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Risk sharing

Court Rejects Segal Blend for Withdrawal Liability Calculations

Last week, there was good news for withdrawing employers from multiemployer pension plans. In The New York Times Company v Newspaper and Mail Deliverers’ – Publishers’ Pension Fund, Judge Robert W. Sweet in the Southern District of New York issued what to us is a fairly stunning decision, but one that we tend to support….Read More

More 401(k) Bashing, And a Fix (reprinted from HRE)

I posted here earlier this month about a provocative Wall Street Journal piece in which the creators and early adopters of the 401(k) retirement-savings vehicle lament the revolution they started. Their point: They had no intention of watching the concept turn into the sole — and highly inadequate — savings receptacle for employees. Now, on…Read More

Let the Retirement Pendulum Swing Freely to a Better Place for All

The movement to a DC-oriented private retirement system has raised concerns by policymakers, employees and even some of the employers who have embraced this trend. The chief concern can be summed up as the total shifting of risks to employees – the risks that they won’t save enough, the risk that they will use the…Read More

How partners upgraded their cash balance plans

Partners of a specialized medical practice were faced with an expensive dilemma when the yearly return on their cash balance plan investments fell quite a bit short of the annual 4% fixed- return target. Not only would partners be required to make up the difference by increasing the current annual contribution by 25%, but the…Read More

How law firm partners upgraded their cash balance plans

Partners of a law firm were faced with an expensive dilemma when the yearly return on their cash balance plan investments fell quite a bit short of the annual 4% fixed- return target. Not only would partners be required to make up the difference by increasing the current annual contribution by 25%, but the mismatch…Read More

Cash balance plans: 2015 update

Many sponsors maintain cash balance plans, either as (1) their main retirement benefits program, (2) a program for a specific group of employees (e.g., employees ‘grandfathered’ in connection with a ‘soft freeze’), or (3) a legacy benefit for certain employees (in connection, e.g., with a ‘hard freeze’). In 2014, IRS finalized cash balance plan regulations,…Read More

IRS finalizes cash balance regulations, adds more flexibility for ReDB designs

On September 19, 2014, IRS published long-awaited final regulations on permissible interest crediting rates in cash balance plans. The new regulations are very good news. They confirm IRS’s proposed rules establishing the market-based cash balance design (what we call ReDB®), and they permit significantly increased flexibility in cash balance plan design. We’ve provided a detailed…Read More

Retirement income: the value of deferring Social Security

In this article we are going to focus on one specific issue under current Social Security rules: the relative utility of deferring the commencement of a participant’s Social Security benefit to age 70. (To be clear: we are talking about the deferral of the commencement of Social Security, not the deferral of retirement.) We discuss…Read More

Is age 70 the ‘new normal’ for retirement?

If you think about a retirement benefit as an in-kind benefit – e.g., every employee needs enough money to replace 70-80% of her preretirement income – then the cost of providing that benefit has doubled in the last 13 years. Why? Because interest rates have declined by more than 400 basis points since 2000. The…Read More

Why use a ReDefined Benefit strategy?

In this article we provide a summary of why we think employers should consider a ReDefined Benefit (ReDB®) design, rather than a 401(k) or other defined contribution (DC) plan, as a core retirement plan for employers. 1. ReDB® is not TDB Traditional defined benefit (TDB) plans pose serious difficulties for many employers, as we discuss…Read More