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Guidance, flexibility offered in cash balance rules

September 29, 2014, Pensions & Investments

Richard Shea and Robert Newman are quoted in this piece on regarding the recently released rules on hybrid defined benefit plans:

The regulations, adopted Sept. 18, “make possible a type of retirement plan our country sorely needs,” said Richard Shea, a Washington attorney with law firm Covington and Burling, who chairs the employee benefits and executive compensation practice. Cash balance plans can provide “all the cost-efficient lifetime income options and survivor protections afforded by a defined benefit plan, while permitting employees to earn market rates of return that adjust over time to their shifting tolerances for risk — key elements in any rational retirement design.” 

"Another big change was allowing plans to credit different rates of return for subsets of plan assets. That's important, said Covington & Burling partner Robert Newman, because it allows a plan “even to credit different rates for different groups of participants based on different subaccounts” to address different workforce goals."

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