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Hidden Pension Potholes: Managing Defined Benefit Risk in M&A Transactions and the 2018 New Tax Rules Window of Opportunity

Recorded on: Mar. 8, 2018
Running Time: 01:03:29

Full Transcript:



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Taken from the One-Hour Briefing Recorded March 2018 in New York

Hidden Pension Potholes: Managing Defined Benefit Risk in M&A Transactions and the 2018 New Tax Rules Window of Opportunity [01:03:29]

The volatility of the Defined Benefit (DB) plan funded status is often overlooked in M&A transactions.  Not only is it a challenge to identify the amount of underfunding to include in the purchase price but the volatility after the fact can impact the ultimate value of the deal.  A $10M underfunded pension liability could easily double to $20M within a short time after closing.  It is important for legal counsel involved in the M&A transaction to understand these risks, the new tools available to mitigate this risk and other tax opportunities that may be available in 2018.   

Russ Proctor of Pacific Life Insurance Company, Jonathan Zimmerman of Morgan, Lewis & Bockius LLP and Karen M. Mack of Altman & Cronin Benefit Consultants, LLC discuss the importance of addressing pension risk during the M&A negotiations.  

Topics covered will include: 

  • How to determine the DB plan’s funded status and quantify the risk exposure?
  • What tools are available in the market to manage this risk?
  • How do you take advantage of changes in corporate tax rates for 2018 when a DB plan is involved?
  • What legal issues should be considered when a DB plan is involved?
    • Compliance issues and audit exposure
    • ERISA fiduciary duties and issues related to risk transfer options
    • Participant communications past and future
    • Managing risk under confidential nature of M&A deals

Presentation Material

  • Hidden Pension Potholes: Managing DB Risk in M&A Transactions and 2018 New Tax Rules Window of Opportunity
    Karen M. Mack, Russ Proctor, Jonathan Zimmerman
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