There is a growing public policy concern regarding the ability of workers in the gig economy to access the ability to accrue retirement savings,. Though IRA’s and SEPs are, of course, available, they are nowhere near as effective as worksite retirement plans. Troy Tisue’s testimony at the Senate HELP Committee’s hearing on retirement plans for the gig economy addresses how Open Meps® may help address this issue. In addition to his written testimony, Troy also discussed at the hearing on how there are ways in which aggregation programs-which are currently available- can be used to address this need.
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Will the Association Health Plans Regs Open the Door for “Association MEPs” (“AMEPS”)?
The DOL’s proposed regulation permitting Association Health Plans which cover unrelated employers is likely to have a significant impact on the market’s ability to offer Multiple Employer retirement plans to unrelated employers. This is because the regulation permits AHPs through the regulatory modification of ERISA’s definition of the term “employer” under Section 3(5).
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Spousal Consent/J&S Issues Under 403(b) Plans May Trigger Document Conflicts
The application of the Spousal Consent and Joint and Survivor Annuity rules is one such issue which we need to consider. In the 401(a) space, dealing with this issue is pretty straightforward. The rules apply uniformly to all 401(a) plans through 401(a)(11) and 417, which is well coordinated with ERISA’s requirements under Section 205. As long as the default form of benefit under the plan is not a J&S benefit; and the spouse is entitled to the survivor benefits upon the participant’s death unless the spouse consents otherwise; the rules are met. If, however, the plan is a money purchase plan, or holds money transferred in from a money purchase plan or a defined benefit plan, or the plan’s default distribution is an annuity payment, the spouse must consent to a lump sum distribution-or even to a loan. Many will remember the efforts we went through years ago cleansing those annuity payment requirements from plans and products, just so no spousal consent would be required for lump sum distributions or loans. Now, though, we have to deal with documenting these rules as they apply to 403(b) plans. Its not so simple
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Is a Change in MEP Rules Imminent?
The DOL’s advisory Opinion on MEPs in 2012 was specifically premised on the DOL’s interpretation of the definition of “employer,” for health plan (MEWA) purposes. The DOL ‘s position was that it had no authority to redefine their historical definition of employer for MEWA purposes merely for retirement plan purposes, that they were bound by the statute to apply the same “employer” definition to both health plans and retirement plans. Does this mean that the new proposed definition of “employer” will, necessarily, by operation of statute, be expanded for retirement plan purposes as well?
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Mitigating Factors in Calculating a 403(b) Plan’s Maximum Payment Amount under CAP: “Inside Build-Up,” Partial Failures, and Non-Deductibility
But it’s interesting to see the effect on a 403(b) plan going through the edit CAP process: There is no tax exempt trust here that is enjoying 501(a) tax exempt treatment; the employer is a tax-exempt entity; and, though
the individual will suffer taxation, the amount of which should be included in the MPA, there are a couple of important factors which come into play here.
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403(b) Document Delays; the “Once In Always In” Rule; and the “Effective Date Addendum”
One of the roots of the problem is what the IRS generally refers to as the “once in, always in” rule of 403(b)’s “universal availability” requirement. “Once in, always in” refers to the IRS position that once an employee has become eligible to make elective deferrals into the plan by reaching the 1000-hour benchmark in one year, that employee will remain eligible to make elective deferrals in future years-even in years where that employee does not complete 1000 hours of service. That person can only lose that ability to defer if they become part of one of those limited categories of employees which can be excluded (such as certain students).
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Variable “Pooled Separate Accounts” Have the Ability to Competitively Provide Scale
One of the most unique, flexible, and underutilized investment platforms in the 401(a) marketplace is the insurance company variable “pooled separate account” (the “PSA”). It may be the least understood investment platform, being buried in group annuity contracts….Why they are worth a look is because of the current discussions on MEPs and their alternatives, and the growing popularity of collective trusts. (They) can give plans access to well-priced investments, along with access to large numbers of unrelated funds and fund managers, which otherwise would not be available to them.
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IRS’s New 401(k) Pre-Approved Document Rules Suggests a Path To Address 403(b) Document Challenges
One of the more difficult rules that the IRS has imposed on the 403(b) market in recent years is the complete ban on issuing determination letters on individually designed 403(b) plan documents, under any circumstance. But buried in Rev Proc 2017-41 is something we have been looking for in the 403(b) space, which actually would help alleviate some of the concerns document drafters have with these long-standing plans.
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DOL Advisory Opinion Demonstrates Structure for Bundling Plans
This Opinion demonstrates that the scale we seek is not exclusively the purview of the MEP. Vendors have the ability to safely “bundle administrative services” to the same effect of a MEP, provided that they have enough scale on their own to negotiate the sort of investment pricing and expert services which the market seeks.
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The SCOTUS’s Church Plan Ruling in Stapleton Affirms Both the QCCO’s and Non-QCCO’s Ability to Maintain ERISA Exempt 403(b) Plans
There are three kinds of 403(b) church plans: the plans of “steeple church”; those of the “Qualified Church Controlled Organizations” (or ”QCCO”, of which the K-12 parochial schools of a church are the best example); and of the “Non-Qualified Church Controlled Organization” (or “Non-QCCO”, of which church hospitals and universities are among the most common