Retirement Plans Archives - Page 28 of 70

DOL Official Says Office Is Investigating Large Defined Benefit Plans Regarding Locating and Paying Terminated Vested Participants

by Jeffrey Holdvogt | Apr 14, 2016 | Labor, Retirement Plans

Recent comments from an official with the Department of Labor (DOL) indicate that the DOL’s Employee Benefits Security Administration (EBSA) has begun investigating large defined benefit plans to review how plan administrators are keeping track of benefits owed to terminated vested participants and if they are really paying participants like they should be. According to the February 2, 2015 BNA Pension & Benefits Reporter, Elizabeth Hopkins, counsel for appellate and special litigation for the DOL’s Office of the Solicitor, Plan Benefits Security Division, stated at a pension conference that EBSA is interested in monitoring whether plan administrators are following their own procedures to locate and pay out terminated vested participants. In particular, EBSA is investigating how plan administrators locate and pay out terminated vested participants over the age of 70 ½ who are owed required minimum distributions.

Defined benefit pension plans must provide that they will distribute benefits beginning no later than the required beginning date, which for most plan participants means April 1 of the calendar year following the later of (i) the calendar year in which a participant turns 70 ½ or (2) the calendar year in which the participant retires. As we noted in our recent article on the “Top IRS and DOL Audit Issues for Retirement Plans,” plan sponsors have a fiduciary duty to try to locate missing participants, to contact terminated vested participants, and to begin distributing benefits within required timeframes. Failure to pay required minimum distributions after a participant turns 70 ½ is a plan qualification error, and participants who miss required distributions may be subject to a 50 percent excise tax. The DOL has also indicated that it may impose personal liability on plan fiduciaries for any tax consequences owed to their employees. For all of these reasons, it is crucial that plan sponsors ensure that proper procedures are in place, and that plan procedures are being followed, to locate and contact terminated vested participants.

EEOC Files Lawsuits Against Employers for Sex Discrimination Under Title VII

by Brian Tiemann and Todd Solomon | Apr 12, 2016 | Employment, Health and Welfare Plans, Retirement Plans

For the first time, the U.S. Equal Employment Opportunity Commission (EEOC) is suing private employers on behalf of employees alleging sexual orientation discrimination. On March 1, 2016, the EEOC issued a press release announcing it has filed its first two sexual orientation lawsuits alleging violations of Title VII of the Civil Rights Act of 1964 (Title VII).

Read the full article.

View From McDermott: Is Tibble the End of Revenue Sharing?

by Lisa Loesel and Mary K. Samsa | Mar 30, 2016 | Fiduciary and Investment Issues, Retirement Plans

Ten short years ago, revenue sharing seemingly presented a “win win” opportunity for third-party administrators (TPAs) and defined contribution plan sponsors. TPAs generally retained all revenue sharing payments received from plans’ investment fund companies in exchange for administrative services provided to the investment funds. In recognition of the revenue sharing received from the investment fund companies, TPAs often provided “free” plan administrative services to plan sponsors. Starting in the mid-2000s, however, more plan sponsors began to question the amount of money received by the TPAs under this arrangement, and plaintiffs’ lawyers and the DOL began to monitor and scrutinize revenue sharing.

This article summarizes the evolution of revenue sharing over the past ten years and examines its future through the lens of the recent U.S. Supreme Court decision in Tibble v. Edison and the subsequent uptick in 401(k) fee litigation.

Read the full article.

IRS Expands Ability of Safe Harbor Plan Sponsors to Make Mid-Year Changes

by McDermott Will & Emery, Jeffrey Holdvogt and Stephen Pavlick | Mar 15, 2016 | Employee Benefits, Employment, Retirement Plans

The IRS recently issued guidance providing safe harbor 401(k) plan sponsors with increased flexibility to make mid-year plan changes. Notice 2016-16 sets forth new rules for when and how safe harbor plan sponsors may amend their plans to make mid-year changes, a process which traditionally has been subject to significant restrictions.

Read the full article.

IRS Announces Additional Changes in Determination Letter Program

by Alan D. Nesburg, PC and Maggie McTigue | Feb 9, 2016 | Employee Benefits, Employment, Retirement Plans

The Internal Revenue Service (the IRS) recently issued Notice 2016-03 (the Notice) addressing three topics and expanding on its earlier announcement of major changes in the determination letter program for individually designed retirement plans. The Notice will likely be followed by additional guidance from the IRS, addressing features of the determination letter program.

Read the full article.

