Two issues need to be addressed with a 403(b) plan’s purchase of the collective trust interests of the sort that are typically sold to 401(k) plans: Code Section 403(b) only permits investments in mutual funds and annuity contracts. The CIT interests purchased by 401(a) plans, however, are typically “unitized” non-mutual fund interests. Even if one could overcome the legal and logistical challenges to making them work for the IRS 403(b) rules, there is a serious securities law problem.
Continue Reading A 403(b) Collective Trust? A Note of Caution…..
DOL Provides Key ERISA Guidance on QLAC/DC Lifetime Income
The DOL just published its first serious guidance on supporting lifetime income with the publication of FAB 2015-2, guidance which is very necessary for the success of the Qualified Longevity Annuity Contracts, as well as DC lifetime income income. The FAB is an initial, but substantial, step in addressing one of the most pressing of the ERISA issues related to providing lifetime income from defined contribution plans.
Continue Reading DOL Provides Key ERISA Guidance on QLAC/DC Lifetime Income
Fiduciary Liability for 403(b) Non-ERISA Plans?
In what appears to be one of the first reported appeals court cases involving school district liability under state law related to a wrongfully administered 403(b) plan a Wisconsin court found was that an action alleging a failure to exercise ordinary care in the administration of a 403(b) plan, if proven, could be a fiduciary breach under state law. This breach then may entitle the participants relief in state court.
Continue Reading Fiduciary Liability for 403(b) Non-ERISA Plans?
The 403(b) QLAC
The QLAC seems to be in the 403(b) “sweet spot”, considering that 403(b) annuities were originally designed to provide lifetime income in the first place. However, as with all things 403(b), however, there are a few unusual twists when trying to put a QLAC in a 403(b) arrangement. Here are a few of the things to consider
Continue Reading The 403(b) QLAC
ERISA and Mom
Our “Annual Mother’s Day” posting, our attempt to put a very personal twist to the things we do, hopefully putting a larger and hopeful light on many of the mundane tasks that make up much of our business.
Continue Reading ERISA and Mom
DOL’s Proposed Fiduciary Rules May Unexpectedly Open Lifetime Income Door, If…….
With regard to the DOL’s fiduciary proposed regulations, There is much to like in the new rules; some troubling things; and, perhaps, a mistake or two which will be all flushed out in the coming months. There are a couple of technical points which are worthwhile sharing because they represent what we can expect of the “unexpected” as we work through the changes’ impact. These include the impact on lifetime income , and the application of the PT rules on the purchase of annuities-including QLACs.
Continue Reading DOL’s Proposed Fiduciary Rules May Unexpectedly Open Lifetime Income Door, If…….
Lifetime Income: Using the Statute Of Limitations to Minimize Insurer Insolvency Risk
In Lifetime Income, ERISA’s statute of limitations may serve to provide the basis for a workable standard when dealing with the long term financial risk posed to fiduciary by insurer insolvency following the purchase of an annuity.
Continue Reading Lifetime Income: Using the Statute Of Limitations to Minimize Insurer Insolvency Risk
State Auto-IRAs and Federal Law: “We’ve already stepped on that rake…..”
Chuck Thulin, a fine ERISA attorney from Seattle, WA, chaired the DOL practitioner panel at the latest (and very successful) annual meeting of the 5 regional TE/GE Councils, in Baltimore. When I commented that we’d “been there, done that” when discussing some obscure rule, he told me of reading of the Russian language version of
Dealing with “Small Amount” 403(b) Annuities of Former Participants, and Other Matters
It is going on 8 years now since since the IRS fundamentally changed the 403(b) world with the issuance of regs which were designed to make 403(b) plans more like 401(k) plans, and to formally impose more employer accountability on the operations of those plans. Though those regs brought very valuable change in many ways,
MEP Reform: Is it Necessary? A Rebuke
There is a serious, and important, debate occurring whether, and to what extent, should there be MEP reform following the DOL’s restrictive advisory opinion on the matter in 2012. There appears to be bi-partisan support for the changes proposed in Senator Hatch’s SAFE Act, which makes wholesale changes to the current MEP rules, and will