| Pension Benefits Reduction Ahead? |
| Written by Maryanne Euthalia |
| Tuesday, 09 March 2010 21:11 |
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Pension Expert Explains How Retirement Fairness Act Is Not Fair To Employees A bill was introduced into the House of Representatives that aims to close a tax loophole that enables Fortune 500 companies to provide executives with generous retirement benefits. However, the Retirement Fairness Act of 2009 may force smaller companies to close their pension plans or further reduce 401k benefits, leaving many employees without a way to save. Brett Goldstein, a Plainview, New York-based pension administrator and President of The Pension Department, Inc., states, the proposal is designed to prohibit highly paid executives from receiving larger retirement benefits at the expense of lower paid employees. However the proposal would also apply to 401ks, and other pension plans, requiring them to include part-time employees in determining certain minimum coverage testing. Current law allows companies to exclude from 401k and pension benefits, any employee who does not work at least 1,000 hours during the year or 20 hours per week. The proposal would force companies to include some or all part-time employees in their traditional pension plans and 401ks. While the new law is intended to stop retirement abuses by larger companies, in a time of economic instability the proposal would hurt small businesses. "Small business owners have cut back on their 401k matching contributions due to the recession. This new proposal may force businesses owner to make larger 401k contributions to part-time employees," says Goldstein. "This comes at a bad time as many small business owners are still trying to recover from the recession. Most small business owners don't have the cash flow to offer part timers 401k benefits. Small businesses not willing to or who can't afford to offer 401k benefits to part time employees might close their 401ks or significantly reduce benefits. That would hurt employees who are relying on their 401k as their sole source of income." CREDENTIALS: Brett Goldstein is a pension administrator and President of The Pension Department, Inc., a consultancy based in Plainview, New York. He is a speaker and media personality who specializes in providing businesses and individuals with affordable retirement planning solutions. Goldstein's timely advice and tips have been featured on Fox Business, the New York Daily News, The Chicago Tribune, Newsday, National Public Radio, MSNBC.com, Kiplingers, and many more. Investment services are offered exclusively through: Cadaret, Grant & Co., Inc. Member FINRA/SIPC. |