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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.

A common misunderstanding between 408(b)(2) and 404(a)(5) is the nature of the requirements: 408(b)(2) requires the service provider’s contract with the plan’s fiduciary contain certain, specific terms. It does NOT require that those fees be disclosed to participants, nor does it require annual disclosure. It is simply a business matter between the fiduciary and the service provider. The only time a follow-up “disclosure” is ever required is if there is a material change in the contract’s terms (including the service fee), and then that disclosure is only required to be made to the plan fiduciary.
Continue Reading The Use, and Impact, of 408(b)(2) and 404(a)-5 Are Often Confused

With few notable exceptions, the statutory and regulatory references we need in the administration of plans are at our fingertips from a number of easily accessible internet resources, a great deal of them actually available for free. One of the most annoying of those “notable exceptions” is found under Code Section 411(e) (6) of the Code, the vesting standards which apply to governmental and church 401(a) plans. Section 411(e)(2) states, in pertinent part, that these plans “shall be treated as meeting the requirements of this section, for purposes of section 401(a), if such plan meets the vesting requirements resulting from the application of sections 401(a)(4) and 401(a)(7) as in effect on September 1, 1974.” You can find those here.


Continue Reading The Hard-To-Find “Pre-ERISA Vesting Rules” for Church and Governmental Plans

There is no “vesting on partial termination” for 403(b) plans, and no need to track the “20%” rule for vesting on partial terminations for a 403(b) plan. That rule simply does not apply. This his true for both ERISA and non-ERISA 403(b) plans.
As a practice note, if you have mistakenly applied that “partial termination” vesting rule to a 403(b) plan, you may have an operational error.
Continue Reading Are There “Partial Terminations” of 403(b) Plans ?

The new PEP rules do not add any new services to the marketplace. Rather, PEPs merely reorganize existing services to be provided in a different format, with the one exception is that it now permits unrelated employers to be able to file a consolidated Form 5500. The Department’s issuance of guidance as to the allocation of these different authorities (consistent with in ERISA Section 3(44)(C) which requires the Department to ‘‘(i) to identify the administrative duties and other actions required to be performed by a pooled plan provider…”) is a required condition precedent to the determination of whether any prohibited transaction exemptive relief is necessary in the operation of a PEP.
Continue Reading PEP Comment to DOL Outlines the Structure of PEPs

The ERISA marketplace is complex, with a plethora of different sorts of arrangements which will be affected in a variety of different ways by the new Fiduciary Prohibited Transaction Exemption. In general, however, I would be little surprised if it ending up being that not many parties will have the need to take advantage of this new exemption.
Continue Reading The DOL’s Fiduciary Rule Prohibited Transaction Exemption May Only Be Needed In Limited Plan Circumstances

Normally, all of the players in any ERISA plan’s life cycle operates under any number of these well-established PTEs. However, in that the PEP is a new sort of arrangement, it is not entirely clear that these existing PTEs will be sufficient to pay all of the PEP players. To address this crucial issue, the DOL has issued a Request for Information on June 18 to gather information on what further, if any, PTE relief will be needed to make the PEP work.There are two noteworthy developments related to these efforts, s the ARA/ASPPA letter to EBSA requesting PTE relief for PEP operatives and, is the letter Congressman Neal wrote to the EBSA.
Continue Reading Rep. Neal and ARA/ASPPA Differently Address Fundamental Issues Underlying the DOL’s Pooled Employer Plan “Request For Information”

What I thought may be useful to discuss is what happens when an employer chooses NOT to offer the CRD relief under the CARES Act. A surprising number of employers have taken this approach. But the employer’s decision is not the final word on this matter, because the statute grants participants specific tax benefits regardless of the sponsor’s choice. So what does this actually mean for participants?
Continue Reading What Happens To Participants’ Covid-Related Distributions When An Employer Chooses Not To Treat Them As Such?

The typical LOSAP will permit a withdrawal for “unforeseen emergencies.” Yet the new CARES Act distribution rules provides no relief for these distributions. The CARES Act does not allow the tax on LOSAP distributions to be spread over three years, like it does for the tax on distributions from other kinds of retirement plans. There is also no ability for the firefighter to repay the amount of those distributions back to the plan, as the CARES Act allows to be done for other types of retirement plans.
Continue Reading Impact of CARES on Volunteer First Responder’s 457(e)(11) LOSAP Plans

Here’s where the problem seems to come in under the determination of a participants COVID status:  there is a bit of ambiguity in the third condition of eligibility: nowhere does it specifically mention the impact of the loss of employment or reduction in hours o of the spouse of the participant in the calculation of what are the causes of the participant’s adverse financial circumstances.
Continue Reading The Fiduciary Angle to the Participant COVID Certification Because of Spousal Employment Loss

Robert Richter, now of ARA and chief editor of the EOB, has weighed ion my posting on the suspension of the due date of loan repayment. I had posited that it is effectively is the participants choice, as the specific language of the statute declares that  “such due date shall be delayed for 1 year” -when combined with the need of the participant to certify COVID stays-effectively means an employee has the right to continue payments or not. I also suggested that the language of the statute means that the employer has no authority to impose a due date. He pointed out that the IRS may end up not agreeing, if past is prescient.
Continue Reading CARE Act Suspension of Loan Repayments: Is it the Employer’s or the Participant’s Choice?