Distress Termination

Filed Under » ,
Dictionary Says

Definition of 'Distress Termination'

A thinning of an employee base that takes place when a company's benefits plan has insufficient funds to cover the expenses associated with paying the employees' earned benefits. This frequently occurs when a company can no longer stay in business, or when the business attempts to avoid or delay closing. Once a plan is terminated, all activities, such as benefit accruals and vesting, end.
Investopedia Says

Investopedia explains 'Distress Termination'

A company may chooses to terminate a benefits plan for many reasons: if it has declared bankruptcy, if it has filed a petition to reorganize in bankruptcy and it is determined that the company cannot reorganize with the plan intact, if it demonstrates that it cannot remain in business unless the pension plan is terminated or if it can demonstrate that the costs associated with the pension plan have become unreasonable due to a decline in the number of participating employees. The Pension Benefit Guaranty Corporation (PBGC), established by The Employee Retirement Income Security Act of 1974 (ERISA), protects the pensions of private defined benefit pension plans, and pays benefits to pensioners of failed pension plans.

Articles Of Interest

  1.

    Keeping Track Of Retirement Plan Assets

    Maintain records of your pension benefits or risk losing them.

  2. Is Your Defined-Benefit Pension Plan Safe?

    Your plan may not last in a rocky market. Find out whether your savings will be affected.

  3. Lump Sum Versus Regular Pension Payments

    If you're about to retire, you may be facing this dilemma soon. Find out what your options are.

  4. An Overview Of The Pension Benefit Guaranty Corporation (PBGC)

    Find out how this "retirement lifeguard" can save drowning plans, and why it's unlikely to be a long-term solution to the pension problem.

  5. Pension Law Could Reduce Your Payout

    Discover how this act negatively affects your lump-sum withdrawals.

  6. Maintaining Work/Life Balance For Financial Professionals

    Maintaining work/life balance is a challenge for most professionals in the finance industry, but it doesn't have to be that way.

  7. Mandatory Pension Savings: Should Employers And Employees Be Forced To Make Contributions?

    The scale of the pension crisis in the U.S. cannot be denied, and there's a growing movement that supports the mandatory pension system that's been created in Australia and other parts of the ...

  8. An Introduction To The Keogh Retirement Plan

    Learn more about this popular defined-contribution retirement plan that many business owners, proprietors, and self-employed people can benefit from.

  9. Introduction To The Continuing Claims Report

    This weekly economic release contains important information concerning unemployment levels and insurance.

  10. Networking To Land A Job

    Networking should be a career-long endeavor that is just as important as performing your job in an excellent manner.
comments powered by Disqus
Marketplace
Hot Definitions

  1. Zomma

    An options greek used to measure the change in gamma in relation to changes in the volatility of the underlying asset.

  2. Yield Elbow

    The point on the yield curve indicating the year in which the economy's highest interest rates occur. The yield elbow is the peak of the yield curve, signifying where the highest interest rates occurred.

  3. Xenocurrency

    A currency that trades in markets outside of its domestic borders.

  4. Wanton Disregard

    A standard of severe negligence. Wanton disregard is a very serious accusation that indicates that a person behaved extremely recklessly.

  5. Ultra ETF

    A class of exchange-traded funds (ETF) that employs leverage in an effort to achieve double the return of a set benchmark.

  6. Toehold Purchase

    A purchase of less than 5% of a target company's outstanding stockmade by an acquiring company. A toehold purchase of just under 5%, while not a significant stake in a firm, allows the shareholders a "toe-holds" grip on the company and its decision making.
Trading Center
http://sp.fastclick.net/ad/tr/10858-64082-15546-0?mpt=7ca6577048468e00bb5cde63f5c52da1