Overfunded pension plan

Overfunded pension plan

A pension plan that has a positive surplus (i.e., assets exceed liabilities).

Overfunded Pension Plan

A pension that has more assets than liabilities. That is, pensioners' contributions and the investment of those contributions amount to more than what the pension owes to retirees. This is considered a sign of financial health for the pension.
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References in periodicals archive ?
If the firm has net operating losses it is carrying forward and has excess pension assets (overfunded), then it is more likely to terminate than to convert, but if the firm is currently paying federal tax and has excess pension assets, termination of an overfunded pension plan will likely involve paying substantial taxes.
An overfunded pension plan should have allowed the Postal Service to scale back contributions, freeing funds for improved service or rate reductions.
In order to resolve the retiree benefit claims, Agway intends to seek a modification of its overfunded pension plan such that, subject to available funding and obtaining requisite governmental approvals, eligible participants in the two ancillary benefits would elect to receive from the pension plan either a lump sum or lifetime annuity generally equal to 62.
The overfunded pension plan, built in large part by employee contributions, can easily afford to pay more, say the retirees.
As part of the corporate restructuring, Union Carbide effected a reversion of pension plan funds from its overfunded pension plan and used it to buy back company stock.
Consider a CPA who provides services to a client that is in difficult financial straits but that maintains an overfunded pension plan.
Under certain circumstances, an employer withdrawing funds from an overfunded pension plan must pay a 50% penalty tax on the reverted funds, even if they are used to enhance the security of other employee benefit programs.
97-956 (9/15/98), the North Carolina Court of Appeals held that income from the return of funds from a company's overfunded pension plan was nonbusiness income.
For example, the board of directors of a public company considering terminating an overfunded pension plan and establishing a new one to siphon off excess plan assets needs to secure a ruling on the new plan's tax status to shield itself from employee and shareholder negligence charges.
If legally permissible, reorganizing an overfunded pension plan also has the potential of freeing significant operating cash.
Employees also are dismayed by the company's refusal to consider improvements in The Post's hugely overfunded pension plan.