Category Archives: Pension Protection Act of 2006

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“It ain’t over till it’s over.” : The Department of Labor’s Proposed Default Regulation

The quotation above is one of the best-known Yogiisms, and it neatly describes the battle that is shaping up before the Department of Labor (DoL) finalizes its proposed regulation on default funds. On one side are the mutual fund companies and on the other are the insurance companies. And here’s what it’s all about. The … Continue Reading

New non-spouse beneficiary IRA rollover not a “gimme”

Individual retirement accounts, as I’ve written about before, are an increasingly valuable planning tool. One of the tax benefits that comes out of the Pension Protection Act of 2006 is the ability of a non-spouse beneficiary to rollover a lump sum distribution from the deceased participant’s retirement plan account tax free to an “inherited IRA”. … Continue Reading

“You mean I can get 100% return on my money using your investment system?”

If you are still not convinced that 401(k) participants need investment advice, then check out the results of a recent survey as reported by Investment News, 43% of investors are suckers. The survey was conducted by Money-Track, a public-television series, and Investor Protection Trust. Most of the survey results I would have expected. I’m not … Continue Reading

Pension funding relief for airlines lands in Iraq funding bill

Earlier this month I asked the question Technical Corrections to the Pension Protection Act of 2006. Another bite of the apple? Would special interest groups be able to accomplish now what they couldn’t accomplish in the PPA? Right question, wrong bill. The just passed Iraq spending bill included a provision giving funding relief to American … Continue Reading

Technical Corrections to the Pension Protection Act of 2006. Another bite of the apple?

On May 3, 2007, the House of Representative’s Education and Labor Subcommittee on Health Employment, Labor, and Pension held a hearing to consider technical corrections to the Pension Protection Act of 2006 (PPA). Technical corrections are designed to fix mistakes and inconsistencies that were inadvertently included in original legislation. Subcommittee Chairman Rob Andrews (D-NJ) indicated … Continue Reading

New guide to 401(k) distributions available from IRS

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

The 2006 retirement plan year in review: the Good, the Bad, and the Ugly

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

It’s Bond. Fidelity Bond

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

Plop plop, fizz fizz, oh what a fiduciary relief it is

“It” refers to the Pension Protection Act of 2006 which provides fiduciary relief in several areas. This relief includes: Investment Advice. Many plan sponsors were previously reluctant to add an investment advice component to their 401(k) plans. The Act specifically permits qualified fiduciary advisers to deliver personally-tailored investment advice to participants in 401(k) plans and … Continue Reading

New study finds 401(k) participants who invest in balanced and lifecycle funds earn highest risk-adjusted rates of return

A recent study by implication supports the use of asset allocation and lifestyle funds as default funds which were those designated in the Department of Labor’s recent proposed regulation. The study by Tekeshi Yamaguchi, Olivia S. Mitchell, Gary Mottola, and Stephen P. Utkus, "Winners and Losers: 401(k) Trading and Portfolio Performance" (October 2006) for the … Continue Reading

IRA is not a kid anymore

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

Pension Protection Act Seminar

"GUARDIAN UNIVERSITY�" Tuesday, November 7, 2006 Lanny D. Levin Agency, Inc, presents Pension Protection Act of 2006�: Challenges and Opportunities (3 hours CE credit applied for) Speakers: Jerry Kalish, National Benefit Services, Inc. Lanny D. Levin, CLU, ChFC, LANNY D. LEVIN AGENCY, Inc. Some of the topics: Extension of EGTRRA Provisions Retirement Plan Provisions Long … Continue Reading

Investment simulation comes to Pensionland

As we know, the recently issued proposed 401(k) default investment regulations by the Department of Labor (DoL) allows 401(k) plan sponsors to select default investments funds that strive to achieve long-term capital appreciation as opposed to mere preservation of capital. But what was the DoL’s basis for permitting the use of investments other than the … Continue Reading

How the retirement plan industry views participant investment advice

Investment News reports that investment advisors are not altogether happy about the Pension Protection Act (PPA) provision that provides fiduciary relief for providing investment advice to 401(k) participants. The reason? The PPA’s fee restrictions on face-to-face advice. Their lobbyists, says Investment News, are trying to convince Congress that the restrictions in the Act were a … Continue Reading

Managed acounts and 401(k) participant portfolios

That’s the subject of a recent study by Vanguard Retirement Research, the results of which were that nearly two-thirds of participants adopting a managed account advisory service saw a sharp increase in their equity exposure. Expected returns rose by 82 basis points (after fund expenses but before any managed account fee), while Sharpe ratios improved … Continue Reading

Department of Labor issues default fund proposed regulation

The Department of Labor (DoL) issued the first regulation under the Pension Protection Act of 2006 (PPA) which deals with what is a permissible default fund. The PPA provides a safe harbor for plan fiduciaries investing participant assets in certain types of default investment alternatives in the absence of participant investment direction. The regulation provides fiduciary … Continue Reading

It’s morning again in Pensionland

The sun will not be setting after all on the favorable retirement plan tax provisions that were part of the Economic Growth and Tax Reconciliation Act of 2001 (EGTRRA). For budget scoring purposes, the more than three dozen rules which included increases to contribution and benefit limits for IRAs and qualified retirement plans had “sunset” … Continue Reading
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