Headlines about "Distributions - rollovers"

Gathered from the web by the editors at BenefitsLink.com.
Helping Plan Participants to Choose Between Annuities and Lump Sums
"If his main retirement goal is to be happy, have him take the pension or a similar lifetime annuity. A 2012 report ... found that among retirees of similar wealth and health, those with annuitized incomes were happier than those without annuities. Any financial adviser worth her credentials would argue that this happiness is likely to be short-lived, though.... There's another angle. Pensions don't generate commissions or asset management fees; rollovers do. So how do you help clients make informed decisions and manage the inherent conflict of interest?" (Reuters)

[Guidance Overview] FINRA's 'Reminder' About Rollovers Is News to Many
"[R]egulators believe that industry practices encourage retirees to make rollovers without a full understanding of their options and the relative costs for each option.... Couched as a 'reminder,' FINRA's year-end Regulatory Notice 13-45 describes practices that many broker-dealers and their registered representatives will find difficult to implement.... The guidance lists ... factors that broker-dealers and their registered representatives must consider and evaluate to determine whether a recommendation to take a distribution and rollover is suitable. In practice, broker-dealer firms and their representatives will have a difficult time obtaining this information." (DrinkerBiddle)

What to Do With Your 401(k) When You Retire
"The ability to invest in nearly anything is a central attraction of an IRA ... as is the chance to get away from the extra administrative costs and pricey fund options that dog some 401(k) plans. Other respondents said they chose to roll over multiple 401(k) accounts from multiple employers to a single IRA for convenience and simplicity.... Several respondents said they had in fact chosen to stay put in their high-quality, low-cost plans, citing extra creditor protections and the ability to pick up a bit of extra yield in a stable-value offering." (Morningstar)

[Guidance Overview] IRS Ruling Streamlines Plans' Acceptance of Rollover Contributions
"This ruling should be welcomed by plan sponsors and TPAs for its streamlining of the rollover process. Prior examples of 'reasonably concludes' (in Treasury regulations) contemplated employees obtaining documentation from the distributing plan and submitting it to the receiving plan, leading to potential delay and frustration for employees and administrators -- and, as the IRS news release notes, to employees taking taxable distributions instead of continuing their tax-deferred savings." (Thomson Reuters / EBIA)

Would an Expanded Fiduciary Definition Lead to Billions in Retirement Cash-Outs?
"If the [DOL] moves ahead with its proposal to impose a fiduciary responsibility on financial professionals offering retirement advice, waves of broker-dealers and company call centers would exit that market and further jeopardize the already precarious retirement situation for millions of workers ... Without that advice, more workers would be likely to cash out their plans upon leaving a job, rather than rolling them over to an IRA or staying with the employer's plan.... [T]hose cash-outs [c]ould add up to between $20 billion to $32 billion each year, which could translate into a net annual decline in retirement savings by 20% to 40% for the affected workers." (Financial Planning)

Chart of Rollover-Eligible Retirement Plans and IRA Combinations (PDF)
BenefitsLink came across this handy unofficial chart on the IRS web site. It is a one-page summary in the form of a table, listing the eight kinds of plans and IRAs that can make rollover-eligible distributions, and the corresponding eight kinds of plans and IRAs into which those distributions can (or cannot) be rolled over. (Internal Revenue Service [IRS])

[Opinion] Mountains of Paperwork Make 401(k) Transfers a Tough Hill to Climb
"Retirement plan advisers are struggling to help workers roll 401(k) assets into a new 401(k) plan when they change jobs, as record keepers load the process with so much red tape that it's easier to move into individual retirement accounts.... Moving assets from one employer to another, in theory, should be intuitive. The transfer ought to take place between the plans and their record keepers so the individual worker doesn't have to worry about receiving a paper check, or about rolling it over within 60 days of receipt[.]" (InvestmentNews)

[Guidance Overview] IRS Offers Two New Due Diligence Safe Harbor Procedures for Accepting Rollovers into Qualified Plans
"These procedures describe various fact patterns involving obtaining letters from the transferring plan or IRA regarding the transferring plan's or IRA's status, certain factual representations from the transferring participant regarding compliance with the applicable rules, and/or supporting documentation from the transferring plan or IRA. Absent facts to the contrary, a plan administrator who follows the procedures in the current guidance may treat an inbound rollover as a valid rollover contribution." (Sutherland)

