401(k) News

  • Bankruptcy and retirement plans

    In 2005, Congress passed a major revision of the Bankruptcy Code, confirming the protected status of individual retirement accounts (IRAs) and defining the levels of debtor assets that may be sheltered by qualified retirement plans and IRAs. Read More…

  • The fiduciary role and Tibble v. Edison

    Under the Employee Retirement Income Security Act (ERISA), a plan fiduciary has important responsibilities and is subject to specific standards of conduct because he or she is acting on behalf of retirement plan participants and their beneficiaries. Read More…

  • Post-severance compensation revisited

    For years, there was no guidance on the issue of whether post-severance payments madeto employees could be used for qualified plan purposes (i.e., elective deferrals and matching and nonelective employer contributions). As a result, various interpretations existed. Although the final 2007 Section 415 regulations provided guidance on this issue, some uncertainty remains as to what, if any, post-severance payments may be used for plan purposes. The 415 regulations provide that certain amounts ear Read More…

  • RECENT developments January/February 2016

    Changes at the IRSThe IRS will no longer answer either Employee Plans (EP) related e-mail questions or questions referred to them by the IRS customer service phone center. Due to the realignmentof legal work and the reassignment of a number of the IRS’s EP employees to the Office of the Associate Chief Counsel, the IRS’s EP area no longer has the resources to do research and provide answers for legal topics. Effective October 1, 2015, the IRS’s EP area ceasedaccepting technical questions through Read More…

  • The ADP test

    Congress has devised several types of nondiscrimination tests designed to prevent qualified retirement plans from favoring highly compensated employees (HCEs) by more than de minimis amounts. Read More…

  • 2016 COLA limits

    The IRS has released the cost-of-living adjustments (COLAs) applicable to the dollar limitations for pension plans (and other items) for the 2016 tax year. Many of the limits remained the same as they were for 2015. Read More…

  • Correcting missed required minimum distributions

    Internal Revenue Code (IRC) Section 401(a)(9) requires every qualified plan to provide required minimum distributions (RMDs) as soon as a participant reaches his or her required beginning date (RBD). Read More…

  • RECENT Developments November/December 2015

    Determination letter program changesBased on its need to direct its limited resources more efficiently, the IRS stated in Announcement 2015-19 that effective January 1, 2017, the staggered five-year determination letter remedial amendment cycles for individually designed plans will be eliminated. There will be a cycle E PPA restatement and a cycle A of the third five-year restatement cycle, which will end January 31, 2017. In addition, effective July 15, 2015, the IRS no longer accepts determina Read More…

  • Eliminating Qualified Joint and Survivor Annuity Options

    Qualified joint and survivor rules apply to all qualified plans, i.e., both defined benefit and defined contribution plans. However, a 401(k) plan or a profit sharing plan may beexempt from the qualified joint and survivor annuity (QJSA) rules when certain conditions are met. Plans can be designed to permit an annuity contract option in order to provide participantswith lifetime benefit options. These types of plans may also be amended at a later date to remove the annuity contract option. This Read More…

  • The Three-Legged Stool in Transition

    For decades, the “three-legged stool” concept has been used as a model to help educateemployees about preparing for retirement.  Leg #1 represents the employee’s personal savings, including IRAs and possible homeequity. Leg #2 represents the private retirement system. Leg #3 represents the “public system” of Social Security payments. Historically, the second leg of the stool consisted substantially of defined benefit (DB)retirement plans. These were the employee’s reward for long years of s Read More…

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