IRS Uses Chernoff Diamond’s Direct Recognition Variable Investment Plan to Establish Standards
With more experience and implemented plans under administration than any other consultant, the IRS selected Chernoff Diamond and the firm’s Direct Recognition – Variable Investment Retirement Plan (DR-VIP) for purposes of evaluating and establishing technical, structural and actuarial standards. After more than 18 months of analysis, papers and discussions, IRS concluded the project with definitive standards and favorable determinations in respect of 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 eliminate 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 selected Chernoff Diamond and the firm’s DR-VIPs for purposes of evaluating and establishing technical, structural and actuarial standards,” says Chernoff Diamond 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 elimination 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.