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Bob Toth has more than 35 years of experience in employee benefits law. His practice focuses on the design, administration and distribution of financial products and services for retirement plans.

There have been a significant number of developments since then, not the least of which being the SECURE Act providing three key new provisions to support lifetime income from DC plans (with the new annuity provider safe harbor, the new lifetime income disclosure rules, and the new lifetime income “portability”); invigorated efforts by all sorts of financial service companies to provide a variety of different lifetime income programs; and, finally,  a growing sense by plan sponsors and participants that lifetime income guarantees are important (see, for example this recent TIAA survey).

Even for all of this excitement, elements of that “annuity fog” I wrote about 13 years seem to continue to linger. I suspect it still has to do with the market’s continuing basic lack of understanding and how guarantees work in a defined contribution retirement plan
Continue Reading The DC Annuity Fog, Revisited

You may’ve noticed that the SECURE Act introduced yet another new twist to the 403(b) world: the Qualified Plan Distribution Annuity Contract (“QPDAC”-you may want to look at my prior blog related to these lifetime income acronyms). Its not that Congress was singly out 403(b) plans, as 401(a) and 457(b) plansnow also have the ability to distribute QPDAC. But, as in all other things 403(b)s, there are a number of unique twists to the rules which exist solely in the 403(b) world.
Continue Reading The 403(b) “Qualified Plan Distribution Annuity Contract” Under SECURE Section 109

Common PEP problems are barely addressed by  the SECURE Act’s fix to the “one bad apple” rule (called the “unified plan rule” by the IRS, under which a participating employer’s disqualification error will disqualify the entire plan), though there seems to be a common misunderstanding in the industry to the contrary. That new “bad apple” fix actually has very little operational impact on a MEP /PEP whose operations has been affected by that bad actor.   It provides only a narrow remedy to a narrow issue by which a P3 or lead sponsor can get rid of an employer who causes an operational/qualification error in the plan-though it may take up to a year to do so if one is to follow the IRS’s pre-SECURE Act proposed regs.
Continue Reading The Limited Utility of the “One Bad Apple” Rule Fix

The Investment Company Institute, the main mutual fund trade group in Washington DC, issued last month its retirement report for the 2020 fourth quarter with $22 trillion attributable to retirement plan assets alone, which is virtually the same size of the the market capitalization of the companies traded on the New York Stock Exchange as of years’ end 2020,  reported to have been $24.49 trillion.  Adding in the 12.2 trillion held in IRAs, these assets constitute over 2/3 of the reported value  of all publicly traded securities in the US., at  $50.9 trillion. This influence seem to be  rarely discussed
Continue Reading The Massive Influence of Retirement Plans on Capital Markets: the Days of ERISA as a “Backwater” are Long Gone

Mike Webb,  (formerly of Cammack Consulting, now being part of Captrust) who has been one of the true 403(b) thought leaders in the country for a number of years, runs a podcast series called called “Revamping Retirment.”  Mike wanted to have a conversation with me about annuities. We do talk about 403(b)’s in the video, of course, but also of many other annuities issues, like  the reluctance of sponsors to take up lifetime income, the value of annuities as well as their problems as they are currently being sold in the market. This resulted  in a refreshing  22 minutes of great conversation.
Continue Reading A Frank-and Fun-Conversation on Annuities with Mike Webb

The minute differences between 403(b) plans and 401(k) plans are often inconvenient, at best, and sometimes they produce serious conundrums in plan administration which can be difficult to resolve.
Prominent among these is the issue of “small amount” cash-outs from 403(b) plans. The ability to cash out small amounts for terminated participants is especially important for a number of “small plan” filers, who are on the cusp of having to comply with the large plan audit rules because of long lost terminated employees with individual contracts who are still counted int the plan’s census-even after eliminating those you can under Rev. Proc. 2007-71.
Continue Reading A Technical Analysis of How “Small Amount” Cash-Outs Under 403(b) Plans Work

None of the MEPS, PEPS, GoPs or CITs are silver bullets in and of themselves; but instead they are all tools to an end with substantially different features. But they all do commonly use the aggregated power of a collection of plans of unrelated employers to provide (each in different measure) advantageous investment pricing and selection; professional fiduciary services; and reduced compliance costs to a sorely underserved market.  Benefit professionals have been educating themselves to familiarizing themselves with each of these arrangements, but this is not particularly a simple task. This is reflective of the fact that successful operation of MEPS, PEPs and GoPs (in particular) are  heavily dependent on technology which is not easy to either build or maintain. They actually require a high level of sophistication and a substantial investment in technology to pull effectively accomplish.  This “meptech” is at the heart of it all,  used for the unique sort of data collection, manipulation, consolidation and control which is fundamental to success with these platforms. There a couple of  “meptech” developments worth noting. I am hopeful to occasionally post developments here from time to time as they arise.
Continue Reading “Plan Aggregation” Update: Find Pooled Plan Providers In E-Fast2; SECURE Act Section 202’s “Group of Plans” Comes to the Forefront