Non-ERISA 403(b) plans must walk a fine line to avoid losing the ERISA exemption

Last month’s Supreme Court decision, Advocate Health Care Network v. Stapleton, upholding ERISA exemption for church-affiliated pension plans was a reminder that not all benefit plans are subject to ERISA. Indeed, non-profit employers who sponsor 403(b) plans can choose to be exempt from ERISA. But they have to tread carefully.

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401(k) Plan Trustees: How Do You Monitor and Select Investments?

Vector GraphsMany 401(k) plan sponsors have wisely selected investment professionals to assist in selecting the plan’s investment menu, typically a listing of various mutual funds. Other plan sponsors may allocate this duty to company officers and other key employees.

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In the complicated world of ERISA, a Fiduciary Checklist can help

canstockphoto9922413 complicatedChecklists. Doctors use them. Engineers use them, Pilots use them. A checklist is a tool to manage complicated jobs. Atul Gawande, MD, author of best seller, The Checklist Manifesto: How to Get Things Right, puts it this way:

Checklists not only offer the possibility of verification but also instill a kind of discipline of higher performance.

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403(b) plans looking a lot like 401(k) plans by making similar mistakes

venn of 403b and 401k-3403(b) plans have come a long way since added to the Internal Revenue Code in 1958. The Internal Revenue Service (“IRS”) issued regulations governing the plans in 1964, and published a comprehensive revision that was effective January 1, 2009 that made major changes to 403(b) plans.

The effect of which was to lessen the difference with 401(k) plans. Continue Reading

Benefit Plan Regulators Have Been Busy – Very Busy

compliance and regulationsBenefit plan regulators were active in the period leading up to the Federal government’s June 30 fiscal year-end. Significant new rules and regulations were proposed for retirement plans, deferred compensation plans and group health plans.

It’s not a walk on the wild side, but some of the dry regulatory pronouncements will impact most benefit plan sponsors and administrators. So, let’s get down in the weeds – here is the good news and the bad news:

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Inside the Cash Balance Plan Black Box

CC_BlackBoxProjectsIn the world of science and engineering, a black box is a device, system or object which can be viewed solely in terms of its input and output without the user knowing how it works.  In our ERISA world,  a Cash Balance plan be a black box into which employer contributions are made on a tax deductible basis and benefits at some point are paid out.

So let’s take a peak inside the black box to help you better understand how a Cash Balance plan works so it could better accomplish your objectives. Here is a brief overview in Q & A format.

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Pension Plans Continue to Enjoy Double Digit Annual Growth – Cash Balance Plans That Is

Cash Balance plans continue their impressive growth rate. Accordingly to the 2016 Cash Balance Research Report recently published by Kravitz, Inc., the number of new Cash Balance plans increased by 19% with assets increasing to $1 Trillion.

Historical Background

The actual number of Cash Balance Plan, 15,178,  may not sound like much in the universe of approximately 700,000 retirement plans, but there were only were only 3,893 plans in 2006 when the Pension Protection Act of 2006 was passed which removed ambiguity about these plans.

Now today:

  • Cash Balance plans now make up 29% of all defined benefit plans, up from 2.9% in 2001.
  • The 19% growth rate significantly outpaced the 2% growth rate of new 401(k) plans.

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