Participants in defined contribution plans could combine those assets with their defined benefit plans without worrying about federal guarantee limits, under a plan to be proposed Wednesday by the Pension Benefit Guaranty Corp.
The idea is to give participants more purchasing power when buying annuities. “It's just part of the effort to give people better retirement security. We're pro-annuities,” said PBGC spokesman Marc Hopkins in an interview.
Mr. Hopkins said PBGC officials wanted to allay concerns that rolling over defined contribution assets to defined benefit plan assets could lead to reduced benefits if the DB plan is terminated and the PBGC takes over benefit payments in the event of a plan termination.
Under the new proposal, benefits earned from a DC plan rollover would not be counted when PBGC maximum guarantee limits are calculated. Rollover amounts also would not be restricted by PBGC phase-in limits on benefit changes before a plan terminates. “For employees that have this rollover option, we're saying, 'Don't worry,'” Mr. Hopkins said.
The propose rule will be published in the Federal Register April 2; comments will be due June 2.