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Total Articles: 29

The CARES Act Effect on Retirement Plans

On March 27, 2020, the President signed into law the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. The Act largely stabilizes fragile industries, provides loans and tax credits to businesses tied to their retaining their workforces during these uncertain times, and offers additional unemployment relief to employees hurt by COVID-19. But the CARES Act does more. It significantly loosens the restrictions on loans and distributions from retirement plans, along with providing funding relief for defined benefit plans, giving employers important options to consider in these times of need.

Congress Looks to Secure Your Retirement Under the SECURE Act

In late December, Congress passed and President Donald Trump signed into law the Setting Every Community Up for Retirement Enhancement (SECURE) Act, the most sweeping retirement legislation since the Pension Protection Act of 2006. The Act, whose enabling legislation was included as part of a large government funding bill, contains many significant changes affecting employers and participants. Several provisions are effective immediately or retroactively, and others go into effect beginning in 2021.

SECURE Act Provides Sweeping and Immediate Changes to Retirement Plans

On Friday, December 20, 2019, President Trump signed into law the Setting Every Community Up for Retirement Act of 2019 (the “SECURE Act”) as part of a spending bill to fund the government through September 30, 2020 (H.R. 1865, the “Further Consolidated Appropriations Act of 2020”). The SECURE Act, which is undoubtedly the most significant pension reform in over 13 years, includes almost 30 provisions aimed at increasing coverage of American workers in employer-sponsored plans, modifying distribution rules, easing administrative requirements for safe harbor 401(k) plans, and more. Most notably, many of the new law’s provisions became effective on January 1, 2020.

University Settles Claims Involving Use of Retirement Plan Participant Data For Cross-Selling by Recordkeeper

Wrongful use of retirement plan participant data was among the claims made by a class of 40,000 participants against the plan sponsor and others in Cassell et al. v. Vanderbilt University et al. Specifically, the plan participants claimed that the University inter alia breached its “loyalty and prudence” duty by failing to protect confidential employee retirement plan participant information, allowing the plan’s recordkeeper to obtain access to participant’s personal information and to profit from that access.

Could This Be Your Retirement Plan?

As reported by CBC, B.C. Pension Corporation announced a data breach involving pension plan records after discovering a box containing microfiche could not be found following a recent office move.

High Court Orders Sixth Circuit to Clean Up Its Retiree Health Benefits Case Law ‘Mess’

Collective bargaining agreements, including those that establish ERISA plans, should be interpreted according to ordinary principles of contract law, the U.S. Supreme Court has reaffirmed in a per curiam opinion. CNH Industrial N.V. v. Reese, No. 17-15 (Feb. 20, 2018).

Mandatory Payroll Deduction Savings Programs Are on the Rise

According to the U.S. Department of Labor (DOL), one-third of American workers do not have the option to participate in a retirement savings plan through their employers.1 To help employees save for retirement, more states are passing or exploring legislation that requires employers to automatically enroll their workers in state-sponsored payroll deduction savings programs. The employee may then opt out, or change the beginning contribution amount, if the employee wishes to do so. Generally, this legislative trend affects only employers that do not offer access to an employer-sponsored retirement plan.

IRS Issues Guidance on Changes to Determination Letter Program for Retirement Plans

The Internal Revenue Service recently issued Revenue Procedure 2016-37, which sets forth in detail the significant changes to the IRS’s determination letter program for qualified retirement plans, which we have written about in previous alerts. The changes will be effective January 1, 2017. The most significant change is the IRS’s elimination of the staggered five-year remedial amendment cycle for individually designed plans. As of January 1, 2017, sponsors of individually designed plans will be permitted to submit determination letter applications only for initial plan qualification, qualification upon plan termination, and certain other circumstances that will be determined each year by the IRS.

DOL Issues Long-Awaited New Rule Governing Retirement Investment Advisors

Executive Summary: On April 6, 2016, the U. S. Department of Labor (DOL) released a long-awaited final rule expanding the definition of "fiduciary" under ERISA as well as the duties of investment advisors who qualify as fiduciaries thereunder. In addition, the DOL issued two related prohibited transaction exemptions that have the effect of minimizing the compliance burden imposed on investment advisors who now, under the final rule, qualify as fiduciaries, by (1) permitting firms to receive certain common types of compensation if they contractually commit to putting their clients' best interests first, and (2) permitting certain principal transactions between those fiduciary-advisors and their customers.

