National Pensions - CPA Oriented

Senior Pension Consultants


In the Pension Protection Act of 2006, congress passed a law to allow a new plan called a DB/K to be established to encourage savings for retirement. The plan is to have features of the popular 401(k) along with the benefits of the Defined Benefit plan. Regulations were to be established by the Treasury department by the end of 2010. The Treasury as of this writing has issued proposed regulations. The DB(k) enables businesses with fewer than 500 employees to sponsor pension and 401(k) plans with less paperwork, more predictable costs, and lower premiums. 

DB(k)s are considered good for small businesses because they enable them to offer the guaranteed income of a pension and the opportunity for workers to save in a 401(k). Companies would be required to establish a pension fund sufficient to pay workers at retirement up to 20% of that individual's average annual salary received during the last few years of work. The company would automatically put 4% of the employee's salary into a 401(k) plan. The business must then match at least 50% of that amount.

These plans are exempt from "top-heavy" rules, which traditional retirement plans must meet and which are designed to ensure that plans don't favor highly-paid workers. Another attraction is that these plans require much less paper work than being required to operate a pension and a 401(k) separately. Employers with a DB(k) would file only one plan document and one Form 5500 - the annual information return - for the two plans.


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