Headlines about "Ret plans - cash balance, hybrid"
Gathered from the web by the editors at BenefitsLink.com.
[Guidance Overview] Monsanto Co. Receives Mixed Outcome from Two Rulings by Federal Judge in Illinois Regarding Monsanto's Cash Balance Plan
Excerpt: "In one decision, U.S. District Judge J. Phil Gilbert of the U.S. District Court for the Southern District of Illinois ruled that Monsanto had not violated the Employee Retirement Income Security Act (ERISA) by directing that cash balance plan 'interest credits' stop at age 55. . . . Later the same day, Gilbert put out a second ruling, turning aside the employer's request to dismiss claims that it violated the plan terms by refusing to use the plan's 8.5% interest rate on delayed lump-sum distributions. . . . The court said the plan clearly mandated that the interest rate for payments delayed by administrative processing must be the same as the rate used for voluntary deferrals of benefits." (planadvisor)
New Milestone in Death of Traditional Pensions, But Hybrid Plans May Grow
Excerpt: "More than half of Fortune 100 companies now offer only a 401(k) or other defined-contribution plan to new employees, the first time a majority of the nation's 100 largest firms does not offer a traditional pension, according to an annual survey released Monday by consulting firm Watson Wyatt." (MarketWatch)
Podcast: Al Lurie Discusses Cash Balance Plans and Applicable Nondiscrimination Rules
Excerpt: "On this edition, Al Lurie, President of Alvin D. Lurie, P.C., Larchmont NY and Of Counsel with The Wagner Law Group, P.C. in Boston, discusses classifying cash balance plans and establishing discrimination rules." (LexisNexis Tax Law Center)
Wells Fargo Freezes Traditional Pension Plan
Excerpt: "Wells Fargo & Co. told employees on Monday it will no longer contribute to their traditional pension plan, effectively cutting the total compensation of its workers less than two weeks after announcing record first-quarter profit. The San Francisco bank is combining its existing program with that of Wachovia Corp., the Charlotte, N.C., bank it acquired in December, and freezing both companies' cash balance plans, a type of defined benefit plan." (San Francisco Chronicle)
Wells Fargo to Freeze Cash Balance Plan
Excerpt: "Wells Fargo & Co. is freezing its cash balance pension plan, making it one of the largest employers to do so. Effective July 1, employees no longer will earn benefits in the plan. Wells Fargo also is freezing the cash balance plan sponsored by Wachovia Corp., a Charlotte, N.C.-based bank Wells Fargo acquired last year. Wells Fargo will continue to match 100% of employees' 401(k) plan salary deferrals, up to the first 6% of pay." (Business Insurance)
While Move Away from Traditional Defined Benefit Plans Continues, Sponsors Not Converting to Cash Balance Designs
Excerpt: "[D]espite the legal clarity and financial advantages to participants, large employers, for the most part, are not showing much interest in converting or setting up new plans, says William Sweetnam, a Partner in The Groom Law Group in Washington. There have been some recent high-profile conversions to cash balance plans, including Federal Express and Coca-Cola, but no wholesale movement to the cash balance format. Instead, for the most part, the IRS in 2008 spent much of the time clearing up old determination requests from older conversions, says Sweetnam." (PLANSPONSOR.com; free registration required)
[Guidance Overview] Court Dismisses Claims against JPMorgan Cash Balance Plan
Excerpt: "JPMorgan Chase & Co. did not violate the Employee Retirement Income Security Act (ERISA) with its 1989 conversion to a cash balance pension plan and subsequent plan amendments, a court ruled. The U.S. District Court for the Southern District of New York also ruled that JPMorgan's predecessor banks, including Chemical Banking Corporation, did not violate ERISA. Former participant Frank Bilello alleged that the plan's failure to specify a projection method for the accrual of benefits resulted in an accrual that was not 'definitely determinable' in violation of ERISA." (planadvisor)
[Guidance Overview] Appeals Court Finds LaRue Does Not Apply in Cash Balance Fiduciary Breach Case
Excerpt: "A cash balance plan participant has no fiduciary breach claim arising from the denial of a lump sum payment, the Second Circuit Court of Appeals ruled (Fisher v. Penn Traffic Co., unpublished), concluding that the Supreme Court's decision in LaRue v. DeWolff did not apply. LaRue recognized the right of a defined contribution participant to recover for individual losses due to fiduciary breach. The Second Circuit noted that a cash balance plan was not an individual account plan, so fiduciary breach remedies are available only to protect the entire plan, not the rights of one participant." (Mercer LLC)
