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THE
RECENTLY ENACTED Pension Protection Act (PPA)
provides plan sponsors with a tremendous opportunity to
enhance the retirement security of their participants.
By enacting this legislation, Congress has ensured that
hybrid plans will remain a viable and valuable form of
employer-sponsored retirement plan well into the future.
More
specifically, the PPA has provided guidance that will
enable hybrid plans to satisfy the ERISA and Age
Discrimination Act (ADEA) rules prohibiting
discrimination. By defining these requirements, the PPA
has helped clarify and solidify the legal status of cash
balance plans established after June 29, 2005.
A hybrid
plan is a retirement plan that combines the
characteristics of a defined contribution plan and a
defined benefit plan. The most common hybrid designs are
cash balance plans that express benefits as the value of
a hypothetical account. Participants receive statements
that display the accumulation of contributions and
interest credited to their hypothetical accounts. While
hybrid plans offer annuity payments and provide that the
normal form of payment is an annuity, a lump sum payment
option is almost always available at termination of
employment.
If your
client’s organization places a premium on loyalty,
experience, and long-term service, a traditional defined
benefit plan or a cash balance plan may be the perfect
solution.
Contact
your Prudential Retirement Regional Director or the
Sales Desk at 800-353-2847 to learn more.
Prudential
Retirement’s Manager of Managers group annuity contracts
are issued by Prudential Retirement Insurance and
Annuity Company (PRIAC), Hartford, CT, a Prudential
Financial company. Prudential Retirement is a
Prudential Financial business. Prudential Retirement and
Prudential Financial are registered service marks of The
Prudential Insurance Company of America, Newark, NJ, and
its affiliates.
INST-20061221-A022203
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