Surplus pension assets: history and opportunity

Article Abstract:

The federal government has made surplus pension assets much harder for employers to recover than they once were, but there are still opportunities for employers to use a plan's surplus assets efficiently. The Omnibus Budget Reconciliation Act of 1990 imposes a 50% excise tax on the reversion of pension surplus for employers who terminate plans. Other benefits which the employer has a binding obligation to provide may sometimes be funded with pension surplus. Post-retirement medical benefits are one example as provided for under IRC 401(h). Pension surplus may also be invested in company stock.

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Payments from plan assets for services provided to in-house plans

Article Abstract:

ERISA 408(b)(2) gives a statutory service provider exemption permitting payments by a pension plan to a party who has provided services to the plan which help it to carry out fiduciary responsibilities, meet obligations legally required in the plan's operation, and ones which help manage the plan. The compensation paid for the services must be reasonable, and a plan fiduciary already receiving full-time pay from the employer may only receive reimbursement for direct expenses incurred in services provided to the plan.

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Benefits and compensation planning: "DIS'ing" has special meaning as it applies to ERISA or one $600,000 mistake is one too many

Article Abstract:

Employers and insurance companies should be certain subrogation and reimbursement provisions in employee benefit plans are carefully written. In Member Services Life Insurance v. American National Bank, the 10th Circuit Court of Appeals ruled an insurance company was not eligible for reimbursement of $570,000 in medical fees. The benefit plan contained no provision for reimbursement if beneficiaries were awarded damages in legal action. Beneficiaries had been awarded $19 mil in a product liability suit.

Health insurance

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