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Cash Balance Pension Plans: Selected Legal Issues (CRS Report for Congress)

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Release Date Revised May 16, 2008
Report Number RS22214
Report Type Report
Authors Erika Lunder and Jennifer Staman, American Law Division
Source Agency Congressional Research Service
Older Revisions
  • Premium   July 29, 2005 (6 pages, $24.95) add
Summary:

Over the past few years, cash balance pension plans have received significant congressional and public attention. Issues that have been controversial include the negative effect of a plan conversion on older employees due to wear-away, the whipsaw effect that may occur when computing a lump-sum payment of benefits prior to normal retirement age, and the practice of providing the "greater of" benefit to plan participants as part of a conversion to a cash balance plan. This report provides an overview of these issues and a discussion of how the Pension Protection Act (P.L. 109-280), as well as IRS guidance, affect them.