The survey, The 2009 FA Insight Study of Advisory Firms: People and Pay, uses input from 200 advisory firms contacted online during May and June.
Reviving The Pension Plan
The devastating market downturn that hammered many a 401(k) account has people longing for the days of guaranteed pension plans. A new investment vehicle set to begin life on January 1, 2010 might offer a solution. The DB(k), an employer-sponsored retirement plan authorized by Congress under the 2006 Pension Protection Act, is designed to be a hybrid defined pension and defined contribution plan in one tidy package.
DB(k) plans would provide employees at participating companies with a guaranteed lifetime monthly income stream equal to 1% of average pay during the final three years of work, times the number of years worked under the plan up to 20 years, or 20% maximum of the final average pay.
At the same time, workers would have 4% of their pay automatically deducted and put into a 401(k) plan, with an employer match of up to 50% of that. Employees can opt out or change their contribution level.
DB(k) plans are designed for companies with 500 or fewer employees. All of the paperwork is consolidated into one plan document, and companies would file a single Form 5500-the annual reporting form for most retirement plans.
Sounds like the best of both worlds, but there's a catch: Neither the U.S. Treasury Department nor the Internal Revenue Service has formulated rules for DB(k) plans.
The agencies have sent out requests for information seeking guidance from various organizations.