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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.
Congress and the Treasury Department are concerned that the recent turmoil in the stock market is having an adverse impact on those individuals who attained age 70 1/2 in 2007, but who must begin taking minimum distributions from their individual retirement accounts (IRAs) and retirement plans in 2008. The problem is caused because the 2008 minimum distributions are based on a December 31, 2007, asset valuation, W. Thomas Reeder, attorney, Office of Tax Policy, Department of Treasury, explained to the 2008 annual conference of the American Society of Pension Professionals and Actuaries (ASPPA) held in Washington, D.C. on October 21, 2008.
The December 31, 2007, calculation establishes the minimum dollar amount that must be distributed in 2008. Since asset values were high at the end of 2007, the dollar amount that must be distributed is based on a higher value than it would be if the same percentage were applied to today’s asset values, which are lower. As a result, the amount of any minimum distribution taken in October 2008 is a higher percentage relative to assets than the calculation required at the end of 2007. Treasury is looking for ways to change the calculation to reflect current asset values, Reeder said. But instead, a change in the law may be required, something that Congress is looking into. In the meantime, he recommends postponing taking any required minimum distributions until the end of the year.
No impact on PBGC
The current stress on financial institutions will not involve the Pension Benefit Guaranty Corporation except for the value of their assets, said Vincent K. Snowbarger, PBGC’s deputy director of operations. Even though the Federal government does not stand behind the PBGC's liabilities, he noted that Congress will not have to address a PBGC bailout because the PBGC is not subject to the demands of its clients. It simply pays out benefits over a long period of time, and has $55 billion to do it.
Snowbarger added that the PBGC will not be faced with problems from defined benefit plans from failed financial institutions because those firms fund their plans very well. However, any impact of the recent economic problems will be felt in about two years, he said, as nonfinancial companies are forced to file for bankruptcy.
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