ABA Journal - Law News Now

Benefits/ERISA

Lawsuit Failed to Shed Light on New Pension Maneuver

Posted Aug 4, 2008, 11:02 am CDT
By Debra Cassens Weiss

Some companies are moving obligations for executive benefits into rank-and-file pension plans in a move that allows them to immediately deduct contributions.

The Wall Street Journal reports that the practice is “a dubious use of tax law” that could drain assets from pension plans and make them more likely to fail. Yet such moves are often shrouded in secrecy, and a recent court case didn’t help shine a light on the practice.

Companies that donate money to pension plans cannot get the tax advantages if their plans discriminate in favor of highly compensated employees, the story explains. Companies that want to pay higher pensions to executives have to do so in a separate supplemental plan without… Continue reading...

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