[Guidance Overview] IRS Rev. Rul. 2014-9 Offers Rollover Due Diligence Safe Harbor (PDF)
"Although the requirement to offer a rollover does not require transferring funds to defined benefit plans, such plans are not precluded from accepting rollovers, as IRS clarified in its regulations. Indeed, recent guidance from IRS and PBGC affirms the ability to make such rollovers and explains how various qualification and benefit guarantee rules operate for them." (Buck Consultants)

[Guidance Overview] IRS Expands In-Plan Roth Rollovers
"Plans may restrict the type of contributions eligible for an in-plan Roth rollover.... Amounts transferred to a Roth account are subject to the same withdrawal restrictions as before the transfer.... The 5-year Roth clock starts on the first day of the plan year in which the participant makes their first Roth contribution to the plan.... If the retirement plan provides and the employee is eligible, an employee may receive an in-service distribution to help pay for the taxes." (TRI-AD)

[Guidance Overview] Two New Safe Harbor Procedures for Rollovers to Qualified Plans
"The IRC has been amended several times to simplify the rules relating to eligible rollover distributions to tax-qualified retirement plans. However, the related regulations governing eligible rollover distributions have not been updated to reflect all of these changes. IRS Revenue Ruling 2014-9 provides two hypothetical examples that illustrate how plan administrators of qualified retirement plans may use to: [1] Be deemed to have reasonably concluded that an amount is a valid rollover contribution ... [2] Correct this situation if that assumption is later determined to be incorrect." (Practical Law Company)

[Guidance Overview] PBGC Proposes Additional Guarantee for Rollover Benefits (PDF)
"Although promoted as enabling rollovers from defined contribution plans, the amendment refers to rollovers in general and would encompass rollovers of lump sums from other defined benefit plans. This appears to allow an individual to obtain a greater guarantee from two defined benefit plans than would otherwise be available." (Buck Consultants)

[Guidance Overview] IRS Issues Guidance Facilitating Rollovers to Qualified Retirement Plans
"Today's ruling simplifies the rollover process by introducing an easy way for a receiving plan to confirm the sending plan's tax-qualified status. The plan administrator for the receiving plan can now simply check a recent annual report filing for the sending plan on a database that is readily available to the public online. This eliminates the need for the two plans to communicate (with the individual as go-between), expedites the rollover process, and reduces associated paperwork." (Internal Revenue Service [IRS])

[Official Guidance] Text of IRS Rev. Rul. 2014-9: Reasonable Belief by Administrator When Accepting Rollover into Qualified Retirement Plan (PDF)
"[I]f a plan accepts an invalid rollover contribution, the contribution will be treated ... as if it were a valid rollover contribution if [two conditions are met, the first of which is that,] when accepting the amount from the employee as a rollover contribution, the plan administrator for the receiving plan must reasonably conclude that the contribution is a valid rollover contribution.... [In Situation 1 of this revenue ruling,] it is reasonable for the plan administrator for [the receiving] Plan M to conclude that [the distributing] Plan O is intended to be a qualified plan [because the administrator of Plan M had accessed the EFAST2 database maintained by the DOL at www.efast.dol.gov and determined that line 8a of the most recently filed Form 5500 for Plan O did not contain code 3C, which would have indicated that the plan was not intended to be qualified under Code section 401, 403, or 408.]" (Internal Revenue Service [IRS])

[Official Guidance] Text of PBGC Proposed Regs: Title IV Treatment of Rollover from Defined Contribution Plan to Defined Benefit Plan
"This proposed rule would amend PBGC's regulations on allocation of assets and benefits payable in terminated single-employer plans to clarify the treatment of benefits resulting from a rollover distribution from a defined contribution plan or other qualified trust to a defined benefit plan, if the defined benefit plan was terminated and trusteed by PBGC. This proposed clarification of Title IV treatment of rollovers is part of PBGC's efforts to enhance retirement security by promoting lifetime income options." (Pension Benefit Guaranty Corporation [PBGC])

IRA Rollovers: 'One' Really Does Mean 'One' Now
"There may be some interesting lessons to learn from this about-face. First of all, appreciate that the same Treasury Department that proposed the regulation described above and developed the example described above from Publication 590 (its own publication provided to assist taxpayers with compliance) is the one that challenged the position taken by Mr. Bobrow in reliance on these items before the Tax Court. So much for reliance on a position of Treasury and/or the IRS as articulated in one of its own compliance publications. Second, the change in position is likely to catch some people by surprise, especially seniors trying to do proper planning and who do not read all of the Tax Court cases and IRS Announcements." (Benefits Bryan Cave)

