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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: California Employment Law
Satisfied Customers: 115464
Experience:  JA Mentor -Attorney Labor/employment, corporate, sports law, admiralty/maritime and civil rights law
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Question is pretty standard. Can a private company, which

Customer Question

Question is pretty standard.
Can a private company, which has been offering company pensions to the employees since the companys' inception. The CEO wants to make several changes and one potential change is to move from a company funded pensions to a more standard 401K plans.
Can you give me an idea of what is needed to move forward. The higher-ups are all long-term executives who do not want to change, but this move is needed badly. What tools are needed to be successful?
Submitted: 1 year ago.
Category: California Employment Law
Expert:  Law Educator, Esq. replied 1 year ago.

Thank you for your question. I look forward to working with you to provide you the information you are seeking for educational purposes only.

First of all, there is no law that a company provide any type of pension plan. So, the employer an cancel their pension or freeze their pension plan at any time they choose. What you need to do is make sure that all of the investments to date in the plan are preserved for the employee. You can roll the money from that plan into the new 401K for each employee, without them suffering a penalty. You can send the employees notice that the pension plan is being changed over to the 401K and you are rolling over their former pension plan into the new 401K. You could also freeze the pension plan you have now, meaning no further contributions and when the employees in the plan meet the eligibility requirements for collection they can do so (this is what many employers do if the plan does not have high management/maintenance fees) and then you can establish a new 401K and tell employees if they want to continue a retirement plan then they have to put their retirement into the 401K from here on out.

You need to sit and decide with your financial planners for your pension plan which way you want to go with this and they need to examine your accounts and your plan to determine which would save you the most.

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