Supreme Court Issues Further Clarification on Equitable Relief Remedies Available Under ERISA

by McDermott Will & Emery | Jan 28, 2016 | Health and Welfare Plans, Retirement Plans

The Supreme Court of the United States’ recent ruling in Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan holds that an ERISA plan cannot enforce an equitable lien against a participant’s general assets when the full amount of the settlement is spent on non-traceable items. This decision should encourage plan fiduciaries to take action on reimbursement and subrogation rights more quickly after learning of a third-party recovery, in order to preserve their right to assert an equitable remedy against an identifiable, traceable fund.

Read the full article.

IRS Announces Reduced VCP Compliance Fees

by Jacob Mattinson | Jan 26, 2016 | Employee Benefits, Employment, Retirement Plans

The Internal Revenue Service (IRS) has announced new general compliance fees for voluntary correction program (VCP) submissions under the Employee Plans Compliance Resolution System (EPCRS), effective February 1, 2016.

Read the full article.

Increase in PBGC Premiums Effective for 2017 and Later Years

by Stephen Pavlick and McDermott Will & Emery | Dec 3, 2015 | Employee Benefits, Fiduciary and Investment Issues, Retirement Plans

President Barack Obama signed into law the Bipartisan Budget Act of 2015 (the Budget Act), which raised Pension Benefit Guaranty Corporation (PBGC) premium rates beginning in 2017.

Background

Single-employer defined benefit pension plans must pay annual premiums to the Pension Benefit Guaranty Corporation (PBGC), the U.S. government agency that insures these plans. All single-employer defined benefit pension plans pay an annual fixed premium. Those plans with unfunded vested benefits at year-end must pay an additional variable rate premium. The due date for payment of these premiums has generally been the fifteenth day of the tenth full calendar month of the premium payment year.

In 2016, the fixed premium is set at $64 per participant. The variable rate premium is based on the amount of potential liability that the plan creates for the PBGC. Calculated on a per-participant basis, the variable rate premium is a specified dollar amount for each $1000 of unfunded vested benefits under the plan as of the end of the preceding year, subject to a $500 per-participant cap. For 2016, it will equal $30 per $1000 of underfunding, subject to the cap. Both premiums are indexed for inflation.

Changes to PBGC Rates

The Budget Act makes the following changes:

Single-employer fixed premiums will be raised to $69 per participant for plan years beginning in 2017, $74 per participant for plan years beginning in 2018 and $80 per participant for plan years beginning in 2019. In 2020, the fixed premium will be re-indexed for inflation.
Single-employer variable rate premiums, which will continue to be adjusted for inflation, will increase by an additional $3 for plan years beginning in 2017 (from $30 to $33 per $1000 of underfunding, subject to indexing); by an additional $4 for plan years beginning in 2018 (from $33 to $37 per $1000 of underfunding, subject to indexing); and by an additional $4 for plan years beginning in 2019 (from $37 to $41 per $1000 of underfunding, subject to indexing). There are no scheduled increases (other than indexing) for years after 2019.
To include the 2025 premium revenue within the 10-year budget window, the premium due date for plan years beginning in 2025 will be the fifteenth day of the ninth calendar month beginning on or after the first day of the premium payment year.

For more information regarding the PBGC premium increases described above or the other employee benefits provisions included in the Budget Act, please contact your regular McDermott lawyer or one of the authors.

Reportable Event Changes for Pension Plans Effective January 1, 2016

by McDermott Will & Emery, Diane Morgenthaler and Patrick Ryan | Dec 2, 2015 | Fiduciary and Investment Issues, Retirement Plans

Effective January 1, 2016, the Pension Benefit Guaranty Corporation (PBGC) altered the reportable event rules for defined benefit pension plans. Although new PBGC regulations make electronic filing of all reportable event notices mandatory, the regulations also substantially reduce the reporting requirements for pension plan administrators, sponsors and contributing employers.

Read the full article.

DOL’s New Disability Claim Rules Add to a Plan Administrator’s Duties under Welfare and Retirement Benefit Plans

by McDermott Will & Emery | Nov 30, 2015 | Benefit Controversies, Employee Benefits, Health and Welfare Plans, Labor, Retirement Plans

Now, faced with an aging baby-boomer generation and increased costs related to disability litigation, the U.S. Department of Labor’s Employee Benefit Security Administration (DOL) has proposed new rules that would revise and strengthen the current rules for claims adjudication of disability claims under welfare and retirement plans.

Read the full article.

BLOG EDITORS

STAY CONNECTED

TOPICS

ARCHIVES

RECENT POSTS