Department of Labor Issues Final Fiduciary Rule

The Department of Labor (DOL) has issued a final rule to re-define who is rendered a "fiduciary" of an employee benefit plan under the Employee Retirement Income Security Act (ERISA) by providing investment advice to a plan or its participants or beneficiaries. More than five years in the making, issuance of a final rule to address conflicts-of-interest in retirement advice has been a priority for the White House and DOL to advance its “middle-class economics” agenda in the face of criticism in Congress and by a number of stakeholders. According to a DOL fact sheet, “this final rulemaking fulfills the Department’s mission to protect, educate, and empower retirement investors as they face important choices in saving for retirement in their IRAs and employee benefit plans.”


An IRS plan audit uniquely focuses an employer’s mind on the core identity of its qualified retirement plan, which is that of a tax exempt organization, but one whose exemption (or “qualification”) requirements are far pickier than those applicable to one’s favorite charity. Any single material operational violation or non-conforming written plan provision risks disqualification and loss of the related special tax benefits.

Teamsters Local Pension Fund Latest to Request Reduction in Vested Member Benefits

Citing the threat of future insolvency, a New Jersey Teamsters Local Pension Fund has applied to the U.S. Treasury Department for permission to reduce by 40 percent the vested member benefits in the Fund.

The Obergefell Effect: Applying the SCOTUS Decision to Qualified Retirement and Health and Welfare Plans

On December 9, 2015, the IRS issued Notice 2015-87 [link below], which provides guidance on the application of the recent United States Supreme Court (“SCOTUS”) decision in Obergefell v. Hodges [link below] to qualified retirement and health and welfare plans.

DOL Issues Guidance on the Application of ERISA to State-Sponsored Retirement Programs for Private Sector Employees

After a recent flurry of activity in state legislatures regarding state mandated automatic savings programs, the Department of Labor (“DOL”) has issued (1) a proposed regulation, and (2) interpretive guidance that addresses how the Employee Retirement Income Security Act of 1974 (“ERISA”) would apply to various types of state legislation aimed at increasing the availability of workplace retirement programs to private sector employees.

Tax and Employee Benefits Alert: Important April 30, 2016 Deadline to Adopt Updated Pre-Approved Defined Contribution Retirement Plans

All employers who are using a pre-approved form for their 401(k), profit sharing, or other defined contribution plan must sign updated documents on or before April 30, 2016 to preserve the tax-qualified status of the plan. Most employers who sponsor retirement plans are subject to this requirement. Read the IRS explanation of why a revised plan is necessary, and what steps employers should take.

IRS to Prohibit Lump-Sum Cashout Windows for Pension Plan Retirees

Yesterday, the IRS issued Notice 2015-49, which abruptly announced the IRS’s intention to prohibit lump-sum cashout windows for pension plan retirees already in pay status. In recent years, many pension plan sponsors have offered retirees the opportunity to elect to receive a single lump-sum payment that is the actuarial equivalent of their future pension (annuity) payments. These lump-sum payments were made in lieu of any future pension payments. Plan sponsors have used these types of programs to stabilize the plan sponsor’s ongoing pension funding obligations. Anyone who has followed this issue knows that lump-sum windows have become a popular and effective strategy for pension plan sponsors to reduce their pension funding risk.

Supreme Court Rejects Analysis of Duration of Retiree Benefits As Contrary to Contract Law

On January 26, 2015, the Supreme Court of the United States resolved a long-standing dispute between the Sixth Circuit Court of Appeals and the remainder of the federal judiciary in a case concerning the extent to which retiree health care benefits provided for in a collective bargaining agreement become vested where the agreement is silent on their duration. Justice Thomas, delivering the opinion of a unanimous Court, disagreed with the judgment of the Sixth Circuit, which had ruled in a number of prior instances that silence in a collective bargaining agreement regarding the duration of bargained-for retiree health care benefits should be construed as evidence of the parties’ intention that those benefits vest and continue indefinitely. Despite the Sixth Circuit’s claims to the contrary, the Court concluded that the “Sixth Circuit’s decision rested on principles that are incompatible with ordinary principles of contract law.” M&G Polymers USA, LLC v. Tackett, No. 13-1010, Supreme Court of the United States (January 26, 2015).

