Blog Tag: Defined Benefits
The Internal Revenue Service (IRS) recently prescribed new mortality tables for purposes of calculating minimum required contributions according to Internal Revenue Code (IRC) Section 430 and minimum lump-sum amounts under IRC Section 417(e)(3) for qualified single employer pension plans. These regulations are applicable for plan years beginning in 2018. The prescribed tables include an update of the base mortality table to the RP-2014 tables, as well as an update of the improvement scale to the MP-2016 scale.
Could the future of certain pension plans be in danger? That’s what some experts are speculating as the Bipartisan Budget Act of 2015 begins to roll out increases on insurance premiums for single-employer defined benefit pension plans. Annual premiums are charged by the Pension Benefit Guaranty Corporation (PBGC), a federal agency that insures private-sector pension plans against default. These premium increases can be treated as revenue gains for the government and are often used to raise money when needed. As 2017 gets underway, pension plan sponsors should become familiar with the scheduled increases and consider strategies to manage or reduce the overall impact of these annual premiums.
Change is inevitable – we hear this all the time. While I’m not aware of any mandate that says as much, it often seems that change correlates with the moment we finally get comfortable doing something a certain way. Over time I’ve learned to accept Pluto's demotion, but it seems counting the planets in our solar system at eight was premature. With each New Year, I eventually start writing the correct date on my checks. My children have all come with new, fluctuating guidelines on when to introduce peanut butter. Change can be frustrating, but we learn to adapt.
The debate continues over how governmental entities should fund their pension plans. Unlike pension plans sponsored by private corporations, generally no federal laws exist that define an annual minimum required contribution. Some state and local governments have laws that define a minimum required contribution, while others have none. Most stakeholders agree on several funding policy objectives. However, some objectives are considered controversial, and even when a general objective is agreed upon, some may disagree on how to best achieve or measure the objective.