According to Brian Donohue, with October Three Consulting, the master strategy to get to full-funding-but-no-surplus on termination is to reduce plan risk by gradually changing the plan’s asset strategy as the plan approaches full funding—the “glide path” strategy that some sponsors have adopted.
The legislation helps protect defendants who settle lawsuits from claims from co-defendants.
They have until mid-September to deduct pension plan contributions at the rate of 35%; after that, the lower 21% rate kicks in.
According to the compliant, the defined benefit (DB) plan was required to adhere to Employee Retirement Income Security Act (ERISA) funding rules.
Borrowing to fund and making in-kind contributions were just a couple of the strategies Robin M. Solomon, a partner at Ivins, Phillips & Barker, shared with attendees of the 2018 PLANSPONSOR National Conference.
The reduction in corporate taxes from 35% last year to 21% starting this year incentivized companies to accelerate tax deductions.
Witnesses for the Joint Select Committee on Solvency of Multiemployer Pension Plans said demographics, failing industries and market returns led to the insolvency of multiemployer pension plans.
“We expect others in the industry will take similar actions,” says Justin Owens, director, Client Strategy & Research, Russell Investments.
A study found DB plans that used the smoothed discount rates under current law had a much lower unfunded liability than plans that did not.
DB plan sponsors may want to make a voluntary contribution to their plans in 2018 to claim a deduction at their former, higher tax rate, according to Michael A. Moran, with GSAM.
The IRS notice also includes a modified unisex version of the mortality tables for use in determining minimum present value for distributions with annuity starting dates that occur during stability periods beginning in the 2019 calendar year.