[Guidance Overview] Legality of 'Whipsaw' Lump Sum Calculation Under Cash Balance Plan Can Be Challenged in Court
Excerpt: "A former employee who challenged the calculation of her lump sum distribution under a cash balance plan was not required to exhaust her administrative remedies under the plan because an appeal would have been futile. This was the decision of the Sixth Circuit U.S. Court of Appeals in Durand v. The Hanover Insurance Group, Inc. and The Allmerica Financial Cash Balance Pension Plan (No. 07-6468)." (Wolters Kluwer)
[Guidance Overview] District Court Upholds Whipsaw Calculation for Pre-PPA Distributions
Excerpt: "In Traylor v. Avnet Pension Plan, a District Court ruled that the elimination of the so-called whipsaw calculation by the Pension Protection Act of 2006 (PPA) does not quash claims for additional benefits based on pre-PPA lump-sum distributions." (Watson Wyatt Worldwide)
Coca-Cola Co. Bucks the Trend, Moves to Cash Balance Plan
Excerpt: "The Coca-Cola Co. is adopting a cash balance pension plan for new and current employees. Under the cash balance plan design, employees will receive annual age-weighted credits equal to a percentage of pay. Those credits will start at 3% of pay and increase with age. Employees' cash balance plan accounts also will be credited with interest, though Coca-Cola hasn't yet decided on the interest-rate formula it will use. The plan will be offered to most U.S. salaried and hourly employees hired as of Jan. 1, 2010. Current employees now in Coca-Cola's traditional $1.5 billion final average pay plan will earn future benefits in the new plan starting Jan. 1, 2010." (Financial Week)
[Guidance Overview] Whipsaw Calculation Case Filed by Two Cash Balance Participants Deemed Class Action
Excerpt: "A federal judge in Wisconsin has declared as a class action a lawsuit by two cash balance participants over the failure to use a whipsaw calculation in determining pre-retirement lump-sum distributions. U.S. District Judge Barbara B. Crabb of the U.S. District Court for the Western District of Wisconsin turned aside arguments by the Alliant Energy Cash Balance Pension Plan that the claims by the two named plaintiffs were not typical of other workers because they agreed not to sue over their pension benefits as part of their severance agreements." (PLANSPONSOR.com; free registration required)
[Guidance Overview] Cash Balance Suit Plaintiff Seeks Dismissal Rehearing
Excerpt: "An employee who had his age discrimination claim against a cash balance plan dismissed has asked a federal judge to reconsider the dismissal in light of the signing of the Lilly Ledbetter Fair Pay Act. Plaintiff Wayne Tomlinson argued that with President Obama's January 29 signing of the Ledbetter bill into law . . ., the U.S. Supreme Court's May 2007 ruling in Ledbetter v. Goodyear Tire & Rubber Co. (which the Ledbetter bill was intended to overturn) should no longer be considered controlling case law . . . ." (PLANSPONSOR.com; free registration required)
The Aftermath of the Cash Balance Controversy: Defining Age Discrimination for Traditional Defined Benefit Pensions
Excerpt: "The appellate decisions upholding cash balance pensions against the claim of age discrimination are unconvincing. Nevertheless, these decisions reach the proper result as a matter of pension policy. These decisions read the statutory term 'benefit accrual' as meaning employer contributions for purposes of measuring for age-based pension discrimination in the defined benefit context. However unpersuasive this reading may be as a textual matter, it reaches a sound outcome in terms of pension policy. In particular, this reading of the pension age discrimination statutes enables employers sponsoring traditional, annuity-paying defined benefit pensions to control their costs by decreasing the annual growth of the accrued benefits earned by older employees." (Benjamin N. Cardozo School of Law via Social Science Research Network)
Cash Balance Pension Plan Works Well for Some
Excerpt: "A cash balance plan is an ERISA-qualified defined benefit pension plan. It takes maximum advantage of higher benefit levels available to such plans under federal law. If you and other highly compensated employees are maximizing contributions to your 401(k) and profit-sharing plans, it can be a valuable new addition." (TheLedger.com)
Cash Balance Plan Participants' Document Requests not Subject to ERISA Time Limit
