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
Testing of the MEP Waters
In blogging, I don’t typically write about informal conversations I have had with anyone, including government staff, friends or colleagues, without first discussing it with them. I fear that otherwise I would indeed lead a lonely life, as who would ever talk with me if there was a chance that conversation would end up on
IRS Extends 8955-SSA Deadline
Important Update to last blog posting. On June 21, IRS announced the extension of the 8955-SSA deadline to January 17, 2011, for which no Form 58 extension will need to be filed. The announcement is here.
403(b), 8955-SSA and 408(b)2
Important Update. On June 21, IRS announced the extension of the 8955-SSA deadline to January 17, 2011, for which no Form 58 extension will need to be filed. The announcement is here
The challenges continue for 403(b) plans, as the IRS and DOL continue to implement their plan level rules in the 403(b) space.
Healthcare’s 403(b) Aggregation Hangover
There are three key employer groups which utilize 403(b) plans: K-12; colleges and universities; and non-profit healthcare systems. Of the three, its is healthcare that seems to be most impacted by the new aggregation rules introduced with the 2007 403(b) regulations.
Not-for-profit hospital systems are typically corporations organized under the non-profit corporation rules of the
Securities Rules for Retirement Plans
A few weeks ago, I blogged on the important role that the Securities Compliance Officer may play in 408(b)(2) compliance. I touched on some of the securities rules which apply to retirement plans outside of the executive compensation context. Attached is a more htorough explanation of those rules, which can hopefully be useful as we
ERISA and Mom
T his has become my "annual Mother’s Day" posting, which hopefully helps describe the importance of what we do:
ERISA wonks such as ourselves tend to get lost in the press of details which seem to flow non-stop from our regulators and legislators in D.C. It is sometimes helpful to step back and see
New IRS Review of Higher Ed’s 403(b) Plans: An Expensive and Serious Matter
The IRS’s Employer Plans Compliance Unit is in the process of issuing a 21 question questionnaire, Form 866a, to a sampling of colleges and universities, aimed at testing whether or not there is compliance with 403(b)’s "universal eligibility rule."
This inquiry is different than the 401(k) questionnaire that EPCU issued a while back, and
The Flushing Effect of the 403(b) Connection Between 408(b)(2), Participant Disclosures and Plan Audits
I would think that it is a basic law of physics that, whenever you attempt to apply a number of different and complicated principles to a single object, that the consequences on that object will be hard to predict, or even readily ascertained.
So it is with a potential impact 408(b)(2) may have on many