News

"[A] federal judge certified a class of more than 1,700 participants and beneficiaries in two of CITGO Petroleum Corporation's pension plans.... The lawsuit against CITGO alleges that the Houston-based gas and energy giant violated [ERISA] by failing to properly calculate joint and survivor annuity ('JSA') benefits for retired employees and imposing a 'marriage penalty' that reduced their monthly pension payments." [ Urlaub v. Citgo Petroleum Corp. , No. 21-4133 (N.D. Ill. May 16, 2024)]

"Before these regulatory updates , Chapter 7 bankruptcy trustees were ineligible to use the Abandoned Plan Program, despite being responsible for administering retirement plan functions on behalf of bankrupt entities ... Using the program's streamlined process, these trustees can now reduce the time and resources needed to wind up a bankrupt company's retirement plan, the department added."

"The DOL proposes to improve the Abandoned Plans Program by expanding coverage to ERISA plans affected by Chapter 7 bankruptcy  ... The rule also makes other changes, including modifying the Special Terminal Report for Abandoned Plans (STRAP) that qualified termination administrators (QTAs) file with the DOL, and will make an optional online method available for filing the STRAP and other notices."

"[1] Requirement to timely file an Annual Report with the [DOL] ... [2] Use of forfeitures in 401(k) plans ... [3] Expected pension de-risking report ... [4] Adequate consideration rule ... [5] Locating lost participants."

"[I]ndividuals and businesses in Ohio that were affected by tornadoes that began on March 14, 2024 ... now have until Sept. 3, 2024, to file various federal individual and business tax returns and make tax payments.... [I]ndividuals and households that reside or have a business in Auglaize, Crawford, Darke, Delaware, Hancock, Licking, Logan, Mercer, Miami, Richland and Union counties qualify for tax relief."

"[I]ndividuals and businesses in Nebraska that were affected by severe storms, straight-line winds, and tornadoes that began on April 25, 2024 ... now have until September 3, 2024, to file various federal individual and business tax returns and make tax payments.... [I]ndividuals and households that reside or have a business in Douglas and Washington counties qualify for tax relief."

131 pages. "This rulemaking amends the Abandoned Plan Program regulations that provide streamlined procedures for the termination of, and distribution of benefits from, individual account pension plans that have been abandoned by their sponsoring employers. The regulations, which were adopted in 2006  ... did not cover individual account pension plans whose sponsors are in liquidation under chapter 7 of the U.S. Bankruptcy Code. These interim final rules expand the regulations to cover these plans so that bankruptcy trustees may use the Abandoned Plan Program's streamlined procedures to terminate and wind them up. Other technical amendments also are being made to improve the efficiency and operation of the Abandoned Plan Program."

35 pages. "The exemption permits a 'qualified termination administrator' (QTA) of an individual account pension plan that has been abandoned by its sponsoring employer to select itself to provide services to the plan in connection with the plan's termination and pay itself fees for the services. This amendment ... permits chapter 7 trustees who elect to be QTAs to rely on the exemption. This amendment to PTE 2006-06 also permits 'eligible designees' of such chapter 7 trustees to rely on the exemption. The amendment is issued in connection with amendments to three related regulations under ERISA ... that provide streamlined procedures for the termination of, and distribution of benefits from, abandoned individual account pension plans."

"Know exactly what you need to provide each year.... Enlist the help of the appropriate service provider ... [W]ork with an auditing firm that liaises directly with your service provider team ... Document everything within your plan ... [T]roubleshoot before the audit.... Know the deadlines, and engage your auditing firm well in advance.... Respond timely to your auditor's requests."

"More companies are using AI to deliver a more intuitive and effective user experience for choosing benefits as generative AI applications become more sophisticated. However, the possibilities of AI go far beyond open enrollment to deliver an improved benefits experience year-round. ... [1] Content creation ... [2] Personalization ... [3] Data analytics ... [4] Improved efficiency ... [5] Benefits offerings and selection ... [6] Improved call centers."

"The appeals court concluded that the language of the statute requiring participants be furnished with statements informing them of their 'total benefits accrued' under Section 1025(a)(2)(A) has the same meaning as 'accrued benefit' in 29 U.S.C. Section 1002(23)(A), and therefore requires statements be accurate.... [T]he panel determined that daily statutory penalties under Section 1132(c)(1), for failure to furnish documents under Section 1025(a), is an available and appropriate remedy. Furthermore, this remedy does not require allegations of bad faith." [ Bafford v. Northrop Grumman , No. 22-55634 (9th Cir. May 9, 2024)]

"This notice provides guidance on the corporate bond monthly yield curve, the corresponding spot segment rates ... and the 24-month average segment rates ... [as well as] the interest rate on 30-year Treasury securities ... as in effect for plan years beginning before 2008 and the 30-year Treasury weighted average rate[.]"

10 pages. Topics: [1] Required minimum distribution provisions: Increased required minimum distribution (RMD) age; Reduced penalties for a missed RMD; Spousal beneficiaries treated as participants; Roth accounts no longer required in RMD. [2] Early withdrawal penalty relief provisions: Emergency expense withdrawals; Domestic abuse withdrawals; Terminal illness 10% tax penalty relief; Withdrawal relief for disasters; Long-term care contracts purchase. [3] Other distribution and withdrawal provisions: Mandatory cash-out limit; Self-certification of hardship and unforeseeable emergency distributions; Amendment deadlines.

