After Court Ruling, Calm Urged on Cash Balance Plans
National Underwriter (Life and Health Financial Services Edition) (08/18/03) Vol. 107, No. 33 p.40; Mogel, Gary S.

Despite a recent ruling that IBM's cash balance plan conversion violated the U.S. Employee Retirement Income Security Act (ERISA), many pension and employee benefit specialists are urging employers to maintain their cash balance plans. Experts note that IBM has not yet exhausted the appeals process and employers should maintain their current plan structures until a final decision has been made. Since the passage of ERISA in 1974, the government has not updated the legislation, which was primarily used to protect the benefits housed in defined-benefit pension plans, but as new plans emerge, it is apparent to most experts that the courts will become involved in the protection of new plans as well. On the other hand, the current court decision flies in the face of Internal Revenue Service regulations, which allow cash balance plans to be used, and businesses will be confused until the matter is resolved.

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