Excerpt: "The U.S. District Court for the Western District of Kentucky has determined that an employer did not have to provide certain documents requested by cash balance plan participants within 30 days as required by the Employee Retirement Income Security Act (ERISA). In its opinion, the court said Commonwealth Industries, Inc. 'acted in a reasonably timely and sufficient manner to comply with the plaintiffs' requests.' Judge Jennifer B. Coffman noted that the employer attempted to produce the documents, even trying to timely obtain those that were not in its possession." (PLANSPONSOR.com; free registration required)
U.S. Supreme Court Turns Away AK Steel Review Request
Excerpt: "The nation's high court has turned down a request to review a $46-million award to former steel workers in a long-running pension dispute over whipsaw calculations used in determining lump sum pension distributions. The U.S. Supreme Court's decision came in a request by the AK Steel Corp. Retirement Accumulation Plan for it to take a look at an April 2007 6th U.S. Circuit Court of Appeals case (See AK Steel Cash Balance Distributions Not Covered by PPA) that kept intact the award for benefits and interest for the 1,250 former AK Steel workers." (PLANSPONSOR.com; free registration required)
[Guidance Overview] Weighing the Pros and Cons of Cash Balance Plans
Excerpt: "Advantages to plan participants include the following: Employer pays the entire cost. Easy to understand. No investment decisions or investment risk. Portable account balance. Benefit protection provided by the Pension Benefit Guaranty Corporation (PBGC). Compared to traditional defined benefit plans, more attractive to younger, mobile workers." (Journal of Accountancy)
Towers Perrin U.S. Legislative Tracking Chart: Retirement (PDF)
13 pages. Excerpt: "These charts summarize selected federal legislation that would affect employer benefit programs. The bills included on the charts are based on judgments regarding the prominence of the issue, the likelihood of enactment, and the influence of the sponsors." (Towers Perrin)
[Guidance Overview] Overview of the Worker, Retiree and Employer Recovery Act of 2008
Excerpt: "Emergency Funding Relief For Defined Benefit Plans . . . Technical Modifications to the PPA . . . Non-Technical Retirement Security Provisions . . . Mental Health Parity and Addiction Equity Act For Collectively Bargained Plans . . . ." (McGuireWoods)
[Opinion] The PLANSPONSOR 2008 Year in Review
Excerpt: "A year ago, I said that 2008 looked 'to be a pivotal year for retirement plans' -- an observation that, in hindsight, may well qualify as the understatement of the decade. Of course, a year ago, that was a commentary on the changes as plans assimilated the impacts of the Pension Protection Act, and the preparations for a new Administration. There's been all that, of course (though the impact of the latter still lies ahead). Still, what has dominated the headlines of late -- and the focus of plan sponsors and participants alike -- was not even on our radar screen last year. Here's where we've been, where we are, and what's ahead . . . ." (PLANSPONSOR.com; free registration required)
AT&T Pension Plan Class Action Lawsuit About Cash Balance Pension Conversions
The site lists and links to documents relating to Engers v. AT&T Managment Pension Plan, C.A. 98-3660 (D.N.J.). (erisapensionclaims.com)
PBGC Semiannual Regulatory Agenda Addresses Cash Balance Plans
Excerpt: "The Pension Benefit Guaranty Corporation (PBGC) has released its semiannual regulatory agenda for Fall 2008, which outlines regulations that have been selected for amendment during the next year, as well as any regulations that have been recently finalized." (Wolters Kluwer)
[Guidance Overview] Plaintiffs in S.C. Johnson Cash Balance Case See One Claim Rejected But Whipsaw Claim Survives
Excerpt: "U.S. District Judge J.P. Stadtmueller of the U.S. District Court for the Eastern District of Wisconsin ruled that the plaintiffs' claim of a violation of ERISA interest credit rules that went into effect earlier this year was premature." (PLANSPONSOR.com)
[Guidance Overview] 2008 Year-End Checkup for Pension and Welfare Benefit Plans (PDF)
17 pages. Excerpt: "This Alert will help identify general year-end administrative and planning issues that could lead to compliance or employee relations problems if not addressed before, or early in, 2009. In addition, we have highlighted recent legislative or regulatory developments that may require plan design or documentation changes." (Aon)
Delaware Company Cleared of Cash Balance Conversion Miscue
