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Fully funded retirement plan
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A fully funded retirement plan is a plan that has funds sufficient to provide current and future benefits to the retiree. Whether or not a plan is fully funded depends on whether the plan's administrator predicts that the financial needs of the plan will be met. This can be complex, as the plan's needs depend on contributions from a variety of sources. A fully funded retirement plan gives the retiree more security. Providing such a plan is the ultimate goal of all retirement and pension plans.[1]
A healthy plan is commonly defined as one that is at least 80 percent funded. A fully funded plan goes beyond this number, to 100 percent. Even so, fully funded plans are not completely secure. If the retirement plan's manager (i.e., the business that supplies the retirement plan) experiences financial difficulty, it is possible that the plan may be revised, or the funding that supports it may be re-appropriated. Such an event happened in 2009 with General Motors. This company, which was known at the time for having well-funded retirement plans, had to make changes to the way retirees received benefits when it declared bankruptcy. In that case, the recipient could elect to receive a lump sum that may or may not last for the duration of that recipient's retirement, or the recipient could move his or her plan under a different manager.[2]
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