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A leading corporate law firm, sponsoring a fully frozen pension plan for its partners, faced the challenge of terminating the plan while preserving surplus assets and avoiding excise taxes. Despite the plan being fully funded and ready for termination, concerns about market volatility and regulatory risks threatened to delay the process.
To begin, October Three efficiently secured highly competitive annuity quotes from leading insurance providers for all plan participants. By analyzing these quotes alongside the plan’s surplus, October Three recommended bypassing a lump sum offer in favor of purchasing annuities for all participants.
This strategic decision accelerated the termination timeline by three months, enabling the plan to be concluded in January 2025 and ensuring the sponsor retained a surplus of over $10 million.
By terminating the plan ahead of schedule, the law firm was insulated from significant market volatility that emerged due to new tariffs under the Trump Administration, volatility that would have otherwise delayed termination by up to a year. Additionally, October Three identified a qualified replacement plan (QRP), allowing the sponsor to utilize all surplus assets without incurring excise taxes. The result was a timely, cost-effective, and tax-advantaged plan termination.
Pension risk transfer offers businesses a way to reduce financial risk, simplify administration, and focus on core business activities to improve financial position and operational efficiency. Schedule a quick call today to learn how October Three can help transfer your pension plan risk.