IRS Approves Chernoff Diamond’s Direct Recognition Variable Investment Plan
With more experience and implemented plans under administration than any other consultant, the IRS approved Chernoff Diamond’s Direct Recognition – Variable Investment Retirement Plan (DR-VIP). After more than 18 months of analysis, papers and discussions, IRS concluded the project with a definitive favorable determination with respect to the various design features and functional elements of Chernoff Diamond’s DR-VIP.
Based on decades of law and regulations, DR-VIPs were developed by Chernoff Diamond to mitigate the liabilities and limitations of traditional defined benefit plans and hybrid cash balance plans. Most recently, the Pension Protection Act of 2006 restated the law and set the framework for this advanced plan design. With clear guidance from the IRS, Chernoff Diamond is implementing DR-VIPs at an increasing rate. Many of the new DR-VIPs are used to replace cash balance plans which have become obsolete due to their benefit and investment limitations plus inherent plan sponsor liabilities. Others are established to increase benefits (i.e. contributions) for key people or provide greater flexibility, expanded investment alternatives and ease of administration.
“With more experience and implemented plans under administration than any other consultant, the IRS has approved Chernoff Diamond’s DR-VIPs,” says Chernoff Diamond Sr. Vice President & Senior Consulting Actuary, Steven Marcus.
Those best suited for DR-VIP retirement plans are companies with more than two highly compensated partners/shareholders/senior management earning more than $400,000 per annum and looking to contribute more than $100,000/yr. to a qualified retirement plan as well as firms seeking increased contribution and investment flexibility, administrative simplicity and mitigation of all liabilities related to investment performance.
To learn more about the advantages of Direct Recognition Variable Investment Plans visit our DR-VIP FAQ page.