The ERISA consultants at the Learning Center Resource Desk, which is available through Columbia Threadneedle Investments, regularly receive calls from financial advisors on a broad array of technical topics related to IRAs and qualified retirement plans. A recent call with a financial advisor in Washington is representative of a common question related to PBGC premiums. The advisor asked:
“I heard PBGC premiums for defined benefit plans are increasing again. Can you explain why and how?”
Highlights of Discussion
- The PBGC’s deficit increased to $62 billion for fiscal year 2014 — up from $36 billion in 2013, putting 1.5 million workers and retirees who rely on the PBGC for their retirement benefits at risk.
- The Bipartisan Budget Act of 2013 included significant increases in the flat-rate and variable-rate premiums charged by the PBGC for single-employer defined benefit plans. These increases took effect for plan years beginning in 2015 and for later years.
- The Bipartisan Budget Act of 2015 further increases the single-employer premium amounts according to the following table.
Conclusion
To help address the PBGC’s growing deficit, Congress and the president, through the Bipartisan Budget Act of 2015, authorized additional premium increases through 2020.
The Learning Center Resource Desk is staffed by the Retirement Learning Center, LLC (RLC), a third-party industry consultant that is not affiliated with Columbia Threadneedle. Any information provided is for informational purposes only. It cannot be used for the purposes of avoiding penalties and taxes. Columbia Threadneedle does not provide tax or legal advice. Consumers consult with their tax advisor or attorney regarding their specific situation.
Information and opinions provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Columbia Threadneedle.
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