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Bob Toth has more than 30 years of experience in employee benefits law. His practice focuses on the design, administration and distribution of financial products and services for retirement plans.

Effective January 1 of this year was the right of participants to an extended period to rollover their defaulted loan amount, if the default arose following unemployment or the termination of a plan. The statue has a fundamental flaw: it confuses the rules related to the taxation of the loan with the distribution rules related to defaulted loans. The practical effect of this confusion is that it is virtually impossible to effectively use.
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The recent uptick in publications from the private sector focusing on lifetime income is now a welcome surprise, complete with studies showing that participants are now wanting elements of guaranteed income ad part of their retirement arrangements. But lifetime income can be a daunting concept for the non-actuarial/non-insurance professional whose practice is focused on defined contribution arrangements. Where does one even start in trying to figure this out, and whether or not to include it your clients DC plans or IRAs?
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One of the continuing confusions in how 401(a) rules apply to 403(b) plan  involves the reporting rules related to the correction and reporting on the 5500 of one of the most common errors in any elective deferral plan: the late deposit of those deferrals into the plan.  Neither non-ERISA or ERISA 403(b) will ever file a Form 5330. Ever. Even when the VFCP program is being used to correct the late deposit.

Adding to the confusion is that the Form 5500 instructions do not differentiate between 403(b) plans and 401(a) plans. It simply states that  all “defined contribution” plans need to file the Form 5330 for late deposits, and pay the penalty tax.
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The Tax Cuts and Jobs Act’s participant loan changes (which delays the account offset on loan defaults related to unemployment or plan termination) triggers something we would all rather not look at:  the “uncomfortable” manner in which ERISA’s fiduciary rules apply to loans and their administration.These changes should cause plan sponsors and recordkeepers to consider new choices about their handling of loan defaults, something they haven’t had to do in nearly 18 years. This matters because changing a plan’s loan rules is not a minor technical act. Loans are investments subject to the same ERISA prudence rules as any other plan investment, and changes to loan procedures impacts the investment.
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There is a little noticed change in the IRS’s recent update of Publication 571 (which is the IRS’s 403(b) technical guide). In a highlighted box on page 4 is the following, under how the limits on “annual additions”-otherwise known as the 415 limits- apply: “More than one 403(b) account. If you contributed to more than one 403(b) account, you must combine the contributions made to all 403(b) accounts maintained by your employer. If you participate in more than one 403(b) plan maintained by different employers, you don’t need to aggregate for annual addition limits.” This innocuous seeming statement is actually pretty outstanding, finalizing a quiet morphing over a generation of the way the IRS applies a regulation in a way we rarely see.
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A 403(b) MEP is really complicated when you get down to it because-like anything 403(b), it seems-of the devil that exists in the details.  For example, besides  having to deal with the DOL 2012 Advisory Opinion on all MEPs; and  the fact that the Tax Code Section governing 401(a) MEPS does not apply to 403(b) plans (which means you can never really have a 403(b) MEP for tax purposes); and that the ERISA Section governing all ERISA MEPs (including 403(b) MEPs) requires compliance with that Tax Code Section which doesn’t cover 403(b) MEPS; you still have to deal with the complications of dealing with those legacy contracts of the various participating employers in the MEP. Then there is the issue of dealing with those combination of ERISA and non-ERISA 403(b) plans commonly sponsored by a 403(b)participating employer. These require use of traditional state law agency rules to make them work.
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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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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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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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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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