The 60-Day IRA Rollover: What Can Go Wrong
"This rollover started in 2008. It was finalized six years later. The IRS fee alone for this type of ruling is capped at $3,000. Generally you also have to pay a professional to prepare the [private letter ruling request]. Given the amount of times IRS requested more information from Nancy, the professional might have charged her another $10,000. The cost in time and money to complete this rollover -- not to mention the aggravation and stress on Gary and Nancy -- is something that we want you to avoid. DON'T DO 60-DAY ROLLOVERS." (The Slott Report)

[Guidance Overview] IRA Rollover Guidance Issued: IRS Will Follow the Tax Court
"The IRS also announced that it intends to withdraw the proposed regulation and issue new regulations that follow the Tax Court's interpretation of the law and apply the limitation on an aggregate basis. It will also revise Publication 590 to the extent needed to reflect that interpretation." (Journal of Accountancy)

[Official Guidance] Text of IRS Announcement 2014-15: Application of One-Per-Year Limit on IRA Rollovers (PDF)
"The IRS anticipates that it will follow the interpretation of 408(d)(3)(B) in [Bobrow v. Commissioner] and, accordingly, intends to withdraw the proposed regulation and revise Publication 590 to the extent needed to follow that interpretation. These actions by the IRS will not affect the ability of an IRA owner to transfer funds from one IRA trustee directly to another, because such a transfer is not a rollover and, therefore, is not subject to the one-rollover-per-year limitation.... The IRS understands that adoption of the Tax Court's interpretation of the statute will require IRA trustees to make changes in the processing of IRA rollovers and in IRA disclosure documents, which will take time to implement. Accordingly, the IRS will not apply the Bobrow interpretation of 408(d)(3)(B) to any rollover that involves an IRA distribution occurring before January 1, 2015." (Internal Revenue Service [IRS])

A Warning on Multiple IRA Rollovers
"Although possibly representing a significant departure from previous advice, in light of the court's decision in Bobrow, it would be prudent to instruct clients to avoid making any more than one 60-day IRA-to-IRA rollover per year. If clients want to move money more frequently, they can still use trustee-to-trustee transfers, which can be made at any time, without regard to the once-per-year rollover rule. Direct transfers (trustee-to-trustee transfers) are still the preferred method to steer clear of this kind of tax trouble." (InvestmentNews)

Rollovers to IRAs from Employer-Sponsored Retirement Plans: Emerging Legal and Regulatory Standards (PDF)
"A number of recent developments suggest that federal regulators and policy makers may be engaged in a reassessment of the IRA rollover phenomenon....[S]everal announcements seem to signal a regulatory interest in either imposing new duties on financial intermediaries when interacting with distribution-eligible plan participants or in reinterpreting existing duties and standards of care in new ways as a means of influencing and reconfiguring the rollover discussion." (Groom Law Group via BNA Pension and Benefits Daily)

Schwab Shoos $25 Billion of Client Assets Out the Door as It Calls the Bluff of Employers with Lopsided 401(k) Contracts
"In a move that reflects the changing economics of the advice and retirement business, The Charles Schwab Corp. fired several big 401(k) clients with a combined $25 billion of assets.... Because the employers bar Schwab from, in effect, soliciting its clients thus thwarting its efforts to win rollover dollars in sufficient numbers, Schwab saw no room for these clients in its business plan going forward, according to Steve Anderson, executive vice president of retirement plan services at Schwab. Schwab wants the freedom to e-mail and hold meetings with participants of 401(k) clients." (RIABiz)

Are Some People Rolling Into IRAs in Order to Make Tax-Advantaged Withdrawals? (PDF)
"[A]mong traditional IRAs that received a rollover, 21.9 percent also had a withdrawal, and of those traditional IRAs that experienced a withdrawal, 9.4 percent also received a rollover. Moreover, the percentage of those with a rollover that also had a withdrawal increased with the owner's age ... from 16.1 percent for those owned by younger-than-50-year-olds to 29 percent for those age 60-69.... [T]here may be tax reasons to first rollover from a 401(k)-type plan to a traditional IRA, and then to take a withdrawal from the IRA. As an example, a withdrawal from a traditional IRA taken before age 59-1/2 for a first-time home purchase ($10,000 maximum) is not subject to the 10 percent early withdrawal penalty that an identical withdrawal for this purpose from a 401(k)-type plan would be." (Employee Benefit Research Institute [EBRI])

