Our Perspective

Bipartisan savings legislation introduced in Senate

A bipartisan group of Senators – Booker (D-NJ), Cotton (R-AK), Heitkamp (D-ND) and Young (R-IN) – have introduced four bills designed to increase employee savings. In this article we focus on two of these proposals that are designed to incentivize short-term savings, the “Strengthening Financial Security Through Short-Term Savings Accounts Act of 2018” and the…Read More

July 2018 Pension Finance Update

Pensions continued their upward march in July – stocks were up and discount rates held steady last month – and 2018 is shaping up to be one of the best years this century for pension finance. Both model plans we track [1] gained ground last month – traditional Plan A improved more than 1% while the…Read More

PBGC web-page guidance on reverse spinoffs

PBGC has established a (new) Q&A web page – “Staff Responses to Practitioner Questions.” In a recent post to this page, PBGC staff indicated that it believes certain “two-step” spinoff/termination transactions that purport to reduce PBGC premiums for one year generally don’t work under ERISA. In this article we briefly review the transactions and PBGC…Read More

Compensating Executives Under the New 162(m)

One of the changes to the Internal Revenue Code (IRC) last fall seemed like a throw-in, targeting a small group of corporate executives that few would notice other than affected executives or individuals involved in determining how executives are compensated. The small group that does understand the change, however, knows it is a pretty big…Read More

Withdrawal liability discount rates – two courts, two different views

Some employers provide retirement benefits for many of their employees through one or more multiemployer (“Taft-Hartley”) plans, and that benefit format represents, in effect, a strategic “fact of life” for them. But there is also a (larger) group of employers that maintain their own (“single employer”) retirement savings plan for the vast majority of their…Read More

Hardship withdrawals after BBA 2018

The Bipartisan Budget Act of 2018 (BBA 2018), signed into law by President Trump on February 9, 2018, included several modifications to the 401(k) hardship withdrawal rules. While the changes are generally not effective until the 2019 plan year, they will fundamentally change how hardship withdrawals work and present issues both for regulators and plan…Read More

DB endgames

A number of factors are resulting in improved defined benefit plan funding. And as plans approach “full funding,” some sponsors are considering plan termination as an option. In this article we briefly review: (1) the factors/moving parts affecting funded status; (2) (very generally) the effect of recent trends in those factors on plan funded status;…Read More

June 2018 Pension Finance Update

June was another decent month for pension sponsors, rounding out a solid quarter and first half of 2018 for pension finance, as stock markets have eked out modest gains while higher interest rates have decreased pension liabilities. Both model plans we track1 at least held steady again last month – traditional Plan A gained 1%…Read More

Cash Balance Plans: 2018 Survey and Trends

In this report we review the use of cash balance features in defined benefit plans sponsored by U.S. employers with a focus on the evolution of interest crediting bases utilized by those plans. Our emphasis on interest crediting is prompted by current and prospective cash balance plan sponsors seeking interest crediting bases that are more…Read More