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Benefits & ERISA Law

Pension Protection Act Blog

The Pension Protection Act made the most sweeping changes in thirty years to ERISA and employee benefits law. This blog examines how PPA impacts every aspect of employee benefits and focuses on qualified plans - both defined contribution and defined benefit.

Post Frequency: 1.5/day

Last Entry: March 21, 2011 at 17:06:17

Required Minimum Distribution Relief for 2009 Clarified

Posted on December 22, 2008
The Dept. of Treasury has informed Congress that the IRS has determined that any further change to the required minimum distribution rules should not be undertaken. This surprising news was contained in a letter sent by the Assistant Secetary for Legislative Affairs Kevin Fromer to Congressman George Miller, Chairman of the Committee on Labor [...

IRS News You Can Use: A Slight Cycle C Extension and a New Address for Determ Letter Applications

Posted on December 18, 2008
In the Winter 2009 Edition of Employee Plan News, hot off the presses today, the IRS gives us a number of items to make note of: 1. There is a new address for Determination Letter Applications using Form 5307, 5300, 5310 and 5310-A. It is: Internal Revenue Service PO Box 12192 Covington, KY 41012-0192 It states that applications [...

Motorola Freezes Defined Benefit Plan and Ends 401(k) Match

Posted on December 17, 2008
In a sign of the times, Motorola announced that, effective March 1, 2009, it is freezing its defined benefit plan and, effective January 1, 2009, it will end matching contributions to its 401(k) plan. Motorola also announced that its co-CEOs will take a 25% decrease in base salary in 2009, and that one CEO [...

IRS Extends 403(b) Written Plan Requirement to December 31, 2009

Posted on December 11, 2008
Today, the IRS issued Notice 2009-3, which extends the written plan requirement for 403(b) plans for one year - to December 31, 2009. Specifically, Notice 2009-3 states that: “The Service will not treat a section 403(b) plan as failing to satisfy the requirements of section 403(b) and the final regulations during the 2009 calendar year, [...

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Over Before It Began: Eliminating 2009 Safe Harbor Match After Notice is Distributed

Posted on December 09, 2008
So what happens if you (or your employer) distributed a safe harbor notice last October or November that stated there would be a safe harbor matching contribution in 2009, and now, with the worsening economy, the employer needs to rescind that promise of making a safe harbor matching contribution in 2009...

Still No News From IRS on Extension of 403(b) Written Plan Requirement

Posted on December 04, 2008
Today’s news is that there is no news on whether there will be an extension of time to comply with the Final 403(b) Regulations. The announcement made by IRS Senior Tax Law Specialist Bob Architect during the IRS’ webcast today was that the Service has received comments requesting an extension and that the IRS [...

IRS Releases Cumulative List for Cycle D Plans

Posted on December 02, 2008
The IRS has released Notice 2008-108, which contains the 2008 Cumulative List of Change in Plan Qualification Requirements, also known as the Cycle D Cumulative List. Cycle D plans are: (1) individually designed single employer qualified plans where the last digit of the plan sponsor’s EIN ends in 4 or 9; or (2) multiemployer [...

IRS Schedules Hearing on Proposed Regs on ESOPs

Posted on November 25, 2008
The IRS has scheduled a hearing on the Proposed Regulations affecting Employee Stock Purchase Plans Under Internal Revenue Code section 423 for Thursday, January 15, 2009, at 10am (also known as the Thursday before the Inauguration). Originally issued on July 29, 2008, and effective on January 1, 2010, these proposed regulations provide a “comprehensive set of [...

IRS Debunks Another 401(k) Urban Myth in New Guidance on Rollovers as Business Startups

Posted on November 12, 2008
ROBS, or Rollovers as Business Startups, have been bouncing around the employee plans arena for a couple of years. I first hear an IRS official mention ROBS during the 2006 Cincinnati Benefit Conference as part of the presentation on tax avoidance transactions...

IRS Goes YouTube with 403(b) Information

Posted on November 10, 2008
The IRS has posted a series of 10 videos on YouTube about the Final 403(b) Regulations. Featuring Tax Law Specialists Bob Architect, the IRS’ authority on 403(b) plans, the videos are short, informative and worth watching. Each video is about 10 minutes long, and paced so that you can watch them during a [...

IRS Updates Dollar Limitations for Qualified Transportation Fringe Benefits

Posted on October 19, 2008
In Revenue Procedure 2008-66, the IRS has updated the dollar limitations for parking, transit passes, and carpooling or vanpooling fringe benefits. Specifically, effective for taxable years beginning in 2009, Code section 132(f)(2)(A) is updated to provide that the fringe benefit exclusion amount for parking is increased to $230...

401(k) is Just a Number, not a Plan for Retirement

Posted on October 17, 2008
I’ve been blogging recently about defined benefit plans providing a more secure retirement than defined contribution plans, such as 401(k) plans. With Congress again discussing how to amend the tax code to provide a portable individual retirement plan for employees whose employer does not offer a plan, the relevant question is whether that plan [...

Massive Fines for Failure to Timely Amendment

Posted on October 10, 2008
VCP fine for not timely adopting a 401(a)(31)(B) amendment: $375 Audit CAP fine for not timely adopting a 401(a)(31)(B) amendment: $3,000 Audit fine for not timely adopting a 401(a)(31)(B) amendment: $45,000 Timely amending your plan: Priceless Recently, it seems that the IRS auditors have been running a governmet fundraiser by imposing inordinately large fines for [...

Senate Passes Bailout Bill Loaded with Tax Provisions Including Bicycle Commuting Reimbursement

Posted on October 02, 2008
Yesterday, the Senate passed their version of the Bailout Bill. One item contained in the bill which caught my eye was a change to Code section 132(f) which will cause an almost immediate revision to our Qualified Transportation plan. As a bicycle commuter for over 30 years, I appreciate this tax credit...

