Basic understanding of how defined benefit plans work for high-income self-employed clients and family businesses.
This course covers defined benefit plan options available to plan sponsors, including the different pay- and service-related benefit formulas, plan funding responsibilities, investment decisions and risks, distribution methods and plan termination. This course will provide you a basic understanding of how defined benefit plans work for high-income self-employed clients and family businesses.
The question is: what is a define – benefit plan?
A a defined-benefit plan is an employer-sponsored retirement plan where employee benefits are computed using a formula that considers several factors, such as length of employment and salary history. The company is responsible for managing the plan's investments and risk and will usually hire an outside investment manager to do this. Typically an employee cannot just withdraw funds as with a 401(k) plan. Rather they become eligible to take their benefit as a lifetime annuity or in some cases as a lump sum at an age defined by the plan's rules.
The comparison between fully insured vs traditional defined benefits will help you determine the key difference between them. The course will also walk you through the definition of Liability Driven Investing and how it works. You will also come across to new concept of Pension risk transfer. Basically, when a defined benefit pension provider offloads some or all of the plan’s risk retirement payment liabilities to former employee beneficiaries. The plan sponsor can do this by offering vested plan participants a lump-sum payment to voluntarily leave the plan, or by negotiating with an insurance company to take on the responsibility for paying benefits. This program summarizes and describes the core provisions of a Defined Benefit Plan, funding, and benefit concepts, with examples and review of alternate forms of defined benefit plans.
Participants at the end of this program will have a clear understanding of the operation of defined benefit plans allowing them to more effectively advise clients and make recommendations.
Major topics covered in this course:
Basics of defined benefit plan Non-Traditional Defined Benefit Plans Fully Insured vs. Traditional Defined Benefit How are “pay credits” and “interest credits” Determined? Liability Driven Investing (LDI) Pension Risk Transfer
Field of Study: Finance
Stephen Abramson is the President and founding partner of APS Pension & Financial Services established in 1979, a mid-size consulting and actuarial firm employing twenty-two professional and support staff specializing in pension and pension-related services. For over 40 years, APS has been providing closely held businesses and non-profits with financial services including pension design and administration, business succession planning, and wealth preservation planning. In 2015 APS Investment Management was established to provide ERISA 3/38 fiduciary services to 401(k) and 403(b) plans and in 2018 APS Wealth Management, LLC, a Registered Investment Advisor (RIA), was established to provide investment management services to individual clients and retirement plans replacing a previous relationship with a Broker/Dealer. Steve has taught professional level education programs for the American Society of Pension Actuaries; lectured to various professional groups, including the National Conference of CPA Practitioners, The NYS Society of CPAs, provided continuing education webinars for the Foundation for Accounting Education (FAE), the Nassau Bar Association, the C.W. Post Tax Institute, and the National Institute of Pension Administrators; and conducted continuing education seminars for Certified Public Accountants for the past 35 years. Steve is an Associate member of the NYSSCPAs, a member of their Employee Benefit Committee, and chairs a sub-committee on Fiduciary Compliance. Steve also hosts webinars on various retirement plan topics, some of which are jointly sponsored by the NYSSCPAs through the Foundation for Accounting Education (FAE). He is co-author of Plan Smart, Retire Rich published by McGraw Hill in 1998; author of Advisor’s Guide to Qualified Plans originally published by Aspen Publishing in March, 2002 and recently updated with the 7th edition in 2018, and Retirement Financial Management for Clients Approaching Retirement published by Aspen Publishing in August, 2002. A less technical version of Advisor’s Guide to Qualified Plans entitled Guide to Qualified Retirement Plans: A Plain Language Primer was published by the International Association of Employee Benefits in March 2005. The second edition of this book was released in 2008. Steve graduated from Cornell University in 1964, earned the designation of Chartered Life Underwriter in 1967 from the American College, Certified Pension Consultant in 1970 from the American Society of Pension Professionals and Actuaries and Chartered Financial Consultant from the American College in 1972.
