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De-risking a Defined Benefit Pension Plan? The IRS Ixnayed One Option

Posted by Brendan P. Brady CPA

Oct 8, 2015 11:32:12 AM

As sponsors of defined-benefit pension plans look to reduce risks associated with volatile stock de-risking strategies for plan sponorsmarkets and an aging but increasingly long-lived workforce, one strategy that has attracted particular attention in recent years is de-risking of those plans. Simply put, de-risking is a process by which companies seek to reduce or eliminate potential volatility in future pension plan contributions in order to better predict and manage cash flows and improve profitability. There are a number of de-risking strategies available to plan sponsors, ranging from liability redesign (for example, closing plan to new participants), to investment strategies (for example, utilization of dynamic asset allocation strategies), to liability transfer (for example, annuity purchases).

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Topics: employee benefit plan, de-risk, irs, defined benefit plan, pension plan

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