When you end a pension plan with the PBGC, your Pension Plan Administrator has to fill out certain papers.
These forms advise the PBGC what amount of cash the plan currently has and does it have enough to pay the staff.
If the pension plan has plenty of money to pay the staff, the employer can teach the Pension Plan Administrator to cancel the plan; this is a standard termination. In the standard termination, the Pension Plan Administrator must fill out the correct forms showing the PBGC that the plan has enough money to pay the staff.
If the pension plan hasn't got enough money to pay all the staff, the Pension Plan Administrator must prepare the all the information to file a distress termination. So as to file a distress termination, the employer must have applied for bankruptcy or the employer must prove the business can't remain in business unless the plan is ended.
In a distress termination the PBGC would then take over as Pension Plan Administrator and pay all the employees their pension benefits.
It's common knowledge that many firms are in finance trouble because of the economy. However since so many firms are having so much difficulty, the PBGC is having to make sure that staff get what they were promised. The PBGC is evaluating pension plan terminations to be certain pension plans can afford to pay the workers their pensions.
This makes it tough for Pension Plan Administrators to cancel a pension plan as all their calculations are being challenged. Therefore what must you do if you are planning on terminating your pension plan? You need to get a second opinion. You should hire another Pension Plan Administrator to study your scheme and make sure that your plan is current and all the calculations are right.
This is a vital step because if the PBGC finds a mistake with some of the Pension Plan Administrators calculations, you'll have to pay for it.
These forms advise the PBGC what amount of cash the plan currently has and does it have enough to pay the staff.
If the pension plan has plenty of money to pay the staff, the employer can teach the Pension Plan Administrator to cancel the plan; this is a standard termination. In the standard termination, the Pension Plan Administrator must fill out the correct forms showing the PBGC that the plan has enough money to pay the staff.
If the pension plan hasn't got enough money to pay all the staff, the Pension Plan Administrator must prepare the all the information to file a distress termination. So as to file a distress termination, the employer must have applied for bankruptcy or the employer must prove the business can't remain in business unless the plan is ended.
In a distress termination the PBGC would then take over as Pension Plan Administrator and pay all the employees their pension benefits.
It's common knowledge that many firms are in finance trouble because of the economy. However since so many firms are having so much difficulty, the PBGC is having to make sure that staff get what they were promised. The PBGC is evaluating pension plan terminations to be certain pension plans can afford to pay the workers their pensions.
This makes it tough for Pension Plan Administrators to cancel a pension plan as all their calculations are being challenged. Therefore what must you do if you are planning on terminating your pension plan? You need to get a second opinion. You should hire another Pension Plan Administrator to study your scheme and make sure that your plan is current and all the calculations are right.
This is a vital step because if the PBGC finds a mistake with some of the Pension Plan Administrators calculations, you'll have to pay for it.
About the Author:
Brett Goldstein and 401kadministrator not only handles 401k plans, but we are also a pension plan administrator. See some of our suggestions on selecting a pension plan administrator.
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