Retirement plan lawyers, both in house and outside counsel, may well want to take note of Bank of New York Mellon’s recently reported troubles related to potentially widespread and fraudulent use of unfair currency exchange rates in their dealings with unsuspecting state and local pension plans. If there is a basis for these charges, and
Year End Business: The Art of the Corporate Resolution; Those 403(b) RMD Amendments
I am, by some serious training and long experience, a corporate lawyer, having been put through the paces by two incredible general counsels: Jack Hunter of Lincoln Financial Group and Scott Campbell of Kellogg Company. Each of these gentleman made quite a study of their attendant Boards and the rules (both formal and informal) related
DC Plans and the Recession Inequities
Many in the industry saw early on, and tried to address, the terrible disruption caused by the change in 403(b) regulations during the recession. In many circumstances, the transition to the new rules made amounts in many 403(b) contracts unavailable at a time when many teachers and employees of not-for-profit organizations (who were among the
The 403(b) 8955 FAQ: Sophistication, Nicely Done
Keeping it simple and sensible is never an easy task. As a matter of fact, it is extremely difficult to do, particularly when dealing with something as complex as 403(b) regulations. This is why the IRS’s recent release of its 8955 FAQ’s is so striking: in merely two FAQs, IRS and Treasury provided answers that
ERISA Accounts, Part 2
I’ve had a number of responses to my “Timing and the ERISA Account” blog of last week: this topic seems to be front and center with a number of folks right now. Given the sorts of comments I received, I thought I’d expand a bit from that initial, almost cryptic, blog.
“ERISA Accounts,” or “Fee Recapture
Timing and the ERISA Account
It is not often that one gets to hearken back to the very basic law governing 401(a) plans in addressing an issue, but one of the key questions related to the funding of “ERISA Accounts” provides just such an opportunity. One of the most fascinating of the issues related to these accounts (and there are a
Dodd-Frank and the Annuity Fiduciary Standard
Section 939A of Dodd Frank has a very interesting mandate to federal agencies. It requires federal agencies to review their regulations to determine those which require the use of a credit-agency rating in assessing the credit-worthiness of a security and:
“Each such agency shall modify any such regulations identified by the review conducted under subsection
403(b) Plan Documents: “Planning to Amend,” by Linda Segal Blinn
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The Uncommon MEP
Since we first published a MEP whitepaper with TAG Resources a few months back, where TAG coined the term “Open MEP,” much has happened in this marketplace. Most recently, Drinker Biddle published its own (very good) whitepaper on this topic, very much affirming, and going into closer detail on, many of the broad points we
Zen and The Art of Annuity Regulation, Part 1
In Robert Pirsig’s novel, Zen and The Art of Motorcycle Maintenance, the protagonist was a technical manual writer who went insane. The author commented that the book had little relation to either Zen or motorcycle maintenance. But at the core of the story was the minutiae which eventually drove him mad: to any explanation he could write in any of his manuals, he could always ask the question “why?”
Similarly, on the topic of annuity regulation in DC plans, minutiae is central to the theme. It is in dwelling there, though, is where I believe that many of the solutions to the public policy challenges raised by this topic can be found. I just hope it doesn’t drive us mad as well…
It may seem to some a bit silly to compare annuity regulation to a classic, modern philosophical tome, but its really not. The answer to the questions at which the regulators will arrive will affect an awful lot of people and businesses for an awfully long time. (For my view on how technical regs reflect important policy, I invite you to read one of my personal favorites-but least read-blogs, Erisa and Mom, which I try to publish every Mother’s Day). You see, what regulators are really doing are attempting to find the right balance between availability, flexibility and securing critical participant retirement rights. As automotive engineers have told me on more than one occasion (yes, I am Imported From Detroit-and have a T-shirt to prove it), every design decision is a trade-off. So for example, you can’t have the safest and most cost/fuel efficient car at the same time (imagine the Bradley fighting vehicle as the family minivan. Beside lousy fuel mileage and high operating costs, it would be hell on the road systems. But it sure would be safe in a collision).
There are a few guiding principles I would think (with the fear of being far too presumptuous, as reg writing is a skill with which I have NO experience) might apply in delving into the minutiae for solutions. For example, it may be helpful to follow Asimov’s Minimum Necessary Change concept. It could also be useful to keep in mind that not all annuity based guarantees are created equal (for example, does high water mark protection deserve the same policy treatment as guaranteed lifetime income?), nor are all annuity types suitable for retirement plans. At the same time, it is important to preserve the ability of the market to continue to develop innovative (and suitable) retirement products, and for plans to readily adopt them. Finally, if at all possible, keep it as simple as possible-as the DOL has recently been accomplishing with a measure of success.
So, with all that, here are some thoughts what some annuity regulations could look like.
Continue Reading Zen and The Art of Annuity Regulation, Part 1