This weekend I read an article in an online east coast paper written by Elaine B. Morgillo, a certified financial planner. It made me think about small business owners who are preparing to file for bankruptcy and the questions they might have about their employees’ pensions. The answer to their concerns may lie in the Pension Benefit Guaranty Corporation (PBGC). The PBGC is a safety net for pensioners created by Congress. If you cannot continue to sponsor your employees’ plans the PBGC may well continue to fund the plan.
Greater than one million workers and retirees have received financial assistance from the PBGC. The particular type and amount of aide given depends upon the kind of plan and the nature of the financial assistance needed.
The maximum amount of guaranteed benefits is limited by statute. The guaranteed amount is contingent upon the kind of plan, when the plan terminates, the type of PBGC involvement, and other factors. “For single-employer plans that terminate in 2009, the maximum guarantee is $4,500 per month ($54,000 per year) for a single-life annuity commencing at age 65. The maximum is reduced if the worker retires at a younger age: at age 62, the guarantee is $3,555 per month. At age 55, the maximum is only $2,025 per month. All of these totals are reduced for annuities that continue to pay a portion of the monthly benefit to a retiree’s surviving spouse (Elaine B. Morgillo, Seacoastonline).”
Due to expenditure limits under PBGC rules, all new benefit accruals terminate after the PBGC takes over. If other provisions that are part of the plan don’t exceed the limit they will be maintained. Keep in mind that not all benefits under the original plan are guaranteed.
Another item to remember is that if your employees’ plans becomes regulated by PBGC, they will be unable to take their benefit in a lump sum or to transfer it into an IRA.
For more information about the PBGC go to their website or call (800) 400-7242. Or contact the U.S. Department of Labor’s Employee Benefits Security Administration.
If I can assist you with any questions please feel free to contact me:
Kevin D. Heupel, Colorado bankruptcy lawyer
Phone: 303-955-7570
website: http://COBankruptcyHelp.com
email: help@cobankruptcyhelp.com
form: personal bankruptcy free-consultation form