Excerpt: "A Newark, Delaware, power company did not have to tell workers when it converted its defined benefit pension plan to a cash balance program because the change was not expected to cut employees' benefits, a federal appellate court ruled. The 3rd U.S. Circuit Court of Appeals asserted in a decision involving a cash balance challenge against Pepco Holdings and its subsidiary, Conectiv, that the conversion did not violate the Employee Retirement Income Security Act (ERISA). The appellate panel decided that because the plan change was not 'reasonably expected to significantly reduce' employees' future benefits, ERISA Section 204(h) did not mandate an employee notice the conversion was taking place." (PLANSPONSOR.com; free registration required)
[Opinion] Amara v. Cigna Pension Plan Class Action Lawsuit About Cash Balance Pension Conversions (PDF)
Excerpt: "On October 14, 2008, AARP and the National Employment Lawyers Association filed an amici curiae . . . brief on behalf of the Plaintiffs, asking the Court to provide full relief to the Plaintiffs." (Stephen R. Bruce via ERISA Pension Claims)
[Guidance Overview] Ninth Circuit Ruling that Cash Balance Plans Do Not Discriminate Against Older Workers (PDF)
3 pages. Excerpt: "BUCK COMMENT. Because the Pension Protection Act of 2006 (PPA) has insulated cash balance plans from such challenges going forward, the discrimination issue only applies retroactively. This ruling by the Ninth Circuit, not usually considered a pro-business court, should largely end the litigation over whether cash balance plans are age discriminatory." (Buck Consultants)
Reports Show How AT&T's Cash Balance Design Created Periods of 'Wear-Away' for Older Employees
Excerpt: "Documents relating to Engers v. AT&T Managment Pension Plan, C.A. 98-3660 (D.N.J.) include the following: Expert statistical report dated Sept. 23, 2008 of Robert A. Bardwell, Ph.D., of Bardwell Consulting, on the impact on older employees of the conversion of AT&T's defined benefit plan to a cash balance pension formula. Expert actuarial report dated Sept. 22, 2008 of Claude Poulin, F.S.A., on the periods of wear-away and benefit reductions produced by the conversion of AT&T's defined benefit plan to a cash balance formula." (Stephen R. Bruce and Zipin Web & Consulting)
U.S. Supreme Court Denies Cash Balance Challenge Review
Excerpt: "U.S. Supreme Court justices have turned aside a request to rule whether cash balance plans are age biased as the high court refused to review a 6th U.S. Circuit Court of Appeals decision. The lower court ruling in Drutis v. Quebecor World (USA) Inc. held that any difference in benefits that employees of different ages received under the cash balance plan was 'merely the result of the time value of money.'" (PLANSPONSOR.com; free registration required)
[Guidance Overview] IRS's Priority Guidance Plan for 2008-2009 Guidance Year
Excerpt: "The [target page] discussion highlights some of the more significant pieces of guidance in the PGP and provides insights beyond the brief descriptions in the PGP. The complete employee benefits section of the PGP is reproduced at the end of this article." (Deloitte via BenefitsLink.com)
[Opinion] ERIC Recommends Final Regs Clarify Anti-Backloading Rules Retroactively As Well As Prospectively (PDF)
11 pages. Excerpt: "The ERISA Industry Committee ('ERIC') is pleased to submit this response to Prop. Treas. Reg. § 1.411(b)-1, which addresses the application of the anti-backloading rules for defined benefit plans under section 411(b)(1)(A)-(C) of the Internal Revenue Code (the 'Code') and the parallel provisions under section 204(b)(1)(A)-(C) of Title I of ERISA. The proposed regulations were published in the Federal Register on June 18, 2008. 73 Fed. Reg. 34,665." (The ERISA Industry Committee)
[Opinion] American Benefits Council Comment Letter to IRS on Backloading/Accrual Rules to 'Greater of' Formulas (PDF)
9 pages. Excerpt: "We are . . . very concerned that the proposed regulations only address one aspect of the greater of issue, albeit a critical aspect. We urge you to broaden the proposed regulations in two ways: 1) Most importantly, it is critical that the 'different basis' requirement be deleted. 2) The separate testing rule should apply for purposes of all three backloading rules, not just the 133 1/3% rule." (American Benefits Council)
[Official Guidance] Text of IRS 2008-2009 Priority Guidance Plan, Including Reg Projects for Retirement Benefits, Executive Comp, Healthcare and Other Benefits (PDF)
31 pages; dated September 10, 2008. (Internal Revenue Service)
Verizon Hit for Cash Balance Conversion Error
Excerpt: "A federal judge said a Verizon benefits committee improperly handled an error in the plan document by ignoring it." (planadvisor)
[Guidance Overview] Green Light for Hybrid Plans
