COLLECTED WISDOM™ on DB(k) Plans
This archive contains not only the most current material on the topic, but also older items that are still relevant, provide background, perspective or are germane to the topic.
If you find a broken link or an items that you feel is outdate, irrelevant or no longer appropriate, please let us know.
Beginning in 2010, an employer may adopt an "Eligible Combined Plan." Consisting of a defined benefit plan and a 401k plan held in a single trust, using one plan document, one summary plan description, one Form 5500, and one audit (if required). The DB(k) plan may be used only by employers with no more than 500 employees.
The DB(k) would be deemed NOT top-heavy or subject to non-discrimination testing where it meets specific safe harbor formulas for both the DB and the 401k elements of the plan. The DB component is either a 1% of final average pay formula for up to 20 years of service, or a cash balance formula that increases with the participant's age. The 401k component must provide automatic enrollment and a fully vested 50% match on the first 4% of deferred pay.
There has been very little written on these plan because DB(k)s have never caught on. See "DB(k) Plans: A Good Idea at the Time" below.
Abstract: American workers face three challenges in a DC world: Inadequate savings, Leakage, and Generating retirement income. This 19-page white paper focuses on solutions to the third challenge while acknowledging the importance of the first two.
Source: Stanford.edu, January 2018
Abstract: As the defined contribution pension industry continues to mature, Canadian employers are considering ways to improve their DC plans by introducing elements of defined benefit plans, according to an industry expert.
Source: Benefitscanada.com, September 2017
Abstract: A DB(k) Plan, formally called an "Eligible Combined Plan," is a hybrid retirement plan that was created by Congress as part of the Pension Protection Act of 2006 under Section 414(x) of the Internal Revenue Code. But after the January 1, 2010 effective date for Section 414(x), DB(k)s didn't take off. Since then, there have been very few DB(k) sightings. Was it a failure?
Source: Retirementplanblog.com, July 2014
Abstract: What makes this plan unique? What are some changes going on with this plan right now?
Source: Focus.com, February 2012.
Abstract: A retirement plan that combines some of the characteristics of a 401(k) plan with those of a defined benefit (DB) plan.
Source: Investopedia, February 2012.
Abstract: Background, recently issued IRS guidance for DB(k) determination letters, steps to create a DB(k) plan, requirements for DB(k) plans, and more.
Source: Ftwilliam.com, February 2011.
Abstract: Why haven't you heard more about the DB/401k? The authority for this new plan, which becomes available on Jan. 1, 2010, was buried deep within the massive Pension Protection Act of 2006. But interest in DB/401ks is expected to heat up during the coming year.
Source: Accountingweb.com, October 2009.
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