Leaderboard

In 1977, as I began law school, I started working as a law clerk and was quickly given responsibility for the firm’s qualified plan practice. When I passed the bar in 1980, I stepped fully into a career that has now spanned more than four decades. As I begin to slowly wind down those years as an ERISA attorney, I am deeply grateful for the opportunities that have come my way and for the encouragement and help of so many good men and women. I never dreamed, in the ’70s and ’80s, where this practice would take me. As this year began, my ERISA work fell into six main roles: I’m an author. I have written or co-authored five books dealing with retirement plans, and am nearly done with my sixth—the ERISA Fiduciary Navigator eSource—all published by ERISApedia.com. I head the ERISApedia ASK service, where my protégé, Adriana Starr, and I answer questions from ERISA practitioners. I present webcasts and live seminars on retirement topics. I draft plan documents and interim amendments on behalf of the Relius division of FIS. I serve as of counsel to the Ferenczy Benefit Law Center. I assist some clients in a private practice. One of the observations that has struck me over the years about the Employee Retirement Income Security Act is that it never defines “retirement.” My own working definition has been “separating from service once you’re old.” But the older I get, the older “old” gets. Still, as I near RMD age (even after SECURE 2.0), it's time to start thinking about saddling up and riding into the sunset. I envision retirement as gradually dropping things out of the saddlebags. So, with mixed emotions, I announce that I will no longer be acting as of counsel to the Ferenczy Benefit Law Center or conducting a private practice. I will consult on special cases, but otherwise, for now, my professional endeavors will focus on writing, teaching, FIS, and the ASK service. Planning for the financial side of retirement has been the easy part. The emotional and professional side is more challenging. My hope is that a slow and gentle ride toward tomorrow will make that transition easier. I am profoundly grateful to the colleagues, clients, and friends who have shared this journey with me—and I look forward to continuing to write, teach, and cheer you on from slightly lighter saddlebags.

Jayasar, you are correct. 1. Highly Paid Individuals for 2026 are those that earned more than $150,000 (indexed) in 2025, based on FICA wages (Box 3 of W-2). It is a lookback provision. 2. Those without W-2 wages (i.e. sole props, partners) are currently exempt from having to make catch-up as Roth. 3. Roth provisions must be in place before the first Roth contribution. The timing of the Roth catchup contribution is irrelevant. The first Roth dollar deposited can be counted as Roth catchup. The participant does not need to exceed the 402(g) limit for the contribution to be counted as catch-up. 4. One note of caution if you have HPIs that solely earn W-2 and are not HCEs: if the plan does not permit Roth and the HCEs get to make catchups (pre tax) because they don't earn W-2, but the HPIs are prevented from catchups, then you have a benefits, rights and feature issue. In your example, since owner makes $50k in W-3 income, they are not subject to the Roth Catchup requirement.

😮noooo!!! Well, for the rest of us. Thanks for everything over the years, Derrin, and enjoy the wind-down!

Darrin you are the one and only person who has ever done singing continuing education classes that I have been in. You bring up your name in this industry and the conversation turns to the signing instructor. You also taught all of us a lot in those classes. Enjoy retirement.

Echoing @Belgarath and wishing you the best on your gradual exit from the industry. Hopefully others will continue your legacy so the next generation of service providers will know "who's the employer?" After 40+ years in the industry myself, I must say that my fondest memories of your contributions to us all were your musical renditions that added spice to otherwise boring and mundane (to most) topics. Enjoy life!

It isn't really possible to adequately describe the profound impact (all good!) that you have had during my career in this business. Congratulations on the "slowdown" - and from a purely selfish standpoint, we are delighted to hear that the teaching and the ASK will still be on the table for now. Best wishes!