IRS Issues Guidance on Roth Rollovers of Nondistributable Balances
"The guidance focuses primarily on rollovers of balances that are not otherwise available for immediate distribution, such as where the account holder is not yet age 59-1/2. A 401(k) plan sponsor that has implemented an in-plan Roth rollover of otherwise nondistributable amounts, or that wants to do so, now has a limited extension for adding enabling provisions." (Towers Watson)

IRA Rollovers: A Checklist for Documenting the Discussion
"Regulators are clear: Advisors recommending rollover of employer retirement plan assets must provide clients with advice that is fair, balanced, and not misleading regarding their options for these funds.. .. Because the decision to transfer funds out of an employer's plan is irrevocable, advisors must adopt practices and procedures to ensure that clients are receiving the most appropriate advice for their situation." (Morningstar Advisor)

[Opinion] Tax Court Ruling and IRS Rollover Guidance Don't Add Up
"The ability to execute IRA rollovers on a one-per-IRA basis has been described in detail in IRS Publication 590, Individual Retirement Arrangements (IRAs), for at least 20 years, that evidence readily available even now at the IRS's own web site. It is not conveyed in a mere statement, but in detailed examples provided to explain the sometimes-misunderstood rollover limitations.... [H]ow can this agency have spent uncounted taxpayer dollars over the life of this publication -- a publication that now runs to 114 pages -- for us to be told that its contents cannot be relied on by taxpayers? Are we not to take seriously the description on the cover that flatly says 'For use in preparing 2013 returns?'" [Bobrow v. Commissioner, T.C. Memo. 2014-21 (Jan. 28, 2014)] (Todd Berghuis for Ascensus)

Roll Over, Bobrow: Surprising Tax Court Decision on IRA Rollover Rules
"The court's holding ... conflicts with the commonly held view that the 12-month limit only applies to rollovers from the same IRA -- a position that is specifically endorsed in Publication 590. While IRS publications are not binding on and are generally not given meaningful weight by courts, the IRS does not usually take litigation positions in conflict with its published materials. It is not clear at this time whether the IRS will revise the publication or otherwise issue guidance articulating its position regarding the 12-month rule." [Bobrow v. Commissioner, T.C. Memo. 2014-21 (Jan. 28, 2014)] (Sutherland)

Even a Tax Lawyer Can Get the IRA Rollover Rules Wrong
"The tax lawyer claimed that the 12 month rule should apply separately to each IRA. The IRS countered that all IRAs should be treated as a single IRA for this purpose and the tax court agreed. Therefore, the lawyer had to include in income the amount of the second rollover distribution since it was not a proper rollover.... Because the amount of the failed rollover exceeded 10% of the lawyer's gross income for the year, the lawyer was also subject to a substantial underpayment penalty of 20% of the amount involved.... Although not mentioned in the court's opinion, in its Publication 590, Individual Retirement Arrangements for use in preparing 2013 tax returns, the IRS embraces the tax lawyer's position[.]" (Stinson Leonard Street)

Tax Court Takes Restrictive View of One Year Limitation on Indirect IRA Rollovers (PDF)
"The Tax Court simply held that the first distribution ... was a tax-free indirect rollover, but as the second distribution was made within a year of the first, it was a taxable distribution ... The court did not consider any [prior IRS] 'guidance' -- nor did it review the private letter rulings in this area that similarly support a per-IRA interpretation. Instead, it focused on the plain language of the statute and the broad legislative history intended to limit repeated shifting of nontaxable income in and out of retirement accounts." [Bobrow v. Comm'r, T.C. Memo. 2014-21 (Jan. 28, 2014)] (Groom Law Group)

Overall IRA Withdrawal Rates Follow RMD Rule Rates
"Just over 16 percent of traditional and Roth IRA accounts had a withdrawal in 2011, including 20.5 percent of traditional accounts. This percentage was largely driven by activity among traditional IRAs owned by individuals ages 70-1/2 or older where the individuals were required to make withdrawals from their tax-qualified accounts. Looking at accounts that have both a withdrawal and a rollover ... nearly a third (29.5 percent) of those having both a rollover and a withdrawal took a withdrawal at least equal to that of the rollover." (Employee Benefit Research Institute [EBRI])