Excerpt: "In Hirt, the US Second Circuit Court of Appeals ruled that cash balance plans do not violate federal age discrimination legislation. Following several other court decisions on this issue, the Second Circuit stated that while the benefits provided to younger employees are worth more than the same benefits provided to older employees, in terms of a retirement age annuity that could be purchased, that difference is the result of time and compound interest and does not constitute age discrimination." (Global Pensions)
Latest Ruling on Cash-Balance Plans Seen as Ending 'Fear of Litigation'
Excerpt: "A fifth appeals court ruling that cash-balance pension plans do not violate age discrimination law almost certainly ends years of uncertainty and costly litigation that threatened their future, legal experts say. In a unanimous decision last week, the 9th U.S. Circuit Court of Appeals in San Francisco joined four other appeals courts in ruling that the plans do not discriminate against older employees." (Workforce Management; free registration required)
[Guidance Overview] Employee Benefits Developments, August 2008 Issue
Includes ESOP Dividends -- New Tax Reporting Rules; Mere Posting of SPD on Intranet Does Not Ensure Actual Receipt; Trilogy of IRS Guidance Regarding Health Savings Accounts; Service by Director as Interim CEO Results in Loss of Tax Deduction for Corporation; IRS Proposes Regulations Regarding 'Greater of' DB Plan Formulas; and No FICA Tax Refund On Nonqualified Deferred Comp Plan Benefits Never Received; Kentucky Retirement System Does Not Violate the ADEA. (Hodgson Russ)
A Fifth Federal Appellate Court Upholds Cash Balance Plan Designs
Excerpt: "In a continuing trend of federal court rulings backing cash balance plans, the 9th U.S. Circuit Court of Appeals has ruled the plans do not discriminate against older workers in favor of their younger counterparts." (PLANSPONSOR.com; free registration required)
Ninth Circuit Rejects IRS Interpretation of ERISA's Anti-Backloading Rules
Excerpt: "'The court recognized what ERIC has long argued, plans that adopt a 'greater of' transition are more generous to participants and do not conflict with the intent of ERISA's anti-backloading provisions,' said Ugoretz. In an important ruling of first impression, the Ninth Circuit also held that 'wearaway' in cash balance conversions does not violate federal or state age discrimination rules. The court determined that in a conversion a participant's accruals may temporarily cease until the benefit under the new formula exceeds the benefit calculated under the old formula. [Links to the Ninth Circuit Decision and to the ERIC Amicus Brief are on the target page.]" (The ERISA Industry Committee)
Appeals Court Affirms Cash Balance Ruling
Excerpt: "The 9th U.S. Circuit Court of Appeals on Wednesday affirmed dismissal of age-discrimination allegations against the cash balance plan of Southern California Gas Co., Los Angeles. The decision in Hurlic vs. Southern California Gas Co., also rejected a Feb. 1 ruling by the IRS that said use of 'greater-of' provisions in cash balance conversions could violate ERISA's anti-backloading provisions." (Pensions & Investments)
California Appeals Court Says the IRS Was Wrong About ERISA's Anti-Backloading Rule
Excerpt: "A U.S. Court of Appeals sided with corporations yesterday when it rejected an Internal Revenue Service interpretation of pension plan rules. At issue was whether pension plans that use so-called cash balance formulas violate provisions of the federal Employee Retirement Income Security Act (ERISA) and California state employment law." (CFO.com)
Pension Ruling a Partial Win for Both Sides - Appeals Court Says Cash Balance Plans Are Legal
Excerpt: "In a ruling that appears to have something for everyone, a U.S. appeals court in Pasadena decided Wednesday that Southern California Gas Co. did not discriminate against older employees when it converted its traditional pension to a cash-balance plan 10 years ago. But, the court said, the company owed its workers fair warning so that they could save more -- or find another employer. The ruling in Hurlic vs. Southern California Gas concurred with other recent appeals court rulings . . . ." (Los Angeles Times)
[Guidance Overview] With the Second Circuit's Recent Cash Balance Decision in Favor of Plan Sponsors, It's All In The Family On Foley Square
Excerpt: "The 2nd Circuit just resolved a family squabble among its district court judges . . . involving an age discrimination issue that has had the pension community across the country in a tumult for 5 years. The appeals court affirmed the judgments of two courts of the Southern District of New York that had ruled that the cash balance plans at issue were not age discriminatory . . . ." (Alvin D. Lurie, Esq.)