When is a Retirement Account not a Retirement Account?

Q: When is a retirement account not a retirement account? A: When it's an inherited IRA and the owner is bankrupt.

Tax Alert: Attention Employers Using Pre-Approved Retirement Plans – It’s Amendment Time Again!

Do you sponsor a tax-qualified retirement plan that was pre-approved by the IRS? If so, pre-approved documents take one of two forms.

Filling in the Retirement Plan Gaps for Same-Sex Couples—What It Means for Your Retirement Plan

Employers and participants alike have been anxiously waiting for further guidance from the Internal Revenue Service (IRS) on how marriages of same-sex couples will be treated for purposes of qualified retirement plans.

Judgment Reduced, but the Importance of Monitoring Plan Investments Reaffirmed

On March 19, 2014, the Eighth Circuit Court of Appeals upheld one of the first excessive fee rulings in favor of retirement plan participants.

April Deadlines Relating to FICA Tax Treatment of Severance Pay in Quality Stores Are Quickly Approaching

Two deadlines relating to the Sixth Circuit Court of Appeals’ decision in United States v. Quality Stores, Inc., No. 10-1563 (6th Cir. Sept. 7, 2012), are quickly approaching—the deadline for the United States to file a petition for certiorari to the Supreme Court and the deadline for employers to file refund claims.

Reminder of Immediate Obligations for Plan Sponsors After Receiving Retirement Plan Fee Disclosures

As we have discussed in previous alerts (DOL Service Provider Fee Disclosure Regulations To Go Into Effect in Early 2012; Plan Sponsor Obligations Under New Retirement Plan Fee Disclosure Rules), the Department of Labor (DOL) recently issued new fee disclosure rules for ERISA-covered retirement plans. By now, plan sponsors should have received the required disclosures from their covered service providers (for example, investment managers, trustees, and others). The Service Provider Fee Disclosure Rule required that these disclosures be provided by July 1, 2012.

Plan Sponsor Obligations Under New Retirement Plan Fee Disclosure Rules

As we have discussed in previous alerts, the Department of Labor (DOL) has issued two new rules that will affect how retirement plan fee information is disclosed. These rules will become effective this summer. The following is a general summary of plan sponsors’ legal obligations under the rules.

New Guidance on Lifetime Income Options in Retirement Plans 02/21/2012

On February 2, 2012, in a stated effort to encourage retirement savings and manage longevity risks, the Department of Treasury, the Internal Revenue Service (IRS) and the White House released a package of guidance and commentary.

DOL Issues New Fee Disclosure Rules for Retirement Plans.

The Department of Labor has issued interim final rules that require certain types of ERISA retirement plan service providers to disclose specific fee information directly to plans. Covered service providers must comply with the disclosure requirements in these final rules in order for such service providers’ contracts or arrangements with plans (including the fees paid by plans under these arrangements) to be considered "reasonable" as required under ERISA. More specifically, these rules are intended to provide retirement plan fiduciaries with a more complete picture of service provider fee structures so as to enable plan fiduciaries to prudently select and monitor such service providers.

New Guidance (and Solid Reasoning) from the Courts.

Two recent court decisions, one by the U.S. Supreme Court and the other by the Sixth Circuit Court of Appeals, have provided employers, plan sponsors, and plan administrators with valuable guidance regarding two of the pressing issues in benefits: retiree health care and the distribution of death benefits. Both of these cases point to the need for employers and plan sponsors to take care in the design of their plans and the terms of other documents (i.e., collective bargaining agreements) that may have a substantial impact on the administration of benefit plans.

Benefits Alert for 2008: New Retiree Health Insurance Help for Employers (pdf).

On December 26, 2007, the Equal Employment Opportunity Commission published a final rule that affords significant flexibility for employers who want to continue their long-standing practice of coordinating benefits with Medicare for the retired workforce.

3rd Circuit Decision Greenlights Changes To Retiree Health Plans.

Employers and retirees may have finally gotten the green light to design retiree health plans and early retirement incentive programs to take advantage of the retirees' eligibility for Medicare benefits. On June 4, 2007, the U.S. Court of Appeals for the Third Circuit issued a long awaited ruling holding that EEOC's 2003 proposed regulations allowing employers to design their retiree health plans to coordinate with Medicare, were valid.
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