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
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
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
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
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 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
Individual Retirement Accounts have become an increasing important tool for retirement savings and tax planning, one of which is the charitable IRA rollover enacted as part of the Pension Protection Act of 2006. It’s one of those niche tax laws that only apply to a few taxpayers. And it has a very short shelf life … 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
“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
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
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
"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
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
A lot if Vanguard’s experience with providing on-line financial plans for individual investors is a guide. According to Investment News, Vanguard is now providing 4,000 new plans a month – up from 15,000 for all of last year. Here is the link to the Investment News article.… Continue Reading
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
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
One thing we can say for sure about new ERISA legislation. It does create more acronyms. Like for instance QDIA which is Pensionland shorthand for Qualified Default Investment Account. So attorney B. Janelle Grenier will be adding one more to her 160 plus and counting Benefits Acronym Lexicon. More to follow.… Continue Reading
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
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
Former President Bill Clinton, whose birthday was yesterday, was heard last week lamenting the fact that he was about to turn age 60. Don’t feel bad, Mr. President, there are another 3 million who will join you this year – part of the first entrants of the baby boom generation. While few of them have … Continue Reading