[Guidance Overview] FINRA and SEC to Focus on IRA Rollover Practices in 2014
"The issuance of Notice 13-45 and the inclusion of IRA rollovers as examination priorities, along with the recent GAO report ... are consistent with the trend toward increasing regulatory scrutiny of the IRA market. IRA rollovers are also receiving attention from the DOL, which indicated in its comments to the GAO report that its pending project to revise its regulation on the definition of a 'fiduciary' may address many of the GAO's concerns. Because IRA rollovers will likely increase as more Americans reach retirement age, we can expect further regulatory activity in this area-including possibly from the IRS." (Morgan Lewis)

Tax Court Takes Restrictive View of One-IRA-Rollover-Per-Year Rule
"[T]he Tax Court ruled that each taxpayer is limited to one IRA distribution eligible for rollover per 12-month period, regardless of the number of IRAs the taxpayer may have.... [IRS] Publication 590 clearly states that each IRA owned by a taxpayer (not including beneficiary IRAs) is entitled to one rollover-eligible distribution per 12-month period. The Tax Court's ruling also conflicts with previous oral guidance from the IRS, and with language in many document provider's ... model-based and prototype IRA document disclosure statements." [Bobrow v. Commissioner, T.C. Memo. 2014-21 (Jan. 28, 2014)] (Ascensus)

[Guidance Overview] Qualified Plans and Executive Pay Programs Exempt from Net Investment Income Tax
"Qualified [retirement] plans and executive pay programs are generally exempt from the 3.8% net investment income tax on high-income individuals. Employers might want to consider expanding deferral opportunities to enable executives to accrue earnings and receive income exempt from the tax." (Towers Watson)

[Opinion] Concern Over EBSA Fiduciary Standard is Still Bipartisan
"There is risk and cost attached to expertise.... Those who do it properly have more training or experience -- or both -- and there is a cost for this level of expertise. Simply put, it will likely cost more to work with an advisor who can meet the ERISA fiduciary standard than one who operates on a more general level of investment suitability.... Any regulations defining fiduciary for retirement saving purposes have to be practical, sensible, and should not be punishing to an important segment of those who are saving for retirement." (Ascensus)

Payout Options for Retirement Income from Defined Contribution Plans: The Plan Sponsor's Perspective
"[It] is clear that it is to the participant's advantage to have an annuity option available as a retirement risk management tool. For sponsors, however, the question remains: does the annuity option (or do the annuity options) have to be available inside the plan?" (October Three Consulting)

[Official Guidance] DOL Technical Release No. 2013-04: ERISA Definition of Marriage Includes Same-Sex Persons Validly Married in State Where Marriage Was Celebrated
"In general, where the Secretary of Labor has authority to issue regulations, rulings, opinions, and exemptions in title I of ERISA and the Internal Revenue Code, as well as in the Department's regulations at chapter XXV of Title 29 of the Code of Federal Regulations, the term 'spouse' will be read to refer to any individuals who are lawfully married under any state law, including individuals married to a person of the same sex who were legally married in a state that recognizes such marriages, but who are domiciled in a state that does not recognize such marriages. Similarly, the term 'marriage' will be read to include a same-sex marriage that is legally recognized as a marriage under any state law.... The terms 'spouse' and 'marriage,' however, do not include individuals in a formal relationship recognized by a state that is not denominated a marriage under state law, such as a domestic partnership or a civil union, regardless of whether the individuals who are in these relationships have the same rights and responsibilities as those individuals who are married under state law." (U.S. Department of Labor)

[Official Guidance] IRS Revenue Ruling 2013-17: Federal Tax Treatment of Same-Sex Spouses and Domestic Partners (PDF)
"ISSUES: 1. Whether, for Federal tax purposes, the terms 'spouse,' 'husband and wife,' 'husband,' and 'wife' include an individual married to a person of the same sex, if the individuals are lawfully married under state 1 law, and whether, for those same purposes, the term 'marriage' includes such a marriage between individuals of the same sex. 2. Whether, for Federal tax purposes, the Internal Revenue Service ... recognizes a marriage of same-sex individuals validly entered into in a state whose laws authorize the marriage of two individuals of the same sex even if the state in which they are domiciled does not recognize the validity of same-sex marriages. 3. Whether, for Federal tax purposes, the terms 'spouse,' 'husband and wife,' 'husband,' and 'wife' include individuals (whether of the opposite sex or same sex) who have entered into a registered domestic partnership, civil union, or other similar formal relationship recognized under state law that is not denominated as a marriage under the laws of that state, and whether, for those same purposes, the term 'marriage' includes such relationships." (Internal Revenue Service)

