While my main focus is qualified retirement plans, I try and stay up to date on what is happening in the world of welfare benefits, i.e., health plans, etc. After all, both types of benefit plans are subject to ERISA’s reporting, disclosure, and fiduciary rules. And both types, of course, are regulated in these areas … Continue Reading
Back in the day, pre-ERISA day, many retirement plans had “bad boy” clauses. That is, a provision in the plan under which a participant could forfeit all benefits for being a “bad boy.” That usually meant among other misdeeds criminal conduct. Well, they’re back – at least as far as Congress is concerned. Last November, … Continue Reading
As the retirement plan industry matures (along with the participants), it seems to me as a non-attorney that the scope of ERISA-related litigation has expanded. Yesterday, I wrote about a U.S. Court of Appeals that vacated a lower court decision that certified a case as a class action. Timely, in the context of other law … Continue Reading
With the spotlight on ERISA class action law suits, I found this interesting and timely post on Barry Barnett’s Blawgletter. He points us to last Thursday’s decision by the U.S. Court of Appeals for the Fifth Circuit (U.S. District Courts in Louisiana and Texas) on a recent ERISA class action suit. In this case involving … Continue Reading
That’s a picture of the Golden Globe award given each year by the Hollywood Foreign Press Association (HFPA). The "no goody bag now going untaxed" is the announcement today by the Internal Revenue Service that it reached an agreement with the HFPA resolving outstanding tax responsibilities with respect to Golden Globe Awards presenter gift baskets. … Continue Reading
The Economics of Providing 401(k) Plans: Services, Fees, and Expenses The Investment Company Institute, November 2006 Executive Summary 401(k) plans are a complex employee benefit to maintain and administer and are subject to an array of rules and regulations. Employers offering 401(k) plans typically hire service providers to operate these plans, and these providers charge … Continue Reading
401(k) Resource Guide – Plan Sponsors – General Distribution Rules Executive Summary Distributions from 401(k) plans can be complicated and confusing. The IRS has just made available a this resource guide that covers the basics of 401(k) distributions. Each topic has a link to the applicable Internal Revenue Service publication.… Continue Reading
Rick Bales over at Workplace Prof Blog points us to a joint Vanguard/Wharton study of over a million 401(k) participants that indicates what works and what doesn’t in maximizing long-term investment returns. Not surprising: High-turnover trading hurts long-term returns. Periodic re-balancing helps long-term returns. Holding balanced or lifecycle funds is the best "trading" strategy of … Continue Reading
Last minute tax planning is like cramming for a final exam. You don’t always get the best results. Starting now to do 2007 retirement planning can make a big difference. Here are some of the situations we saw in late December, 2006: Not enough compensation for a shareholder-employee of an S corporation. Many owners will … Continue Reading
The Pension Protection Act of 2006 makes significant changes affecting 401(k) plans – for the most part favorable to plan sponsors and participants. Here is a summary of those changes effective in 2007: Increased 401(k) Limits. For 2007, the annual limit for 401(k) contribution increases to $15,500. The catch-up for age 50 and older remains … Continue Reading
Just like Sergio Leone’s classic 1966 movie, 2006 will indeed be memorable. And so with apologies to Mr. Leone and Clint Eastwood, here are my 2006 choices for the Good, the Bad, and the Ugly in Pensionland: The Good: The passage of the Pension Protection Act of 2006 (PPA). The new law makes significant changes … Continue Reading
Chutzpah, derived from the Yiddish, is the quality of audacity for good or for bad. For the bad in the case at hand. And "case" it is. Someone stole 3 laptops from the London Metropolitan Police with payroll and pension data on 15,000 Met police officers. And if it could happen to Scotland Yard, one … Continue Reading
You can call them independent contractors and pay them as such, but they may actually be employees. This matter is especially timely now as many retirement plans (and health insurance plans) have January 1st employee enrollments. It’s critical that workers be treated correctly for tax compliance purposes. If someone is an employee, then the … Continue Reading
Roth 401(k): Giving Employees A Choice Executive Summary: With the uncertainty now removed about the Roth 401(k)’s fate, many retirement plan sponsors are now adding this option to their 401(k) plans. Those plan sponsors that haven’t should consider adding it in order to: Provide participants with the opportunity to diversify their future tax burden, and … Continue Reading
If you are a small business owner who has established a retirement plan this year, you may be eligible to receive a tax credit for the cost of implementing a plan. And a tax credit can be better than a tax deduction. The same legislation that Congress passed in 2001 that increased benefit and contribution … Continue Reading
Impact of Pension Protection Act of 2006 on Profit Sharing and 401(k) Plans Executive Summary: Called the most significant retirement plan legislation since ERISA, the Pension Protection Act of 2006 (PPA) signed into law on August 17, 2006 makes important changes affecting both defined benefit and defined contribution plans. While much of the attention in … Continue Reading
Will there be a hedge fund in your 401(k) plan anytime soon? USA Today reporter, Adam Shell reports, in his Friday story, Investors add a bit of hedge fund to investment mix, that hedge funds are going retail. Mr. Shell reports that: Since the start of 2003, the number of mutual funds that utilize hedge … Continue Reading
I’m not an art critic, and I don’t play one on the Internet. So I understand this picture, (Untitled by Jackson Pollack, incidentally), as much as perhaps … say the average 401(k) participant understands his or her plan’s summary plan description (SPD). Which is to say, in many cases, not much. And it’s quite obvious … Continue Reading
If you don’t think that 401(k) fees aren’t going to become a hot issue next year, consider how local papers picked up on last Thursday’s Government Accounting Office Report on 401(k) fees commissioned by Congressman George Miller (D, Ca) and his comments about having Congressional hearings. Here is just a sampling from newspapers across the … Continue Reading
If you’ve been wondering how the results of last month’s mid-term elections are going to affect the 401(k) industry, then wonder no more. 401(k) fees now in court have just moved into the political arena. Yesterday’s article in the San Francisco Chronicle, Dems set to take on pension, health industries, reported that Rep. George Miller, … Continue Reading
One of those year-end retirement plan housekeeping matters is for plan sponsors to review the adequacy of the plan’s fidelity bond required by Department of Labor (DoL) regulations. Here is a summary of the fidelity bond rules. Overview A fidelity bond is required to protect the assets in a retirement plan from misuse or misappropriation … Continue Reading
Last Wednesday, Keller Rohrback L.L.P., the lead counsel in numerous ERISA class actions, announced that it was investigating whether several 401(k) providers breached their fiduciary responsibilities by entering into improper fee arrangements with mutual fund companies they selected. The service providers mentioned were Hartford Financial Services Group, Inc., Lincoln National Corp., and Principal Life Insurance … Continue Reading
Some employers just don’t get it. Management-Issues blog reports on a new survey that indicates the employers are out of sync with their employees on the role that compensation and benefits play in attracting, retaining, and motivating employees. The result is that employers are losing top talent. The survey of 262 large U.S. companies and … Continue Reading
