Articles Tagged ‘Employees retirement plan’

If We Freeze Our Pension and Move to a 401(k), How will Employees be Impacted?

Tuesday, June 28th, 2011

The impact of stopping benefit accruals in a defined benefit (DB) plan and using a defined contribution (DC) plan going forward depends on the employee’s age and years of service at the time the DB accruals stop.

For the employees within a year or two of retirement, a move to a DC plan will have very little impact because they have already earned almost their whole career’s benefit under the DB plan. However, employees still a decade or more away from retiring at the time of the DB plan freeze and who have earned ten or more years of service are often severely impacted.

Younger employees who only have a few years of service may benefit from the plan change, depending on the employer contributions to the DC plan. In fact, the DC plan will provide the younger employee with more years of investment earnings. In a good investment market, the benefits earned early in a person’s career may be the most valuable in a DC plan.

It is more difficult to predict the impact on mid-career employees. read full article »

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Debt Commission and 401(k) plans Collide

Monday, January 31st, 2011

The National Commission on Fiscal Reform and Responsibility (http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/
documents/TheMomentofTruth12_1_2010.pdf) has released its final report
to reduce the deficit of the United States.

Reducing the deficit is critical, but the proposal to eliminate certain retirement tax deductions is a slippery slope. Eliminating tax incentives for retirement savings will certainly adversely affect participant’s ability to retire and put further long-term strain on our economy.

Our firm just released our “401(k) Retirement Readiness Study” that showed that across all age groups and salary levels, 401(k) participants indicate a low probability of success. In order to succeed, participants need to contribute more money to retirement plans, not less. Limiting the deduction will further reduce employees’ desire to make contributions to their retirement – furthering the primary cause 401(k) and related investment options aren’t projected to meet demand for retirement for employees in their 60’s.

With defined benefit plans continuing to scale back or be eliminated, we need to incentivize employees to be saving for retirement. If we don’t, the limited ability for participants to retire will force the government to make up the difference. This is not a scenario any consumer, taxpayer, or 401k participant desires.

Tom Totten, CEO
Nyhart
www.nyhart.com

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2011 Retirement Plan Limits Remain at the 2010 Level

Friday, December 31st, 2010

Increases in plan limits from year to year depend on the relationship of the cost of living index as of September 30 of the prior two years.  The cost of living index at September 30, 2010 was higher than the index at September 30, 2009, but lower than the index at September 30, 2008.  As a result, retirement plan limits for 2011 will be unchanged from the 2010 limits.

Limitation

2010

2011

401(k) / 403(b) / 457 Plan Maximum Elective Deferral

$16,500

$16,500

Qualified Plan Compensation Limit

$245,000

$245,000

Catch-Up Contribution Limit

$5,500

$5,500

Highly Compensation Employee Definition

$110,000

$110,000

Top Heavy Key Employee Definition

$160,000

$160,000

Defined Contribution Annual Additions Limit

$49,000

$49,000

Defined Benefit Annual Benefit Limit

$195,000

$195,000

Social Security Taxable Wage Base

$106,800

$106,800

  

Pat Scahill
Nyhart
www.nyhart.com

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