| Test Your Human Resources Knowledge | ||
|
| Labor Law Journal Submissions | ||
|
| Labor Arbitrators' Awards and Biographies | ||
5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.
While the Pension Protection Act of 2006 (PPA; P.L. 109-280) clarifies the legal status of cash balance and other hybrid plans on a prospective basis, further guidance is needed to resolve issues with respect to such plans adopted or converted after June 29, 2005, and before August 17, 2006, according to panelists at a recent CCH audio conference. The audio conference, "Cash Balance Plans After the PPA: Is There a Future?," was held on October 19, 2006, and featured three speakers from Hewitt Associates: Dan Schwallie, an attorney, Paul Rangecroft, a Principal and consulting actuary, and Barbara J. Hogg, a Principal and senior retirement consultant.
In general, with respect to cash balance and other hybrid plans, the PPA:
Provides an age discrimination standard, though application of the PPA standard is not required or inferred prior to June 29, 2005;
Prohibits wearaway of prior benefits upon conversion to such plans, effective for conversions after June 29, 2005;
Establishes interest crediting rules;
Permits lump-sum payment of account balances (thereby eliminating the "whipsaw" calculation); and
Requires faster (three-year) vesting.
The panelists noted that, although the "no inference" provision of the PPA does not give express retroactive relief from age discrimination claims regarding pre-PPA conversions, it also means that pre-PPA conversions are not required to follow PPA conversion rules. The legality of plans converted prior to June 30, 2005, may be still be determined by the courts. According to the panelists, conversions adopted after June 29, 2005, and before August 17, 2006, will likely need modification to conform to the conversion rules of the PPA, unless statutory or regulatory relief is provided.
The panelists also indicated that cash balance plans adopted after June 29, 2005, and before August 17, 2006, will likely need modification to conform to the interest crediting and vesting rules of the PPA, unless relief is provided. They also noted a delayed effective date is provided for collectively bargained plans.
Plan sponsors may also want to wait for guidance on the PPA lump-sum rules, according to the panel. There is some concern that an amendment to eliminate whipsaw calculations may violate the anti-cutback rules, particularly if applied to a participant's entire accrued benefit.
For more information on this and related topics, consult the CCH Pension Plan Guide.
Visit our News Library to read more news stories.
©2005-2024 CCH Incorporated or its affiliates
