Category: Retirement Plans
The Presumption of Prudence Persists: In re UBS ERISA Litigation
In 1995 the Third Circuit Court of Appeals broke new ground in the area of fiduciary liability under ERISA when it found that an action of a fiduciary "should be presumed to be reasonable" if the terms of a retirement plan "require or strongly encourage" the fiduciary to take...
Ignoring the IRS Is Not a Good Idea (another example)
On February 23, 2011, the IRS indicated that its 401(k) Compliance Check Questionnaire Project is entering its next phase. As discussed in a prior post , in May 2010 the IRS, through its Employee Plans Compliance Unit, sent letters to a statistically valid sample of 1,200 401(k) plan sponsors...
DOL Announces Delay in Application of Fiduciary Fee Disclosure Rules
Today EBSA (part of the DOL) announced its intention to delay the applicability date of the new feedisclosure rules under Section 408(b)(2) of ERISA, from July 16, 2011 to January 1, 2012. These interim final rules , published on July 16, 2010, require certain pension plan service providers to...
Plan Disqualification Happens If You Don't Follow Basic Rules!
A recent Tax Court case, Hollen v. Commissioner (2011, T.C. Memo 2011-2), offers a stark reminder that the IRS can and will seek to disqualify a tax-qualified retirement plan if the plan sponsor fails to comply with key legal requirements and fails to correct the failure. In Hollen a...
Update Regarding Expanded Definition of "Fiduciary"
The Employee Benefits Security Administration (EBSA) will hold a hearing to consider issues regarding the adoption of a new regulation defining when a person is considered a "fiduciary" by reason of giving investment advice to a benefit plan or to a plan's participants. The hearing will be held on...
Hybrid (Cash Balance/Pension Equity) Plan Regulations: Market Rate Amendments
In October the IRS released regulations, in final and proposed form, intended to provide clarity in the utterly complicated area of hybrid pension plans, the two most common of which are cash balance plans and pension equity plans. These new regulations address: "market rate" of return limits for interest...
Proposed DOL Regulations Expand Meaning of "Fiduciary"
Proposed regulations published last week by the Employee Benefits Security Administration (EBSA), part of the DOL, would modify the definition of "fiduciary" under ERISA by expanding the meaning of the term "investment advice." The DOL explained that the definition of "investment advice" – which has remained unchanged since it...
Using Retirement Plan Assets to Pay Plan Administrative Expenses
We are sometimes asked: when is it okay to use retirement plan assets to pay for plan administrative expenses? The question often comes up in the context of a restatement of the plan document, the preparation of a new SPD or some other project where the costs may be...
The Universal Availability Rule Under Code Section 403(b)
One of the most well known, yet commonly flouted, requirements in the world of 403(b) plans is the "universal availability" requirement. Section 403(b) plans operate free of the nondiscrimination rules that apply to elective deferrals under 401(k) plans – namely the ADP test and minimum coverage rule – on...
IRS Launches 401(k) Plan Compliance Project
This month the IRS is launching a new compliance initiative aimed at the retirement plan community, the 401(k) Compliance Check Questionnaire Project . As part of this project the IRS is asking a random sampling of 1,200 401(k) plan sponsors to fill out a 45-page compliance questionnaire. Although the...
Some Basic Advice to Plan Investment Fiduciaries
Capital markets worldwide have recovered from their 2009 lows, but remain in a protracted period of extreme volatility and we continue to experience wide swings in market sentiment that seem to defy explanation. Though market fluctuations affect all retirement plans with assets to invest, the unstable investment environment is...
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