Employee Benefits Associate
Shipman & Goodwin LLP
in Hartford CT

Retirement Plan Administrator
Nicholas Pension Consultants
in Rancho Cordova CA / Corona CA

Retirement Plan Administrator
RPA
in VA / Telecommute

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IRS Allows Retiree Cashouts Again -- Consider the Benefits and Risks

"Notwithstanding the IRS about-faces, If you read it carefully, Notice 2019-18 does not clearly state that cashing out retirees is permissible. It is possible that retirees who squander their payments could come back to sue sponsors, particularly if the communications they received were poor. Although retirees may not be likely to win such suits, defending ERISA litigation takes time and money. Plan sponsors who want to offer these cashouts should be aware of litigation risk."
Cohen & Buckmann, P.C.

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IRS Notice on Lump-Sum Windows for Retirees Creates More De-Risking Opportunities

"Plan sponsors should carefully consider [1] the possibility of further guidance from the IRS on retiree lump-sum windows ... [2] numerous other administrative complexities such as QDROs, how retiree medical premiums are being paid, etc.... [3] the PBGC and [DOL] implications of adding a retiree lump-sum window.... [S]ponsors should ensure that all participant communications are as clear and comprehensive as possible[.]" Groom Law Group

It's All Fun and Games Until a Loan Defaults

"If a loan was taken and payments were never made, this may be considered a prohibited transaction and opens up a whole can of worms, as it may not be considered a bona fide loan. Plan loans that are prohibited transactions trigger excise taxes and threaten the qualified status of the plan.... [I]gnoring loan failures can end up costing the plan sponsor far more than the fees for properly filing through VCP. Tempting though self-correction can be, it's better to handle these problems correctly -- either through acknowledging the deemed distribution, or through a VCP filing -- to avoid even worse results." Ferenczy Benefits Law Center

IRS Requires Electronic VCR Applications Beginning April 1

"Beginning April 1, 2019, applicants seeking to resolve employee benefit tax qualification issues via the Voluntary Compliance Resolution (VCR) program must submit applications electronically through Pay.gov. Any paper VCP submissions sent to the IRS with a postmark after March 31, 2019, will be returned to the applicant." Solutions Law Press

Benefits of a Retirement Managed Account (PDF)

12 pages. "Target date funds are the chosen QDIA for 85% of plans, and their approach to investing has many advantages, including low fees and a simplified investment strategy. However, research suggests that the potential long-term benefits of more personalized strategies such as retirement managed accounts (RMAs) may outweigh the advantages of target date funds in some situations. This paper presents new insights showing that the personalized portfolio approach of RMAs adds value to retirement accounts, and that the key is to look beyond performance." Great-West Financial and Empower Retirement

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BlackRock Fights $100M ERISA Fiduciary Suit

"Plaintiffs Charles Baird and Lauren Slayton hit BlackRock Inc., its subsidiaries and board members, along with BlackRock's investment consultant Mercer Investment Counseling, with a sprawling, 134-page, 11 count amended complaint in August. The suit alleges with the aid of Mercer, BlackRock mismanaged retirement plans by charging excessive hidden fees, selecting investments that charged up to 871 percent in premiums, violating ERISA and costing participants hundreds of millions of dollars in losses." Cohen Milstein

House Holds Hearing on Multiemployer Pensions (PDF)

"The sense from the hearings has been that if the multiemployer pension system fails, the fall-out will not only devastate contributing employers, employees and retirees, [but also may] lead to the failure of other multiemployer plans and increase the burden on state, local and the federal government to provide 'safety-net' social services to the impacted." United Actuarial Services, Inc.

What to Expect When You Do a Retirement Account Rollover

"Keep an eye on the process online and maintain any paperwork sent to you about the transfer.... [C]heck to make sure that the amount that left your old account lines up with the amount received in your new account. Consider leaving the old account open for a few weeks to collect any residual interest or dividends in the old account, then make sure those are transferred over as well. You should receive a Form 1099-R from the distributing firm the following year ... Use the paperwork and online history to make sure the transactions line up properly." Financial Finesse

How People Might Save for Retirement in the Future

"While not possible under current federal law, one could imagine a low-cost, portable, individual-based system, managed by a third party, that allows workers to automatically contribute to their own retirement account with each paycheck and give employers the option to add to those accounts through a matching contribution. No current initiative fully captures these ideas, but recent actions at the state and federal levels point to a system that could cover more people without relying solely on individual employers to sponsor their own retirement plan." The Pew Charitable Trusts

Treasury Lump Sum Notice Puts Retirees' Pensions at Risk

"You may be asking, what's so bad about offering lump sums? Well if you're a retiree already in pay status receiving a guaranteed pension that you can't outlive, then being offered a lump sum is a bit like Adam contemplating eating that apple in the Garden of Eden. You may be tempted by something that looks good -- but if you give in to temptation you may come to regret it." Pension Rights Center

Participant Had No Comp But Made Deferrals from Severance Pay -- What Kind of Refund Needed?

Participant only received severance on his 2018 W-2. He deferred $24,500 from it. So the money must be refunded. What excess is it? 402(g) or 415? BenefitsLink Message Boards

Ex-Spouse Entitled to My Pension But Won't Sign QDRO

During our divorce settlement, my ex was granted $100K+ from my teaching pension when I retire. Although the QDRO was drafted by an outside company specializing in QDROs, my ex refused to sign believing that he should receive more. Both his lawyer and the mediator tried to get him to sign, but he refuses. It's been 6 years and he still hasn't signed. When I retire in a few years, if he hasn't signed it and submitted it to the judge, will he be entitled to the pension money? BenefitsLink Message Boards

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