[Guidance Overview] Second Circuit Joins Others in Ruling that Pre-PPA Cash Balance Plans Do Not Violate ERISA Age Discrimination Provisions
Excerpt: "The court ruled that the ERISA provisions -- which prohibit an employee's 'rate of benefit accrual' from being reduced because of age -- refer to the employer's contributions to the plan and not to the employee's accrued benefit (which is expressed as an annuity commencing at normal retirement age). As such, a cash balance plan does not violate ERISA § 204(b)(1)(H)(i) where two similarly situated employees receive the same contribution even though a smaller annuity at normal retirement age will result for the employee who is older." (Deloitte)
Retirement Assets Continue to Grow, Hybrid Plans Get Bulk of New Money - 8/6/08
Excerpt: "Retirement assets grew in the United States from $16.509 trillion at the end of 2006 to $17.619 trillion at the end of 2007 . . . ." (Wolters Kluwer)
Are Cash Balance Pension Plans Right for Business?
Excerpt: "A cash-balance plan allows the business to make tax deductible contributions for eligible employees determined under a nondiscriminatory formula that may exceed the dollar limits for defined contribution plans. Contributions are in addition to amounts contributed for an employee to a defined contribution plan. Ideal candidates are companies with owners, partners or other highly compensated employees who may have neglected retirement savings to either grow their business or otherwise desire to catch up on savings." (The Spectrum)
[Guidance Overview] Second Circuit Rules That Cash Balance Plans Are Not Inherently Age Discriminatory (PDF)
Pages 2-3 of 6 pages. Excerpt: "The Second Circuit ruling makes it quite likely that the age discrimination issue has been put to bed for cash balance plans. Although there is at least one appeal pending in the Ninth Circuit on this same issue, most anticipate that it too will follow the holdings and reasoning of the four Circuit Courts that have unanimously rejected these claims. Should the Ninth Circuit (or any other Circuit) rule to the contrary, however, there might still be a need for Supreme Court resolution." (Proskauer Rose LLP)
Podcast: 'Cash Balance 101' explores and educates viewers on Cash Balance Pension Plans
Excerpt: "'We are offering the podcasts to support plan sponsors and third party intermediaries so they can have access to the very best information in plan design, implementation and administration for Cash Balance Plans,' stated Ken Guidroz, Director of New Plan Design for Kravitz." (Louis Kravitz & Associates)
[Guidance Overview] Cash Balance Plans Are Not Inherently Age-Discriminatory, According to Second Circuit
Excerpt: "Ruling in two consolidated class action lawsuits, the Second Circuit U.S. Court of Appeals has held that cash balance plans are not inherently age-discriminatory, even prior to amendments made by the Pension Protection Act of 2006 (PPA). The cases are Hirt, et al. v. The Equitable Retirement Plan for Employees, Managers, and Agents, et al. and Bryerton, et al. v. Verizon Communications, Inc., et al. (Nos. 06-4757, 06-5190, and 07-1680)." (Wolters Kluwer)
Alvin Lurie's Recent Employee Benefits Articles
Excerpt: "The first article, It's a PIP - Or Is It?, concerns 'an idea . . . to make employers in small businesses set up a payroll deduction facility for their employees not covered by employer-sponsored retirement plans, for the purpose of easing the making of contributions to an IRA established by or on behalf of the employee.' The second one, All in the Family on Foley Square, Lurie discusses the 2nd Circuit's recent cash balance plan decision in Hirt v. The Equitable Retirement Plan . . . . [And the third article is: Triple Play: Stevens to Roberts to Thomas or A View of LaRue.] (Workplace Prof Blog)
Comparison Chart of Selected Features of Public Sector Hybrid Retirement Benefit Plans (PDF)
2 pages. (National Association of State Retirement Administrators)
'Greater of' Formulas and the IRS Backloading Position
Excerpt: "In September 2007 we discussed the Wheeler v. Boeing decision, in which a federal district court rejected the IRS's application of defined benefit plan 'backloading' or accrual rules to a 'greater of' formula in a cash balance plan conversion. Since then, the IRS issued Revenue Ruling 2008-7 and has now proposed regulations providing relief from the application of its anti-backloading analysis in the case of multiple formulas." (JPMorgan Chase & Co.)
