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.”
Articles Discussing Retiree Benefits.
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.
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.
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.
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.
The IRS recently issued long-awaited final regulations on hybrid pension plans, along with proposed transitional relief for hybrid pension plans that are not in compliance with the final rules. The newly issued final rules provide guidance on issues not covered in the final hybrid plan regulations that were issued in 2010, and clarify certain issues in the 2010 final regulations. The final rules are generally effective for plan years beginning on or after January 1, 2016, except that provisions in the final rules clarifying provisions in the 2010 final rules are effective for plan years beginning on or after January 1, 2011.
Q: When is a retirement account not a retirement account? A: When it’s an inherited IRA and the owner is bankrupt.
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.
On April 4, 2014, the Department of the Treasury issued its long-awaited supplemental guidance on when and how tax-qualified retirement plans (including 401(k) plans) must comply with Windsor v. United States, in which the Supreme Court held that federal laws must recognize valid same-sex marriages. In Rev. Rul. 2013-17, the Department interpreted Windsor to require recognition (for purposes of the Internal Revenue Code) of same-sex spouses who were legally married where the marriage took place, effective Sept. 16, 2013. In the new guidance (Notice 2014-19), the Department expands upon that prior guidance with respect to qualified retirement plans and whether (and how) same-sex spouse recognition can be applied retroactively.
The First Circuit recently issued a decision in Bonneau v. Plumbers & Pipefitters Local 51 Pension Trust Fund, No. 13-1515 (1st Cir. Nov. 15, 2013). This interesting case addresses an open question – when a pension plan is amended to enhance benefits based on prior service, are those benefit enhancements protected accrued benefits that cannot be reduced by a future amendment, or are they gratuitous benefits that can be taken back? The First Circuit decided that if the benefit enhancement is adopted while the employees are still employed, the resulting benefits are protected, but if they are adopted after retirement or termination of employment, they are not protected by ERISA.
The Internal Revenue Service has released a detailed list of pension plan and other retirement-related contribution limitations for Tax Year 2013 that were triggered by increases to the cost of living. A number of the pension plan limitations will change for 2013 because the increase in the cost-of-living index met the statutory thresholds for the adjustment. Other limitations, however, will remain unchanged.
As an employee reaches retirement age, he may want to retire or cease working full-time. The employer, however, may need or want the employee to continue to work temporarily or on a part-time basis. The employee wants to begin to receive his pension plan payments. A frequent question in this scenario is, â€œCan we employ the participant part-time or for a few more months, but begin the employeeâ€™s pension payments?â€