Pension Adjustment Reversal - PAR


DEFINITION of 'Pension Adjustment Reversal - PAR'

A numerical calculation in certain Canadian pension plans that reverses a previously assumed pension value. This can occur when an employee leaves a company after a short period of time and before he or she is vested. As a result, the employee may only have his or her pension contributions and not any employer contributions. The pension adjustment reversal "reverses" the overstated pension adjustments, since the employer contributions are not counted.

BREAKING DOWN 'Pension Adjustment Reversal - PAR'

The pension adjustment reversal reduces the amount of money that has been contributed in that year's pension plan, thereby increasing the Registered Retirement Savings Plan (RRSP) deduction limit. In order to be eligible for a pension adjustment reversal, the employee must terminate his or her membership in the pension plan (for example, by transferring benefits to a Registered Retirement Savings Plan), but not necessarily his or her employment with the company. Conversely, an employee who leaves a company but continues membership in the pension plan is not eligible for the PAR.

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  1. When can catch-up contributions start?

    Most qualified retirement plans such as 401(k), 403(b) and SIMPLE 401(k) plans, as well as individual retirement accounts ... Read Full Answer >>
  2. Are 401(k) contributions tax deductible?

    All contributions to qualified retirement plans such as 401(k)s reduce taxable income, which lowers the total taxes owed. ... Read Full Answer >>
  3. Are 401(k) rollovers taxable?

    401(k) rollovers are generally not taxable as long as the money goes into another qualifying plan, an individual retirement ... Read Full Answer >>
  4. Are catch-up contributions included in the 415 limit?

    Unlike regular employee deferrals, catch-up contributions are not included in the 415 limit. While there is an annual limit ... Read Full Answer >>
  5. Can catch-up contributions be matched?

    Depending on the terms of your plan, catch-up contributions you make to 401(k)s or other qualified retirement savings plans ... Read Full Answer >>
  6. Are catch-up contributions included in actual deferral percentage (ADP) testing?

    Though the Internal Revenue Service (IRS) carefully scrutinizes the contributions of highly compensated employees (HCEs) ... Read Full Answer >>

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