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Perspectives on Employee Benefits
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When Electronic Disclosure Isn’t Enough Under ERISA
ERISA’s disclosure rules require plan administrators to inform participants of circumstances that may cause a loss of benefits. But just what counts as a disclosure? This question was recently litigated in the U.S. District Court for the Eastern District of New York. The case involved the denial of a payout from a group life insurance policy after an employee died without completing a waiver of premium request.
IRS offers guidance on taxation of phased retirement payments
Phased retirement has become an increasingly popular trend lately. Along with its increased use, however, a number of questions have arisen. The IRS recently has issued guidance for determining the taxable portion of payments made to an employee during phased retirement. The guidance explains whether the payments are “received as an annuity” under Code Sec. 72 and how to determine the taxable portion of payments that are not received as an annuity.
Fiduciary “Carve-Outs”
The DOL provides exemptions to the above broad fiduciary rule through “carve-outs.” For example, a person won’t be considered a fiduciary for providing the following investment advice:...
IRS Checklist Offers a Convenient Compliance Self-Check Up
As a plan sponsor, you have a fiduciary responsibility to ensure that your qualified plan complies with all current employee benefits laws and regulations and operates within the plan’s current provisions. Do you know if your plan is current? If not, it’s time for an annual self-checkup.
401(K) and Retirement Plan Limits for 2016 Tax Year
On October 21, 2015, the Internal Revenue Service announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2016. In general, the pension plan limitations will not change for 2016 because the increase in the cost-of-living index did not meet the statutory thresholds that trigger their adjustment. However, other limitations will change because the increase in the index did meet the statutory thresholds.
Determination Letter Limbo
Sponsors of individually designed qualified retirement plans will need to adjust to the idea of operating without the IRS’s official blessings when changing the plan document to comply with new laws and regulations. The changes won’t affect plan sponsors who have adopted standardized preapproved plans, as many small plan sponsors do. Earlier this year, the IRS laid out its plans to scale back its plan determination letter program.
Tibble Case Puts Focus on Fiduciaries’ Ongoing Duties
Earlier in 2015, the U.S. Supreme Court clarified the ongoing duty of retirement plan fiduciaries to monitor plan investments. Tibble v. Edison International has been percolating through the federal court system since 2007. The case focuses on the timing of lawsuits against plan fiduciaries for breaches of their fiduciary duty.
Give Employees More Bang for their Buck
According to a Plan Sponsor Council of America survey, only 46% of defined contribution plans automatically enroll participants. The most common default deferral rate for those that do is 3%. Are you telling your employees that they can afford to retire by saving just 3% of their salary each year? Some participants may think so.