Pension Plans Tips

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What is a Defined Contribution Plan?

Defined Contribution Plans

Some examples of Defined Contribution Plans include 401k plans, money purchase pension plans, and profit sharing plans. When discussing Pension Plans, many people feel that more companies are leaning towards Defined Contribution plans as opposed to company sponsored Defined Benefit Plans. There are advantages to having a Defined Contribution Plans, these include:

Tax Shelter until the plan is withdrawn

The employee can determine how much to contribute to the plan.

The Defined Contribution Plan is funded through pre taxed payroll deductions.

The plan is easy to understand

You should check with your employer about their Defined Contribution Plans.

How will early retirement affect my Pension Plan?

Pension Plans and Retiring Early

If you would like information regarding early retirement and its effect on your Pension Plan, then you will need to read your Summary Description Plan to determine the exact specifications of your Pension Plan. Every employer can set the limits in their company's Pension Plan but they must follow state and federal guidelines. Every company has a different plan, so it is imperative that you read and follow the requirements of your particular plan. The Summary Plan Description is required by law to be administered to you, so you should have no problem receiving it and reading it over. If you are unable to receive a copy of your Summary Plan Description, you can contact the Department of Labor and request a copy.

Can I leave my Pension Plan to my spouse after I die?

Pension Plans and Spouses

Pension Plans and spouses walk hand in hand. There are many benefits to having a spouse when it comes to retirement benefits. One of these benefits is the fact that a spouse may name the other as a beneficiary to their Pension Plan should they die. This must be in writing and signed by the working spouse. If you would like to name your spouse as the beneficiary to your Pension Plan, then you should make an appointment with your plan representative and put those changes in effect.

What does it mean to have my Pension Plan insured?

Is Your Pension Plan Insured?

It is a good idea to find out if your pension plan is insured. The Pension Benefit Guaranty Corporation is a federally funded corporation that insures certain pension plans. To determine if your plan is insured you should carefully read your Summary Plan Description. There are many benefits to having a pension plan that is insured. For instance, if your plan is insured and your benefits come up short, the Pension Benefit Guaranty Corporation will continue your benefits. You can contact the Pension Benefit Guaranty Corporation by visiting their website.

What is a Defined Benefit Plan

Defined Benefit Plans

There are two types of Pension Plans: Defined Benefit Plans and Defined Contribution Plans. Your employer sponsors a Defined Benefit plan and you are guaranteed that you will receive the exact amount stated in your paperwork. There is no investment risk involved, and you don't have to worry about saving money for the plan. It is a great choice for employees who are sure that they will not have any career changes before retirement.
There are many benefits to a Defined Benefit Plan. However, it is still wise not to depend upon one plan for all of your retirement needs. Some believe that the future of the Defined Benefit Plan is headed for trouble, so remember it is always best to diversify your portfolio.

What can I do if I think I have a Pension Plan with a former company?

Pension Benefit Guaranty Corporation

Sometimes people lose track of their pensions. Let's face it, people change jobs frequently and often they leave one job behind for an opportunity that has better benefits. Often, during the transition, people neglect to keep track of their prior records, pension plans, and other benefits. The Pension Benefit Guaranty Corporation (PBGC) guarantees the benefits for Defined Benefit Plans. If you worked for a company that has gone out of business or if you lost track of your records but had a Defined Benefit Plan, the Pension Benefit Guaranty Corporation may help you find your lost money. If you or your spouse believe that you may have a Pension Plan but aren't sure, contact the PBGC at: 202-326-4000 or visit their website at:

What can women do to ensure that they will have enough savings for retirement?

Tips for Women and Pension Plans

You've come a long way baby- but what about your Pension Plan? Studies have shown that even though women have made leaps and strides in the economic workplace they still don't earn as much as their male counterparts. To make sure that women are receiving an adequate pension for retirement may take more planning. Since women tend to earn less then men that may mean that they have less saved for retirement.
Here are some tips to help ensure that you will receive the most benefit from your Pension Plan.

Carefully read over your Summary Plan Description to determine what your benefits are

Find out if your Pension Plan is insured by the Pension Benefit Guaranty Corporation

Check to see if your Pension Plan will be offset by your Social Security

For the greatest amount of benefits, include Pension Plans that you may have from former employers to your retirement plan.

Is your Pension Plan looking for you?

Is Your Pension Plan Looking for You?

If you have moved and have a Pension Plan with a former employer, you may be surprised to learn that your former employer has tried to get in touch with you. Using the IRS' program called, “The Letter Forwarding Unit”, your former employer will submit a letter through the program and the IRS will try to locate your address and contact you with your information. Due to privacy laws, your former employer will not be notified as to your new address or whether or not the IRS successfully locates you. If the IRS cannot find you, they will destroy the letter. The Letter Forwarding Unit is a vital tool used by employers who are looking for past employees.

What is ERISA?

What is ERISA?

ERISA stands for the Employee Retirement Income Security Act. The Employee Retirement Income Security Act was formed in 1974 to protect the rights of beneficiaries of Pension Plans. ERISA determines the guidelines set for Pension Plans. ERISA has set boundaries and guidelines, but every individual plan differs. To determine the exact benefits of your Pension Plan, you will need to review the Summary Plan Description. You may get a copy of your Summary Plan Description from your employer, or you may contact the Labor Board at The Department of Labor.

Should I choose Pension Plan payments or a lump sum?

Pension Plan: Lump Sum or Payments

When its time to retire, many people are offered the choice between receiving Pension Plan payments or as one lump sum. There are benefits and risks to both choices. Here are some things to consider that will help you determine the best choice for your situation.

Will the lump sum be equivalent to the amount of pension that you would receive in payments?

If you are concerned about the future of the company, remember that as long as the Pension Benefit Guaranty Corporation insures your Pension, your benefits are guaranteed to continue.

What will you forfeit if you choose the lump sum payments?

Will you use some of the lump sum to invest and earn a larger amount of money?

You should thoroughly consider all of your options and discuss the benefits and the risks with your financial planner.

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