DB might as well stand for "dinosaur bones’’ as far as the Medford, Mass.-based Medford Bancorp is concerned.
The community bank’s directors recently voted to shut down the defined benefit plan and boost the bank’s 401(k) plan instead. "We’ve determined that the defined benefit plan was not perceived to be as useful as in the past to recruit or retain employees,’’ said Phillip W. Wong, CFO.
The bank anticipates recording a one-time after-tax gain of approximately $1.9 million as a result, adding approximately $700,000 to its earnings in the first quarter of this year. The remainder will be added after the plan is shut down and the excess assets are distributed later this year. The defined benefit plan has approximately $6 million in assets and accrued liabilities of $3.5 million, Mr. Wong said.
The company is improving the match on its 401(k) plan to 75 cents for each dollar employees contribute up to 6% of pay and eliminating a one-year waiting period for new employees. Instead, new employees will be able to join the plan right away and be eligible for the employer match after three months. Employees are vested immediately in the 401(k) plan, which has $2 million in assets.
