, there hasn’t been any guidance from the Internal Revenue Service until recently.
Last month the IRS issued guidance for DB(k) Determination Letters as part of Revenue Procedure 2011-6. Now you’ll be hearing a lot more about these unique retirement plans in this blog space so stay tuned.
Picture credit: Two Sides of the Same Coin by Paul H.