In-house borrowing: waiver lets company tap its pension fund
Article Abstract:
A number of corporations have received permission from the Department of Labor to borrow from corporate pension funds. The Department's decisions to permit borrowing are not based on whether the pension plan overfunded, but on whether the borrowing arrangement represents a sound investment for the pension fund. Loans from pension plans must benefit both the company and the plan. The corporation must have the financial statements for the pension plan prepared by an independent fiduciary in order to obtain borrowing approval from the Department of Labor. All borrowings from pension plans must be at prevailing interest rates. Sherwin-Williams Co was one of the first corporations to apply for a pension plan loan. Sherwin-Williams received approval for the $65 million loan from its pension plan in November 1986.
Publication Name: Cashflow Magazine
Subject: Business
ISSN: 0196-6227
Year: 1987
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Taming COBRA: push early choice by former employees
Article Abstract:
Employers can plan for possible expenses and reduce risks by encouraging former employees to decide promptly what benefit option to elect under provisions of the Consolidated Omnibus Reconciliation Act of 1985 (COBRA). COBRA provides for continued benefits coverage for terminated, retired, or otherwise departing employees. COBRA allows former employees to continue employer-sponsored coverage, but without continuation of corporate subsidies. The largest risk to employers is found among employees or dependents who have pre-existing medical problems. Employers who do not comply precisely with COBRA provisions face strong penalty provisions such as: loss of tax deductions for medical benefits paid, and treatment of employer premium payment contributions as taxable income.
Publication Name: Cashflow Magazine
Subject: Business
ISSN: 0196-6227
Year: 1987
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Check 401(k) plan loans for fit with new DOL regulations
Article Abstract:
The Department of Labor is proposing regulations that would more narrowly define approved and prohibited employer defined contribution or 401(k) plan loan transactions. These regulations clarify details of 401(k) loan provisions, but also affect some previously accepted practices such as using 401(k) assets as loan security. The regulations also require stricter and more formal structuring of loan provisions, but remain vague on the issue of setting interest rates for borrowers.
Publication Name: Cashflow Magazine
Subject: Business
ISSN: 0196-6227
Year: 1988
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