[Official Guidance] Treasury and IRS Announce That All Legal Same-Sex Marriages Will Be Recognized for Federal Tax Purposes (PDF)
"The U.S. Department of the Treasury and the Internal Revenue Service (IRS) today ruled that same-sex couples, legally married in jurisdictions that recognize their marriages, will be treated as married for federal tax purposes. The ruling applies regardless of whether the couple lives in a jurisdiction that recognizes same-sex marriage or a jurisdiction that does not recognize same-sex marriage.... [S]ame-sex couples will be treated as married for all federal tax purposes, including income and gift and estate taxes. The ruling applies to all federal tax provisions where marriage is a factor, including filing status, claiming personal and dependency exemptions, taking the standard deduction, employee benefits, contributing to an IRA and claiming the earned income tax credit or child tax credit. Any same-sex marriage legally entered into in one of the 50 states, the District of Columbia, a U.S. territory or a foreign country will be covered by the ruling. However, the ruling does not apply to registered domestic partnerships, civil unions or similar formal relationships recognized under state law." (Internal Revenue Service)

Recent Studies on Rollovers Identify Emerging Issues
"Two recent reports ... focus on the issue of advisor conflicts of interest, particularly in the distribution/rollover context, and the consequences for retirement savings.... Both reports make an argument for robust regulation of the distribution/rollover process and of advisor conflicts of interest both in the context of a re-proposed re-definition of ERISA fiduciary and more generally.... Many of the changes suggested ... would mandate changes in sponsor practice." (October Three)

[Guidance Overview] Effect on Benefits Plans of the Supreme Court Decision on DOMA
"[E]mployers with pension and 401(k) plans will be required to recognize same-sex spouses for purposes of determining surviving spouse annuities or death benefits. The same-sex spouse of an employee will also be able to elect spousal rollovers to his or her own [IRA] upon the employee's death, enabling the surviving spouse to receive payments over his or her lifetime.... [An] employee with a same-sex spouse will have to obtain spousal consent to change the beneficiary of his or her retirement benefit ... If a same-sex couple divorces, benefits in qualified retirement plans may be split pursuant to a [QDRO].... [T]he decision will simplify life for employers who currently provide welfare benefits to same-sex couples by eliminating the current situation in which employers provide tax-free benefits to opposite-sex partners, but must tax benefits to same-sex partners. In addition, an employee with a same-sex spouse will now be able to contribute to health savings and flexible spending accounts at the same levels as an employee with an opposite-sex spouse. COBRA will apply to same-sex spouses." (Thompson Hine)

IRA Contribution Flows Dwarfed by Rollovers (PDF)
"Almost 13 times the amount of dollars were added through rollovers compared with contributions in 2011 ... The average and median (mid-point) rollover amounts in 2011 were $72,398 and $19,632, respectively, compared with the average contribution of $3,723. Average and median rollover amounts increased with age, reaching $121,106 and $46,216, respectively, for those age 60-64, at which point the median rollover amount began decreasing, while the average rollover amount continued to rise until the owners reached age 70." (EBRI)

Monitoring the Providers of IRA Rollover Services: What Are a Plan Sponsor's Responsibilities? (PDF)
"While the [GAO] report discusses a number of issues ... there is also a message to plan sponsors about the practices of some providers. As a part of the study, the GAO reviewed the practices and materials of selected plan providers and their IRA rollover services (e.g., call centers) and determined that, in some cases, participants were receiving biased information.... Is it possible that plan sponsors could be viewed as 'endorsing' or selecting the provider for that purpose and, therefore, be obligated to prudently select and monitor the IRA rollover services of their provider? Unfortunately, neither the courts nor the DOL have provided a clear answer to that question." (Drinker Biddle)

Five Reasons to Let a Sleeping 401(k) Lie
"1. You can't buy comparable investment options on your own.... 2. You may need early access to your money.... 3. You could need the extra legal protections.... 4. You own company stock in your 401(k).... 5. You need the guardrails." (Morningstar)

