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May 2017 Archives

Pension Annuity Versus Pension Lump Sum: Which is Better?

There are two basic types of pension plans: (1) defined benefit (DB) plans, which provide a guaranteed benefit based on a defined formula set forth in the plan; and (2) defined contribution (DC) plans, such as 401(k) plans, which provide an individual account for each participant and for benefits based solely on the amount contributed to the account and any income, expenses, gains, or losses allocated to the account.Pension-Lawyer-Annuity Bag Dollars Overflowing_Depositphotos_19273467_m-2015.jpg DB plans must provide the benefit in the form of a life annuity, but may permit participants to elect to take their benefit in the form of an optional lump sum. DC plans are not required to provide the benefit in the form of a life annuity, but a small percentage offer a deferred annuity product among their investment options. So which is better? The annuity or the lump sum? That depends.

Widow's Release of Claims Against Deceased Husband's Estate Did Not Extinguish Her Right to His Pension Account

It makes me sad to learn when heirs fight over a decedent's assets, especially when it involves a widow's surviving spouse pension benefits, as occurred in Goins v. Tona L. Goins & Nat'l Elec. Annuity Plan, No. 16-cv-01281, 2017 U.S. Dist. LEXIS 71387 (S.D. Ill. May 10, 2017).Pension-Lawyer-Sad Old Lady Dressed in Black_Depositphotos_135800966_s-2015.jpg

Underfunded Pension Plans; the PBGC; and What the Heck Got Us Into This Pension Funding Mess?

You would need to be asleep at the wheel to not know we are in a pension funding crisis. Hardly a day goes by when we do not hear about a pension plan that reduces or freezes future benefit accruals to lessen its funding shortfall, or that is predicted to become insolvent in the foreseeable future notwithstanding such benefit adjustments. Participants in these underfunded plans naturally worry that they will lose their hard-earned pension benefits. If the plan is in the private sector, they will be somewhat protected by a pension insurance system established in 1974 under ERISA [the Employee Retirement Income Security, which covers most non-governmental pension plans] and administered by a governmental agency known as the Pension Benefit Guaranty Corporation (PBGC).Pension Fund on Elephant Piggy Bank_Depositphotos_75179247_s-2015.jpg