A partial termination of a retirement plan is one of those things that you know now what you didn’t know then. If it happens, then all plan participants must be fully vested. But there is no clear objective test as to when it happens. What got me thinking about this subject was yesterday’s article by … Continue Reading
Baltimore doesn’t forget its Colts. And one of those former Baltimore Colts, Bruce Laird, (Baltimore Colts’ defensive back from 1972 to 1981 and a San Diego Charger in 1982 and 1983) wants to make sure that his former teammates and other retired NFL players are remembered in a more tangible way than street signs. Specifically, … 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
While sports fans are looking forward to tomorrow’s NFL games (for me the Beloved Bears vs. the Saints) that wil decide the two Super Bowl contestants, the retired NFL players are looking forward to receiving their pension increases under the new Collective Bargaining Agreement which I wrote about last year. (While agreement on the new … Continue Reading
The U.S. Supreme Court on Tuesday upheld the 7th U.S. Circuit Court of Appeals’ decision regarding IBM’s cash balance pension plan. In addition, the IRS has begun to review moratorium cash balance plans, i.e, those cash balance plans that were converted from defined benefit plans before June 29, 2005. And with the Pension Protection Act … Continue Reading
Steve Rosenberg in his article today on his Boston ERISA and Insurance Litigation Blog, Top Hat Plans and ERISA, brings into focus one of the inherent problems with Top Hat plans. At least from the standpoint of the employee. That is, Top Hat plans are exempt from the participation, funding, vesting and fiduciary responsibility rules … 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
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
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
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
If you are a business owner/employer with a calendar fiscal year, you still have time to adopt a qualified retirement plan for 2006. Here’s what you have to do: Before December 31, 2006, you need to: Sign adopting resolutions and a plan document, and Deposit a de minimis amount, e.g., $100 in a trust account … 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
Questions and Answers on 412(i) Defined Benefit Pension Plans Updated for the Pension Protection Act of 2006 Executive Summary: A 412(i) defined benefit pension plan, referred to in IRS regulations as an "insurance contract plan", is the only defined benefit plan that is exempt from the minimum funding requirements of Section 412 of the Internal … 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
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
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
In an earlier post with the same headline, I cited the decline in the number of defined benefit pension plans from 1985 to 2005: from approximately 112,000 to 29,000. I’m certainly not the only one who has commented on the passing of defined benefit pension plans. Today Robert Pozen, Chairman of MFS Investment Management, in a speech to … Continue Reading
From its humble beginning in 1974 as part of the Employee Retirement Income Security Act of (ERISA), the Individual Retirement Account along with cousins Roth, SEP, and SIMPLE, has grown up. It’s now an increasingly important investment vehicle for retirement savings and tax planning. And it will become even more so as the Boomers start … Continue Reading
Right after the Pension Protection Act of 2006 was passed, I read comments that the new Act would help employees by removing uncertainty about funding, and it would avoid pension plan terminations and freezes. Not! A Quick Poll recently released by SEI revealed that almost a third (29%) of the employers polled said that they … Continue Reading
The IRS today announced 2007 cost-of-living adjustments to dollar limitations for qualified retirement plans. Here are the highlights: Highly Compensated Employee Definition $100,000 Annual Compensation Limit $225,000 401(k) Contribution Limit $15,500 Annual Defined Contribution Limit $45,000 Annual Defined Benefit Limit $180,000 Click here for the full IRS announcment.… Continue Reading
Headline writers last week took advantage of Hershey’s announcement that it would be closing its defined benefit pension plan to new hires. Here are a few examples: CANDY: Hershey blows pension plan a goodbye kiss: St. Louis Post Dispatch Hersey to phase out DB plan, sweeten 401(k) plan: Business Insurance Pension Cuts Not So Sweet: … Continue Reading
One of the tenets of the law of physics is that for every action there is a reaction. So too in Pensionland. The increasing amount of dollars in retirement plans raises the stakes for fiduciaries who have now been discovered by class action plaintiff lawyers. Steven Rosenberg in his Boston ERISA Law Blog points us … Continue Reading
