Annuitization from DC plans suffers from the lack of clarity on a number of key technical rules, which need to be resolved before such annuities can be widely implemented. The IRS has taken a major step in its issuance of PLR200951039, a complex PLR which- for the first time-defines what an annuity really is
DOL’s Fiduciary Proxy Voting Rules Makes Upcoming Proxy Season “Dicey” for Plan Fiduciaries
Its going to be a demanding year for fiduciaries of retirement plans, particularly of those in the small and mid-market which are not particularly accustomed to paying close attention to them. I have blogged earlier on the increased fiduciary demands related to the new data provided to fiduciaries under the 2008 Form 5500 Schedule C
The 403(b) Prohibited Transaction
I had posted in an earlier blog some of the technical differences between 401(k) plans and 403(b) plans. One of the more striking differences I did NOT mention was that of the Prohibited Transaction.
Assume a successful insurance agent sits on the Board of a mid-sized tax exempt organization with 250 employees, a Board which
The Trouble with 403(b) Cash; the 403(b) SAR; and Other 403(b) Stocking Stuffers
403(b) devotees often speak of the continuing, and significant, number of technical differences between 403(b) and 401(k) plans. The following lists a few of the differences not given a lot of attention, a sort of holiday stocking stuffer:
Handling 403(b) cash. Handling cash is much more challenging under a 403(b) plan than under
Continuing the DB Demise Discussion
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.
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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.
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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.
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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.
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