TSP Beneficiary Beware
"[R]ules for establishing an inherited IRA do not apply when inheriting a spousal beneficiary participant account from the [federal government's Thrift Savings Plan].... [F]rom the TSP Beneficiary Participant Booklet: Death benefit payments made from your beneficiary participant account must be paid directly to your beneficiary(ies). These payments are subject to certain tax restrictions and cannot be transferred or rolled over into an IRA or eligible employer plan." (Government Executive)

[Official Guidance] Text of IRS Private Letter Ruling Extending 60-Day Rollover Period Because of Bank Error (PDF)
"Taxpayer A maintained IRA B, a [CD], with Bank C. Upon maturity of the CD ... Taxpayer A initiated a transfer of Amount 1 from IRA B to an account at Bank D. Instead of depositing Amount 1 into a rollover IRA account as Taxpayer A intended, Bank D deposited Amount 1 in Account E, a non-IRA CD.... When the mistake was discovered ... Bank D transferred Amount 3 to ... and IRA CD. Taxpayer A ... believed that Account E was and IRA and that Bank D made a mistake in depositing Amount 1 into a non-IRA CD." [PLR 201319034, dated Feb. 14, 2013, published May 9, 2013] (Internal Revenue Service)

When Rolling Over, Make Sure You Don't Get Squished by Costs
"Investing pros agree that cashing out retirement savings is hardly ever wise. But there are benefits to both of the other alternatives: IRAs typically offer a wider range of investment options, while 401(k) plans offer lower costs, particularly if they are sponsored by a big employer. Those cost savings can be significant in the long run." (The Wall Street Journal)

401(k) Rollover Study Triggers Call for Action to Protect Plan Participants
"One of the biggest steps is updating a 37-year-old fiduciary standard that was developed in a very different marketplace, said Phyllis C. Borzi, assistant secretary of labor for [EBSA]. 'We believe our work regarding the definition of fiduciary is key to addressing conflicted investment advice and related problems your report identifies,' Ms. Borzi said in a letter to the GAO." (Pensions & Investments)

Text of GAO Report: DOL and IRS Could Improve the Rollover Process for Participants
"GAO found that service providers' call center representatives encouraged rolling 401(k) plan savings into an IRA even with only minimal knowledge of a caller's financial situation. Participants may also interpret information about their plans' service providers' retail investment products contained in their plans' educational materials as suggestions to choose those products. Labor's current requirements do not sufficiently assist participants in understanding the financial interests that service providers may have in participants' distribution and investment decisions.... GAO recommends that Labor and IRS should take certain steps to reduce obstacles and disincentives to plan-to-plan rollovers." [Editor's note: The report includes seven specific recommendations for DOL and Treasury actions, including "finalize the agency's initiative to clarify the [ERISA] definition of fiduciary" and "develop a concise written summary explaining a participant's four distribution options and listing key factors a participant should consider when comparing possible investments, and require sponsors to provide that summary."] (U.S. Government Accountability Office)

Making a 'Backdoor' Roth IRA Contribution
"[If] a taxpayer rolls over a distribution from his or her IRA to an eligible retirement plan ... and the amount rolled over equals only the sum of deductible contributions and earnings on all contributions ... but not any nondeductible contributions, the entire amount rolled over will not be taxed at the time of rollover.... The taxpayer's remaining IRA balance after the rollover should equal its basis, so the taxpayer could immediately withdraw that remaining balance tax free or convert it to a Roth IRA tax free." (Journal of Accountancy)

[Guidance Overview] 'Blue Book' Clarifies Distribution Restrictions Following In-Service Roth Conversions
"The 'Blue Book' for [the American Taxpayer Relief Act of 2012], as released by [JCT] in February 2013, clarifies the provisions authorizing in-service rollover distributions of 401(k) funds to Roth 401(k) plans. Significantly, the Blue Book explains that amounts subject to a distribution restriction in a 401(k), 403(b), or 457(b) plan before an in-plan transfer remain subject to the applicable distribution restrictions after the transfer." (Wolters Kluwer Law & Business)

Auto Rollovers: They're Not Just for Crash Test Dummies
"[M]any plans have never adopted an auto rollover provision. Default IRAs are handy because they get the liabilities out of the plan and eliminate the need to keep track of long forgotten, barely vested participants and pay their [PBGC] premiums.... [Many] IRA providers .. accept the auto rollovers ... [at] no cost to the plan sponsor." (Retirement Town Hall)

