December 2012 Archive

The fiscal cliff and retirement plans: Medicare taxes

December 17, 2012

As part of the Patient Protection and Affordable Care Act (PPACA), for joint filers making over $250,000, Medicare taxes will increase beginning in 2013. This tax increase is part of the ‘fiscal cliff’, but there has been, generally, no discussion of, e.g., delaying the effective date of this new tax. The new tax will have the effect of increasing the relative value of saving in a 401(k) plan or other qualified plan. In this article we review just how significant the impact the relative value of in-plan vs. non-plan savings may be. Read More

The fiscal cliff and retirement plans: 'caps on deductions'

December 12, 2012

We have written several times about proposals to change the Tax Code and the effect of such proposals on, e.g., 401(k) plan participants. There is currently talk, in connection with ‘avoiding the fiscal cliff,’ of ‘capping’ retirement savings tax benefits, generally in connection with a broader cap on tax deductions or tax preferences or tax expenditures. In this article we consider, first, some of the conceptual problems that such a cap would present, and, second, how a cap might affect participants. Read More

November 2012 Pension Finance Update

December 02, 2012

The election results, and ensuing concern over the looming ‘fiscal cliff’, made for a volatile month in securities markets in November. Stocks slid 5% in the first half of the month before bouncing back to end the month in the black. Interest rates were mixed, with Treasuries declining while corporate yields edged up. The combination produced modest good news for pension sponsors, who saw funded status improve 1%-2% during the month and are now down 1%-3% so far in 2012. Download

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