Just like Sergio Leone’s classic 1966 movie, 2006 will indeed be memorable. And so with apologies to Mr. Leone and Clint Eastwood, here are my 2006 choices for the Good, the Bad, and the Ugly in Pensionland: The Good: The passage of the Pension Protection Act of 2006 (PPA). The new law makes significant changes … Continue Reading
You can call them independent contractors and pay them as such, but they may actually be employees. This matter is especially timely now as many retirement plans (and health insurance plans) have January 1st employee enrollments. It’s critical that workers be treated correctly for tax compliance purposes. If someone is an employee, then the … Continue Reading
If you are a business owner/employer with a calendar fiscal year, you still have time to adopt a qualified retirement plan for 2006. Here’s what you have to do: Before December 31, 2006, you need to: Sign adopting resolutions and a plan document, and Deposit a de minimis amount, e.g., $100 in a trust account … Continue Reading
If you are a small business owner who has established a retirement plan this year, you may be eligible to receive a tax credit for the cost of implementing a plan. And a tax credit can be better than a tax deduction. The same legislation that Congress passed in 2001 that increased benefit and contribution … Continue Reading
Questions and Answers on 412(i) Defined Benefit Pension Plans Updated for the Pension Protection Act of 2006 Executive Summary: A 412(i) defined benefit pension plan, referred to in IRS regulations as an "insurance contract plan", is the only defined benefit plan that is exempt from the minimum funding requirements of Section 412 of the Internal … Continue Reading
I’m not an art critic, and I don’t play one on the Internet. So I understand this picture, (Untitled by Jackson Pollack, incidentally), as much as perhaps … say the average 401(k) participant understands his or her plan’s summary plan description (SPD). Which is to say, in many cases, not much. And it’s quite obvious … Continue Reading
One of those year-end retirement plan housekeeping matters is for plan sponsors to review the adequacy of the plan’s fidelity bond required by Department of Labor (DoL) regulations. Here is a summary of the fidelity bond rules. Overview A fidelity bond is required to protect the assets in a retirement plan from misuse or misappropriation … Continue Reading
Some employers just don’t get it. Management-Issues blog reports on a new survey that indicates the employers are out of sync with their employees on the role that compensation and benefits play in attracting, retaining, and motivating employees. The result is that employers are losing top talent. The survey of 262 large U.S. companies and … Continue Reading
In an earlier post with the same headline, I cited the decline in the number of defined benefit pension plans from 1985 to 2005: from approximately 112,000 to 29,000. I’m certainly not the only one who has commented on the passing of defined benefit pension plans. Today Robert Pozen, Chairman of MFS Investment Management, in a speech to … Continue Reading
From its humble beginning in 1974 as part of the Employee Retirement Income Security Act of (ERISA), the Individual Retirement Account along with cousins Roth, SEP, and SIMPLE, has grown up. It’s now an increasingly important investment vehicle for retirement savings and tax planning. And it will become even more so as the Boomers start … Continue Reading
Right after the Pension Protection Act of 2006 was passed, I read comments that the new Act would help employees by removing uncertainty about funding, and it would avoid pension plan terminations and freezes. Not! A Quick Poll recently released by SEI revealed that almost a third (29%) of the employers polled said that they … Continue Reading
The IRS today announced 2007 cost-of-living adjustments to dollar limitations for qualified retirement plans. Here are the highlights: Highly Compensated Employee Definition $100,000 Annual Compensation Limit $225,000 401(k) Contribution Limit $15,500 Annual Defined Contribution Limit $45,000 Annual Defined Benefit Limit $180,000 Click here for the full IRS announcment.… Continue Reading
Headline writers last week took advantage of Hershey’s announcement that it would be closing its defined benefit pension plan to new hires. Here are a few examples: CANDY: Hershey blows pension plan a goodbye kiss: St. Louis Post Dispatch Hersey to phase out DB plan, sweeten 401(k) plan: Business Insurance Pension Cuts Not So Sweet: … Continue Reading
One of the tenets of the law of physics is that for every action there is a reaction. So too in Pensionland. The increasing amount of dollars in retirement plans raises the stakes for fiduciaries who have now been discovered by class action plaintiff lawyers. Steven Rosenberg in his Boston ERISA Law Blog points us … Continue Reading
The Department of Labor just released its Five Year Strategic Plan for Fiscal Years 2006-2011. One of the DoL’s four strategic goals is to strengthen economic protections for workers which includes enhancing pension and health benefit security. Here are the DoL’s national projects for that goal in 2006: The Employee Contributions Project is aimed at … Continue Reading
Number of single employer defined benefit plans covered by the Pension Benefit Guaranty Corporation: 1985: 112,208 1995: 53,589 2005: 28,769… Continue Reading
That ‘s the title of a just published study by The Center for Retirement Research (CRR) at Boston College. The study compared defined benefit pension plan investment returns with 401(k) plan investment returns. Using data from 1988-2004, the study reports that: Defined benefit plans outperformed 401(k) plans by one percentage point. Part of the explanation … Continue Reading
The picture above certainly does not represent today’s accountant. And in a similar vein the Department of Labor (DoL) wants to know whether its Interpretative Bulletin 75-9 published over 30 years ago relating to the independence of accountants who audit ERISA plans is still relevant. The DoL published a notice yesterday in the Federal Register asking … Continue Reading
Max Goldman in his blog, The Performance & Talent Management Blog, writes about a recent survey by McKinsey that indicates HR executives overwhelmingly see employee benefits as being important in order to compete effectively. Particularly to be able to attract and retain top talent. However, says the study, most companies don’t understand what benefits employees … Continue Reading
The sun will not be setting after all on the favorable retirement plan tax provisions that were part of the Economic Growth and Tax Reconciliation Act of 2001 (EGTRRA). For budget scoring purposes, the more than three dozen rules which included increases to contribution and benefit limits for IRAs and qualified retirement plans had “sunset” … Continue Reading
Former President Bill Clinton, whose birthday was yesterday, was heard last week lamenting the fact that he was about to turn age 60. Don’t feel bad, Mr. President, there are another 3 million who will join you this year – part of the first entrants of the baby boom generation. While few of them have … Continue Reading
The Internal Revenue Service announced an agreement yesterday with the Academy of Motion Picture Arts & Sciences resolving outstanding tax responsibilities with respect to Academy Awards gift baskets. The agreement marks the beginning of an IRS effort to reach out to the entertainment industry with reminders that award show gifts and promotional giveaways are … Continue Reading
In an earlier post, Gambling On Retirement, I cited a survey done for The Tax Foundation that indicated that 21% of the respondents believe the lottery is a practical way to save for retirement. The Tax Foundation went on to assert that contrary to many people’s beliefs—and to state governments’ claims—the money that states raise … Continue Reading