"To ensure participants are using their retirement benefits -- or at least being taxed on them -- the RMD process has been around since the passage of ERISA. A simple concept has increasingly become an operational nightmare.... Everyone knows about force-out provisions for terminated participants with a balance of less than $7,000. That same process can also apply to terminated participants who reach normal retirement age.... [P]articipant consent is only required for any distribution before the participant attains the plan's normal retirement age (or age 62, if later)."

"[1] Claims could be processed instantly ... [2] Employee experience could be improved with AI-powered self-service ... [3] Analysis of benefits performance could be easier and more insightful ... That gives the benefits professional of the future significantly more bandwidth to focus on the areas of the job that require human touch, empathy, and ingenuity."

"[ IRS Fact Sheet 2024?18 highlights] how three SECURE 2.0 provisions, if offered by a plan sponsor, are reported on Forms W-2 ... and Forms 1099??R beginning with the 2023 tax year. Those provisions are: [1] de minimis financial incentives, [2] ROTH SIMPLE IRAs and ROTH SEP IRAs, and [3] designated ROTH employer contributions ... Plan sponsors who have implemented these features must use updated tax reporting forms (or, as applicable, file amended tax reporting forms) to comply with their reporting obligations."

"As staff members in the HR and benefits department often wear multiple hats, from overseeing an organization's retirement plan to managing a company's health care benefits, it is easy for these workers to feel overwhelmed, stressed and burnt out at times. For plan sponsors ... it is important to be aware of the challenges that HR and benefits staff members face daily and not blur the line of fiduciary responsibility with these employees."

"[T]he assumption some sponsors make that their plan uses Well-Known Vendor X, and so they can simply trust that this large vendor must maintain strong cybersecurity protections, is faulty ... A plan fiduciary still has to ... do their due diligence, document that they've done their due diligence, and make prudent decisions.' "

"[1] Involve the team.... [2] Clearly define 'missing' participants.... [3] Identify procedures to minimize missing participants.... [4] Define search procedures.... [5] Identify search documentation and retention.... [6] Conduct annual policy reviews."

"The amicus brief filed [by the coalition] in support of AT&T argues that: [1] The Ninth Circuit's decision renders standard and ubiquitous contracts ... in American retirement plans presumptively unlawful. [2] The Ninth Circuit's decision will open the floodgates to speculative claims regarding routine matters, multiplying frivolous litigation and costing employees and employers. [3] Allowing claims that all re-negotiations of service provider agreements are prohibited transactions unless proven otherwise will have far-reaching negative consequences for plan sponsors, fiduciaries, and participants." Bugielski v. AT&T Servs., Inc. , No. 21-56196 (9th Cir. Nov. 8, 2023; cert pet. filed Apr. 5, 2024)]

"[M]any retirement plan third-party administrators (“TPAs”) are seeking approval to be an AEP during 2024 and are anticipating being in a position to e-file the Forms 5330 before the filing deadline of March 31, 2025 (applicable to the deadline for the excise taxes on late corrective distributions from a retirement plan that occur in 2024). However, these TPAs cannot guarantee approval prior to the deadline. Unfortunately, employers do not have the option of filing the Forms 5330 by paper even with the lack of AEPs."

"[P]laintiffs' claim that the administrator provided substantially inaccurate pension benefit statements was cognizable under Section 1025(a)(1)(B)(ii). The panel also concluded that plaintiffs adequately pleaded an ERISA violation based on their allegation that they made written requests sufficient to trigger the duty to produce pension benefit statements. The panel rejected the administrator's argument that there were no remedies available for the ERISA violations plaintiffs alleged. Accordingly, the panel reversed the district court's dismissal of plaintiffs' claims ... and remanded for further proceedings." [Bafford v. Northrop Grumman, No. 22-55634 (9th Cir. May 9, 2024)]

"Under the proposed rules , in addition to disclosure and operational requirements, [auto-portability providers (APPs)] would need to acknowledge their fiduciary status in writing and would be subject to fiduciary duties. Unlike the existing rules for safe harbor IRAs, the proposed rules provide no fiduciary safe harbor for rollovers to a new employer's plan by an APP.... Moreover, according to the DOL, the decision of an employer to participate in an APP program would constitute a fiduciary act."

"The updated form contains some significant changes for certain retirement plans and is effective for plan years beginning on or after January 1, 2023.... [1] Determining small or large plan status ... [2] Breakdown of administrative expenses ... [3] Consolidation rules for Defined Contribution Groups (DCGs) ... [4] Internal Revenue Code compliance questions ... [5] New disclosures for Multiple Employer Plans (MEPs) ... [6] Electronic filing for the extension of time to file."

"Determining whether a worker is an employee or independent contractor particularly for retirement plan coverage purposes can be tricky. The DOL has a new FLSA employee standard. There's also the IRS definition of employee for tax purposes and Supreme Court rulings. All three of these standards may impact whether a worker is an employee that should be covered under an employer-sponsored retirement plan."