Wall Street Journal on What Happens to Your Retirement Benefits after Bankruptcy

Posted on September 23, 2008
Mike Spector wrote a short article in the Wall Street Journal today about What Happens to Your Benefits After Bankrupcy. The article discusses the general differences between 401(k), defined benefit and cafeteria plans when the plan sponsor files for bankruptcy, providing this example: “Here’s what to consider if your company is facing the possibility of [...

Some Tax Statistics and the $700 Billion Bailout Package

Posted on September 22, 2008
Over dinner on Saturday night, we started to wonder how much the bailout package meant for each person seated at the table. The Number = $5,227.12 Being tax geeks, we decided that $700 billion and dividing it by the population of the United States is not really a valid number because there are Americans who [...

9th Circuit Decides QJSA Tug of War in Favor of Spouse at Time of Retirement

Posted on September 18, 2008
“This case requires us to once again navigate the complex statutory scheme set out in the Employee Retirement Income Security Act of 1974….” - Judge Clifton, 9th Circuit Court of Appeals Yesterday, the 9th Circuit Court of Appeals decided whether or not a participant in a plan with a Qualified Joint and Survivor Annuity (QJSA) may change [...

Employees File Lawsuit Over Tribune ESOP

Posted on September 17, 2008
When the Tribune Company was purchased by Samuel Zell by utlizing an ESOP, one question was how long would it take before the litigation began. Today, that question was answered when a group of current and former employees filed suit in the U.S. District Court for the Central District of California...

2008-09 Priority Guidance List Has Arrived and It Contains 2 New Programs from the IRS

Posted on September 12, 2008
The IRS released the 2008-09 Priority Guidance List on September 10th. The Priority Guidance List is the annual list from the IRS which contains the list of projects and programs which the IRS intends to address during the during the 12-month period from July 1st each year through June 30th...

Maybe What We Need is a Deregulated Individual Defined Benefit Plan

Posted on September 08, 2008
A few years ago, there was a lot of buzz about Congress creating some type of defined contribution plan for employees whose employer did not sponsor a plan. The idea was that if the employer was not sponsoring a qualified plan, the employee could create their own plan and contribute to their retirement accounts [...

IRS Expands Transitional Relief for Defined Benefit Plans

Posted on September 04, 2008
One impact of Congress’ failure so far to pass any version of the Pension Protection Technical Corrections Act is that defined benefit plans have been forced to operate while awaiting guidance. Earlier this year, the IRS issued transitional relief in Notice 2008-21...

Final 403(b) Regulation Date Tricky for Church Plans

Posted on August 21, 2008
As the general deadline of January 1, 2009 creeps closer and closer for most 403(b) plans to comply with the Final 403(b) Regulations, the applicability dates in the Final 403(b) Regulations deserves a little scrutiny. For church 403(b) plans, the deadline for complying with the Final 403(b) Regulations depends on whether the authority to [...

IRS Updates Employee Plans Compliance Resolution System

Posted on August 19, 2008
On August 14th, the IRS released Revenue Procedure 2008-50. Rev. Proc. 2008-50 is 179-pages long, and updates the Employee Plans Compliance Resolution System (EPCRS), which the IRS last updated in 2006 with Rev. Proc. 2006-27. The IRS has issued a number of handy guides to Rev...

And the ERPA Contract Goes To??..

Posted on August 07, 2008
In a strange, almost bizarre, twist today, the IRS announced that they have awarded the contract to conduct the examinations for the Enrolled Retirement Plan Agent (ERPA) program to the American Institute of Retirement Education LLC, a partnership between the American Society of Pension Professionals & Actuaries (ASPPA) and the National Institute of Pension Administrators [...

Electronic Copies for Nothin? and Your Paper Copies Are Free

Posted on July 29, 2008
As more offices go green and provide information electronically, a growing question is whether you can charge participants and beneficiaries for paper copies. There are two theories for charging participants and beneficiaries for paper copies. The first theory is that trees will be saved because participants and beneficiaries will not want to pay [...

Fee and Expense Information for 401(k) Plans is About to Become Clearer

Posted on July 25, 2008
On July 22, 2008, the Dept. of Labor released new proposed regulations on fiduciary requirements for disclosures in participant-directed individual account plans effective for plan years beginning after January 1, 2009. Participant-directed Individual account plans are plans such as 401(k) plans where each participant has an account which they can select how they want [...

DOL Releases Proposed Fee Disclosure Regulations

Posted on July 23, 2008
The Dept. of Labor released the long-awaited proposed regulations on fee disclosures and fiduciary responsibilities. Officially called the proposed regulations on “Fiduciary Requirements for Disclosure in Participant-Directed Individual Account Plans”, these proposed regulations are 103 pages long and include a model disclosure notice...

Cashed Out Participant is Still a Participant for Breach of Fiduciary Lawsuits

Posted on July 21, 2008
When is comes to litigating over alleged fiduciary breaches, when is a terminated employee no longer a participant. If you think the answer should be as soon as the terminated employee receives a lump sum distribution of their entire account balance, you would be incorrect according to the 1st Circuit Court of Appeals...

Loans from Qualified Plans Generating Unprecedented Buzz

Posted on July 21, 2008
With the economy headed south, or already at rock bottom, depending upon where you live, it is not surprising that participants are borrowing from their retirement plans. What is surprising is the amount of buzz suddenly appearing in the popular media on this topic...

WSJ Article Provides Advice About Vesting

Posted on July 15, 2008
In a recent article in the Wall Street Journal, Kelly Greene answers the question from a reader about whether her employer can keep a percentage of the matching contribution in her account because she is not fully vested. It is not the question which is so interest, but the answer, provided by David Wray, [...

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