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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.
Answer--An employer with an overfunded pension plan can amend the plan to add postretirement health insurance as an additional incidental benefit.
This ruling preserves more than $1 billion in pending government claims against other defense contractors as well as future government claims against defense contractors that divest a segment covered under an overfunded pension plan.
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.
In IBM's case, it did have an overfunded pension plan.
Consider a CPA who provides services to a client that is in difficult financial straits but that maintains an overfunded pension plan.
For example, in the case of the overfunded pension plan, an actuarial review may turn the overage into cash.
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.