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Defined Benefit (DB) Plan Termination Best Practices - Part One

Executive Summary

Having witnessed the impact adverse and volatile equity and interest rate markets have had on their plans, many sponsors of hard-frozen defined benefit (DB) plans continue to search for ways to manage their plan's funded status and for insight on how to ultimately terminate these plans.

But to wind down such plans in a cost-efficient and timely manner requires a well-thought-out strategy. Having a good strategy in place is also crucial to managing the associated financial risks—the ultimate cost of termination and balance sheet liability.

The objective of this white paper is to define "best practices" for developing and implementing a strategy for terminating a hard-frozen plan as soon as reasonably possible, and at the lowest possible cost. The second part of this series, Best Practices for Executing a Termination Strategy, will delve into best practices for executing the termination of a hard-frozen DB plan once the strategy is in place.

Our analysis centers on working effectively with a financial professional and efficiently integrating the plan's actuary and other retirement plan service provider(s) in the termination process.

Special emphasis is placed on:

  • Understanding the rules for termination
  • Developing a termination strategy by evaluating:
    • The cost
    • Funding strategies
    • The impact of asset allocation
  • Carrying out your termination strategy

Get the full report

Download the white paper now (PDF: 784 KB)

 

For more information about Principal Funds, please see the Principal Funds, Inc. prospectus or call Customer Service at 1.800.222.5852.

Investment options are subject to investment risk. Shares or unit values will fluctuate and investments, when redeemed, may be worth more or less than their original cost. This does not apply, however, to the guaranteed portions of group annuity contracts issued by Principal Life that constitute guaranteed benefit policies as defined in ERISA §401(b)(2)(B).

Insurance products issued by Principal National Life Insurance Co. (except in NY) and Principal Life Insurance Co. Plan administrative services offered through Principal Life. Securities offered through Princor Financial Services Corp. 800.247.1737, member SIPC and/or independent broker dealers. Principal Funds, Inc. is distributed by Principal Funds Distributor, Inc. Principal National, Principal Life, Princor® and Principal Funds Distributor are members of the Principal Financial Group®, Des Moines, IA 50392.

Investment advisory services offered by the affiliates and specialized investment groups of Principal Global Investors, the asset management arm of the Principal Financial Group.

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