Hi, ho, Silver! We all wish you the very best as you enter this new phase of your life. We have valued having you as a resource, and we are glad that we will still be working together with ERISApedia. Be well, my friend, enjoy your life and family, and know that you are always in our thoughts. We love you - Ilene, Alison, and the rest of us at FBLC

If a portion of the settlement might be “back pay” for wages (or, arguably, self-employment income) that would have happened had the claims complained-of not happened, there might be some opportunities for applying a participant’s elective-deferral election, matching or nonelective contributions (to the extent the plan provided), and years of service (possibly for eligibility, benefit accrual, and vesting). “Back pay. Payments awarded by an administrative agency or court or pursuant to a bona fide agreement by an employer to compensate an employee for lost wages are compensation within the meaning of section 415(c)(3) for the limitation year to which the back pay relates, but only to the extent such payments represent wages and compensation that would otherwise be included in compensation under this section.” 26 C.F.R. § 1.415(c)-2(g)(8) https://www.ecfr.gov/current/title-26/part-1/section-1.415(c)-2#p-1.415(c)-2(g)(8). But the details of how to write the settlement agreement; how to allocate amounts to particular plan, limitation, and tax years; and how to time and document elections are tricky. And there are other employee-benefits issues. If your client does not have a regularly engaged employee-benefits lawyer or that lawyer wants to add one who is specially knowledgeable for this situation, Bradley Horne (Super Lawyers Rising Stars: 2024, 2025, 2026) at Smith & Downey has a developed knowledge of how to handle the retirement, health, and other employee-benefit plans’ aspects regarding settlements of employment-related disputes. https://www.smithdowney.com/professionals/bradley-j-horne/

Since there are very good reasons to be suspicious of the request, you and the plan's fiduciaries need to protect the plan from potential fraud. Otherwise, if the request is fraudulent, then there will be a lot of finger-pointing (and potentially litigation) about who will make the plan and participant whole. If there is a concern about inviting the individual into your office or the client's office, consider choosing a public, safe place to meet. This could be at a bank or even at a police station, depending upon the level of concern. The purpose is to arrange for a notary or plan representative to validate the individual's identity. Ideally, someone who could recognize the participant could be available. If the level of concern is at the level that the plan fiduciaries are comfortable just having an election form notarized without their being present, then consider listing on the document being notarized specific items for the notary to confirm was presented at the signing. This could be at least one item with a picture (like a driver's license), and any additional documents that would acceptable like an original Social Security Card, Medicare ID or something similar. Ultimately, it is the plan fiduciaries call on how to approach the issue, but you need to make it abundantly clear to them that you believe additional steps need to be taken to confirm the participant's identity. We have not dealt with this particular set of circumstances, but have had a couple of incidents where we expressed our concerns to the plan fiduciaries and worked with them to document the participant's identity to their satisfaction. These are just some thoughts and is not advice to anyone.

Well done! I can echo, after 40+ years as an actuary, it was difficult to "let go", so I endorse your gradual approach. Retirement is great!

@S Derrin Watson, you have been a trusted advisor, teacher, lecturer, and author for my entire career in the industry. I can easily say that you, @Ilene Ferenczy, and Sal have shaped me into the practitioner I am today. I wish you the best as you start this new chapter of your life!

A caution for others who might do one or both sorts for who might be § 414(v)(7)-affected: An employee who’s 49 at the beginning of a year might turn 50 by the end of the year.

I agree. We've also had DOL audits (excuse me, "investigations" - we had a DOL "auditor" get snippy when we referred to her as an "auditor" rather than an "investigator") where the response was identical - "get a bond" - and no penalty was imposed.

I would tend to say that's not necessary. I've had IRS audits for clients where they checked the 'No' box and never got a bond, where the auditor simply says "...and tell them to get a bond". Your situation is even better because you can tell the agent that a bond was obtained and the year in question is retroactively covered. We can usually get the agent to tell us why a certain plan was selected for audit and my experience has been that it was never because of a lack of a bond.

Just file the amended 5500 ASAP attaching the auditor's report. From Form 5500 instruction – “If the required IQPA’s report is not attached to the Form 5500, the filing is subject to rejection as incomplete and penalties may be assessed.“ From DOL EFAST FAQ – “Q25: Will EFAST2 receive my filing if I do not attach the IQPA report to my Form 5500 annual return/report? EFAST2 will receive your filing, but the filing is incomplete without the required IQPA report. An incomplete filing may be subject to further review, correspondence, rejection, and civil penalties. Please note Schedule H, line 3 specifically asks for information regarding the plan’s IQPA report. If you do not submit the required IQPA report, you must still correctly answer these questions. If you have to file Form 5500 without the required IQPA report, correct that error as soon as possible.”