Annual IRA Rollovers to Surpass $450B by 2017
"Assets in 401(k) plans totaled $3.1 trillion in 2011 ... IRA assets reached nearly $5 trillion by the end of 2011 and rollover contributions were more than $300 billion. Both of these totals will increase over the next five years as Baby Boomers enter retirement." (PLANADVISER.com)

2012 Q&As: Treasury and IRS Meeting with ABA Joint Committee on Employee Benefits, May 11, 2012 (PDF)
Some questions on flexible spending accounts, HSAs and executive benefits, but most of the questions address 401(k) plan operation and distributions from tax-qualified retirement plans. "The statements contained herein cannot be relied on even though they are printed as statements of the IRS. The questions were submitted by ABA members, and the responses were given [orally at a meeeting on May 11, 2012] after explicit statements that their responses reflect the unofficial, individual views of the government participants as of the time of the discussion, and do not necessarily represent agency policy." (American Bar Association)

Advantages and Disadvantages of DC to DB Rollovers
"This Spotlight presents an overview of some of the advantages and disadvantages of DC to DB rollovers, from both the employer's and the employees' perspective. The decision to offer DC to DB rollovers is by no means straightforward, depending on the weight the plan sponsor places on the positive and negative attributes. The Spotlight concludes with an overview of some ambiguities about DC to DB rollovers that employers should be aware of if they are considering offering the option." (Sibson Consulting)

Annuity Buyers Finding Guaranteed Lifetime Benefits Attractive
"Indexed annuities ... rose by 14% in the first quarter ... Guaranteed-lifetime-withdrawal benefits ('GLWB') helped move the product among customers. Two of three people who bought fixed indexed annuities decided to buy a GLWB rider, which lets customers get lifetime income without annuitizing their contracts." (Investment News; free registration required)

[Guidance Overview] A Bridge Too Far: Early Retirement Exception from 10% Tax Was Available from Participant's 401(k), But Not After IRA Rollover
"The court held that the taxpayer would not have been subject to the 10% tax if he had taken the distribution directly from the 401(k) plan upon termination because of the exception in section 72(t)(2)(A)(v) of the Internal Revenue Code for post-separation distributions to an employee who has attained age 55, but because he chose to roll over his balance, the exception no longer applied to a distribution from an IRA." (Haynes and Boone)

Think Twice About Rolling Your 401(k) into an IRA -- Consider Investment Management Fees When You Receive New Disclosure Report
"Before you make a move, compare the fees of your 401(k) plan's funds with any retail funds you're considering at the IRA rollover institution. The new 401(k) fee-disclosure rules that become fully effective in August will make this comparison easier. [The author's] recent post showed average and median fees for various types of mutual funds. You'll want to invest in funds with expenses well below these averages, and there's a good chance your 401(k) plan will accomplish this." (CBS MoneyWatch)

[Opinion] ERIC Offers Recommendations to Improve Treasury Lifetime Income Guidance
"[ERIC] submitted to [Treasury and IRS] a series of three comment letters in response to their February 2012 package of proposed regulations and revenue rulings regarding lifetime-income options for participants and beneficiaries in retirement plans.... ERIC's three comment letters offer recommendations addressing the longevity annuity contract regulations, the partial annuity regulations, and the revenue ruling concerning rollovers from defined contribution [plans to defined benefit] plans[.]" (The ERISA Industry Committee)

[Opinion] American Benefits Council Comment Letter to IRS on Priority Guidance Plan (PDF)
"The Council is writing to recommend items relating to employee benefit matters that should be included on the [IRS] 2012-2013 Guidance Priority List. The Council is submitting a letter separately recommending a project to modify the current nondiscrimination and minimum participation regulations to protect older, long-service participants. This letter focuses on other recommendations for the Guidance Priority List." (American Benefits Council)

[Guidance Overview] Waiver of 60-Day Rollover Requirement Granted to Taxpayer Who Mistakenly Requested Duplicate IRA Distribution
"The taxpayer's failure to accomplish a timely rollover was due to the error by the financial institution which caused her to request the duplicate distribution. Therefore, the IRS waived the 60-day rollover requirement and the taxpayer was given 60 days to roll over the duplicate distribution." (Wolters Kluwer Law & Business / CCH)


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