[Guidance Overview] 2nd Circuit Finds Cash Balance Plans Do Not Offend ERISA Bias Rules
Excerpt: "The trial court judges, Judge Alvin Hellerstein in Hirt v. The Equitable Retirement Plan for Employers, Managers and Agents, 06-4757-cv and 06-5190-cv, and Judge Denny Chin in Bryerton v. Verizon Communications Inc., 07-1680-cv, decided in favor of companies accused of violating the rule against age bias." (New York Law Journal)
Cash-Balance Plans Not Discriminatory, Court Rules
Excerpt: "The 2nd Circuit Court of Appeals says that while the benefits provided to younger employees are worth more than the same benefits provided to older employees, that difference is the result of time and compound interest and does not constitute age discrimination." (Workforce Management; free registration required)
[Official Guidance] U.S. Second Circuit Court of Appeals Decision in Hirt v. Equitable, Decided July 9, 2008 (PDF)
15 pages. Excerpt: "Plaintiffs in two separate cases brought claims alleging that 'cash balance' defined benefit plans violated the Employee Retirement Income Security Act's rule against age-based reductions in the rate of benefit accrual, 29 U.S.C. § 1054(b)(1)(H)(i) (2005), as that rule existed prior to the amendment that took effect as of June 29, 2005." (American Benefits Council)
Cash-Balance Plans Not Discriminatory, Court Says - Fourth Appellate Ruling in Favor of Employers
Excerpt: "In a unanimous decision, the appeals court affirmed two separate lower court rulings finding that cash balance plans sponsored by Verizon Communications Inc. and Equitable Life Assurance Society -- now known as AXA Equitable Life Insurance Co. -- do not discriminate against older workers." (Financial Week; free registration required)
[Opinion] ERISA Doesn't Ban 'Cash Balance' Plans; Second Circuit Joins Sisters
Excerpt: "The Second Circuit today joined the Third, Sixth, and Seventh Circuits in holding that a 'cash balance' pension plan doesn't violate the Employee Retirement and Income Security Act of 1974 despite the fact that older employees (sort of) get less bang for their buck." (Barry Barnett)
Court Dismisses Age Bias Claims Against Hybrid Plan
Excerpt: "The U.S. District Court for the District of Colorado has ruled the pension equity formula and wear-away period that are part of the Gannett Retirement Plan do not discriminate against older workers." (PLANSPONSOR.com; free registration required)
[Guidance Overview] IRS Proposed Regulations Would Encourage Generosity in Cash Balance Conversions (PDF)
Excerpt: "The IRS has issued proposed regulations that would clarify how defined benefit plans, especially hybrid plans, that provide a benefit calculated as the greatest of benefits under separate formulas would satisfy the ERISA anti-backloading rules. Generally, the proposed regulations would permit such 'greater-of' plans to satisfy a backloading test by testing each formula separately. This is the same relief offered in Revenue Ruling 2008-7 and is generally helpful to employers who want to convert to cash balance designs while providing more than the required transitional benefits to older employees." (Buck Consultants)
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