pension simplificaation

[Larry M]

if you had access to Santa Claus (read Congress) what specific provisions would you want changed in order to simplify the administration of plans while maintaining "budget neutrality"?...and, perhaps, encouraging more firms to sponsor plans ...

e.g., eliminate separate definitions of hce and key; get rid of either minimum funding or PBGC (my favorite)

[Guest John S]

From a defined benefit plan point of view, I think the current liability full funding limit and the penalty tax on non deductible contributions need to go.

The full funding limit cause (sometimes) wild fluctuations in what can be contributed to a plan, and the penalty tax on non deductible contributions causes the employer to be unable to adequately fund the defined benefit plan when the money is available to do so.

[richard]

PBGC variable premiums based on market assumptions (politically hot)

Remove 401(a)(26) for DB plans (too arcane)

Increase the 401(a)(17) and 415 limits to reflect actual inflation since the 1980's (too expensive).

[Chester]

Here is my wish list:

(1) Repeal Top Heavy requirements

(2) Eliminate 150% Current Liability Full Funding Limitation and RPA '94 Override

(3) Eliminate Restricted Benefit provisions for HCEs

(4) Eliminate or reduce PBGC premiums for well-funded DB plans

(5) Eliminate 401(a)(17) compensation limits (or increase them to the pre-1994 levels increased with inflation since that time)

(6) Eliminate combined plan deduction limits for combination DB/DC plans

(7) Eliminate quarterly contribution requirements for all DB plans

(8) Modify maximum deduction for large DB plans from 100% of current liability to 100% of plan termination liability

(9) Change definition of key employee to the current definition of highly compensated employee (salary exceeds $80,000 or 5% owner)

(10) Change permitted disparity rules to eliminate uniformity requirement (so fractional rule integrated plans could be safe harbor with less than 35 years of service)

[Guest Ken Newhouse]

I hope you have a really big stocking, Chester. I would be happy with repeal of Top Heavy and repeal of Quarterly Contribution Requirements. You should also be able to deduct up to 110% of current liability.

[david rigby]

Most of the above are pretty good.

My list is pretty short:

Modify the non-deductible contribution limit, so that sponsors can make contributions when times are good, to pre-fund the down times in their business cycles.

Eliminate the PBGC entirely. This well-intentioned agency does not serve its mandate (to promote the private pension system) but does discourage (that is, by its mandated "premiums") the very existence of DB plans. I propose an alternative: each plan contribute $10 per participant to the trust (after all, the trust is the only place it can do any good for the participants) annually.

Last, I suggest that, if DB plans are subject to spousal oversight, then DC plans must be also.