For the right person, a qualified
defined-benefit plan that uses life insurance as a funding tool can be very effective in helping individuals reach their retirement goals.
The
defined-benefit plan economics are shifting and will afford employers the opportunity for lower funding costs, thereby positioning [them] to once again become one of the most cost-effective methods of providing adequate retirement income," Rausser said.
A REPORT FROM the Employee Benefit Research Institute found that having a
defined-benefit plan at age 65 reduces the risk of retiring with inadequate income for boomers and Generation X workers by almost 12 percentage points.
But a
defined-benefit plan is more efficient than most people's 401(k)s because it takes advantage of economies of scale that permit professional management.
companies, offers this advice for those considering a move to cash balance: "If you have plan that's not well-funded, the
defined-benefit plan would need to be up to snuff from a funding perspective.
The Colorado Education Association (CEA) is fighting all of them, along with a proposed referendum that would put new state employees into a "defined-contribution" plan instead of the existing
defined-benefit plan, which guarantees a set retirement income based on years of service and salary.
A cash-balance plan is a hybrid pension plan with features of both a
defined-benefit plan and a defined-contribution plan.
Allowable deductions are also increased for employers that maintain both a defined-contribution and
defined-benefit plan.
411 (b) (1) (G), a
defined-benefit plan is not qualified if it reduces a participant's accrued benefit on account of any increase in his or her age or service.
Boston, has launched a full-service
defined-benefit plan for older small-business owners who haven't planned for their own retirements or their employees'.
