One of the most daunting challenges a pension plan can face is distributing required minimum distributions (RMDs) at a terminated vested participant’s required beginning date (RBD). The RBD is akin to cleaning house for the Internal Revenue Service (IRS) because tax-deferred income must start being taxed by the statutory date. Ostensibly, this income will be taxed in full within the participant’s lifetime.
The fall is the perfect time to take stock of which participants (including alternate payees, spouses, and non-spouse beneficiaries) are required to commence payment by April 1 of the following year. Any corrective actions that need to be taken for those participants who missed their RBDs may be completed before filing Form 5500.
To read more about cleaning up with required minimum distributions, read Jennifer Godwin’s article here.
When a small pension plan disaffiliated from its larger pension group, it lost access to the retirement system infrastructure that helped administer its plan. In this article, employee benefits analyst Julie Sinke explains the sponsor’s decision to fully outsource its plan administration to Milliman and how the firm provided a more efficient and streamlined solution.
A Milliman client was considering an acquisition. But first, it needed to review the target’s single-employer defined benefit pension plan. On the client’s behalf, the firm reviewed the target’s latest pension valuation report and five-year projections to make a determination. Would this potential acquisition—and its pension plan—fit in with the client?
Consultant Bret Linton explains in more detail the work that Milliman did and what it meant for the client’s bottom line in his article “Mergers & acquisitions: Pension plan due diligence.”
There are several pros and cons for defined benefit (DB) plan sponsors to consider before moving to a paperless records management system. The DB digest article “Paper records: Can we shred them yet?” by Milliman’s Stephanie Sorenson explores the advantages of converting to a paperless system. In the article, Stephanie also discusses the regulatory guidelines and administrative questions plan sponsors need to think about before making such a conversion.
One defined benefit (DB) plan sponsor decided to change how the plan calculated participant benefits from a final average pay formula to a cash balance formula. The change produced two groups of employees with significantly different levels of retirement benefits. Milliman was able to help the sponsor improve the amount of benefits provided to employees as well as give them the ability to receive income in retirement on a flexible basis for employees individual needs. Milliman actuary Vicki Mazzie provides some perspective in this article.
Monitoring the life status of pension plan participants and beneficiaries is an important fiduciary requirement. The inability to locate them can produce an administrative burden for plan sponsors. The latest DB Digest article, “Fiduciary responsibilities: Wanted dead or alive,” by Milliman’s Verna Brenner highlights three auditing strategies plan sponsors should consider to effectively track retirees.