BOSTON (TheStreet) — Small-business owners won't be able to offer a new type of retirement plan next year because of stalling by the Internal Revenue Service.
Starting Jan. 1, companies with two to 500 workers were supposed to be able to launch DB(k) plans — a hybrid of "defined benefit" and 401(k) — that were developed by retirement-services firm Principal Financial Group
DB(k) plans would establish a small fund intended to provide a lifetime income stream based on a percentage of an employee's annual income upon retirement. The fund, which would follow an employee to different jobs, would be supplemented by direct contributions and an employer match, similar to how a 401(k) is managed.
Courts ultimately rejected the argument that compound interest in a pension plan is discriminatory. Nevertheless, the Pension Protection Act of 2006 required that interest credited to cash balance accounts not exceed a "market rate of return."