This where the PBGC, the NIRS and Pension Rights Center (which also presented at the conference) have it all wrong: the traditional DB plan does not, and will not, meet these laudable goal if you rely upon the private employer for the financial wherewithal to insure that the funding will be adequate, and that plan sponsor’s own corporate financial needs have not caused some sort dangerous “creative accounting” in the management of these plans which we have all too often seen in the past.
Continue Reading Continuing the DB Demise Discussion
Using the Third Condition of DOL’s FAB 2009-2 to Manage 403(b) Audit Expense
The real key to making the FAB work for the employer in keeping auditing costs down is in the sensible application of the FAB’s 3rd condition. I would suggest that applying it consists of two parts. First, use a reasonable effort to determine and find contracts that were related to the plan at some time in the past and, secondly, making a reasonable effort to determine whether or not the rights under those contracts are “legally enforceable” by the individual.
Continue Reading Using the Third Condition of DOL’s FAB 2009-2 to Manage 403(b) Audit Expense
DOL Considering 403(b) FAQ
The DOL is about to take the next step, and is considering issue a 403(b) “Frequently Asked Questions” as they have done twice for the Schedule C. The FAQ is to address critical year end 403(b) issues related to reporting and Title 1 status.
While applauding the DOL in its continuing efforts, there is a danger related to one particular issue it may be addressing: the question of how few vendors can be offered by a 403(b) plan (which otherwise qualifies under the safe harbor) without triggering Title 1 coverage.
Continue Reading DOL Considering 403(b) FAQ
Private Employer DB Demise Was Inevitable, and Should Not Be Revitalized in Current Form.
The private employer-sponsored defined benefit plan has had a good run of it, supporting two generations well in its goal of providing economic security for retirees. But the last 10 years have seen gradual though substantial decline in the number of employers sponsoring these plans, and in the percentage of employees being covered by these
Managing the ERISA 403(b) Transition
There are still a number of critical tax issues related to the 2007 403(b) regulations that need to be resolved. For example, the IRS needs to clean up the horrible mess created by the ambiguities of Revenue Procedure 2007-71, and it needs to come to terms with the fact that mutual fund custodial accounts should
SEC Chair Warns of Increased Focus On Retirement Market
The SEC’s rules have always had particular applicability to the 403(b) marketplace. But the SEC also has leverage into the 401(k) market, a market which often pays scant attention to the agency. in addition to the SEC’s authority to regulate registered investment products, a participant’s interest in a 401(k) plan is still, legally, a “security” under its jurisdiction. 401(k) plan interests may be exempted from the registration and filing requirements of the ’33 and ’34 Acts, but they ARE NOT exempted from those laws’ anti-fraud provisions. So, the agency has every right to investigate fraudulent activities related to the provision of 401(k) plans to plan participants.
Continue Reading SEC Chair Warns of Increased Focus On Retirement Market
Addressing Fiduciary Concerns in the Purchase of 401(k) Distributed Annuities: Dealing With The Five “I’s”- Part 2, Inflexibility and Inaccessability
Traditional annuities are inflexible. Period. You get the monthly benefit you pay for. They provide a very valuable benefit which should be part of anyone’s retirement planning, but this inflexibility can be scary, as it takes away from the participant the ability to address unexpected contingencies. This fear comes from the second point: the funds used to buy the traditional annuity are gone for good. Other than payments made under a survivor annuity, the traditional annuity doesn’t give the participant any access to funds to pay for contingencies, nor does it typically pay a death benefit. So what’s a fiduciary to do?
Continue Reading Addressing Fiduciary Concerns in the Purchase of 401(k) Distributed Annuities: Dealing With The Five “I’s”- Part 2, Inflexibility and Inaccessability
DOL Shows Its Swagger; Annuities Pick Up Steam
The Swagger
I had the privilege to speak on a 403(b) panel at the recent DOL/ASPPA "DOL Speaks" seminar, with Lisa Alexander and Susan Reese of the DOL. Our own panel went very well, with Susan and Lisa both speaking directly to and recognizing the transition problems related to this new 403(b) world. As Lisa
Pang/Warshawsky vs. GAO: Recent Study Challenges Traditional Thinking About DC Annuities
“GAO Retirement Study” “401(k) Annuities”
Continue Reading Pang/Warshawsky vs. GAO: Recent Study Challenges Traditional Thinking About DC Annuities
2009 Form 5500 Schedules A and C Will Create New Fiduciary Burdens For Plan Sponsors
Retirement plan vendors throughout the industry are engaging in efforts to prepare for the new disclosure requirements for the 2009 Form 5500 schedules, particularly the disclosures related to direct and indirect compensation under Schedule C and the substantial requirements for Schedule A.
I had the pleasure of a couple of informative conversations this week which