Pension Expert Explains Why The Recession Is Causing Many 401ks To Be Under-Funded

PLAINVIEW, NY (MMD Newswire) March 18, 2009 - - Due to the loss in the market, many pension plans are now significantly under funded. As the recession continues, many companies do not have enough money to make required 401k contributions. Thus many companies now owe money to the 401k. With companies now owing money to the 401k, for the first time many 401ks are now in an under-funded position just like traditional pension plans.

401k plans are subject to certain non-discrimination testing, aimed at making sure that officers and owners do not receive larger benefits than regular employees. One of the non-discrimination tests is the Top Heavy Test. If the 401k account of officers and owners is more than 60% of the total assets for the plan, the company then owes a contribution equal to 3% of compensation for each full-time employee.

Many companies simply do not have the money to make these types of mandatory contributions. Employees are now finding out that their company owes them more money and wondering whether they will be able to collect before the company terminates the 401k plan.

"Before the economic crisis, under-funded pension plans was a term only used to describe traditional pension plans. With the recession and consumer spending down, many companies don't have the cash to make these required 401k contributions. The new trend is that many 401ks are now under-funded as they do not have enough money to make the required contributions owed to the employees," explains Brett Goldstein, a Plainview, New York-based pension administrator and President of The Pension Department. "The Obama Administration needs to pay more attention to 401ks and traditional pension plans. A pension bailout to suspend the top heavy contributions for small and medium businesses is desperately needed to avoid mass terminations of 401k plans," he urges.

About Brett Goldstein:
Brett Goldstein is a pension administrator and president of The Pension Department, a consultancy based in Plainview, New York. He is a speaker and media personality who specializes in providing businesses and individuals with affordable retirement planning solutions. Goldstein's timely advice and tips have been featured on Fox Business Network, Wall Street Journal Radio, Kiplingers Magazine, MarketWatch.com, New York Daily News, The Chicago Tribune, and many others. Investment services are offered exclusively through: Cadaret, Grant & Co., Inc. Member FINRA/SIPC.

Brett Goldstein is available for interview: In the Greater New York City area; nationwide by arrangement via telephone; available for interviews in print or broadcast.

Brett Goldstein
The Pension Department
Phone: (516) 346-2999
Email: bgoldtpa@aol.com or bgoldtpa@optonline.net

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