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All News > Rollovers

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Tax Court Rules New SECURE 2.0 Statute of Limitations on Excess Contribution Penalty Is Not Retroactive
Slott Report Link to more items from this source
Mar. 4, 2024

"anyone thinking that they can let sleeping dogs lie, and not fix excess IRA contributions or missed RMDs from years prior to 2022, may want to reconsider. This Tax Court case is a warning that the new SECURE 2.0 SOL may not be enough to make those problems go away." [Couturier v. Commissioner, No. 19714-16 (T.C. Feb. 28, 2024)]

Tags: IRAs  •  Rollovers

Nongovernmental 457(b) Plans and Rollovers: The Two Don't Mix
Retirement Learning Center, LLC Link to more items from this source
[Guidance Overview]
Feb. 23, 2024

"[A] nongovernmental 457(b) plan (e.g., a plan maintained by a nonprofit hospital) is not an eligible plan for rollover purposes ... For nongovernmental 457(b) plans, the only way to defer taxes would be through a direct transfer to another 457(b) plan of a tax-exempt entity[.]

Tags: 457 Plans  •  Rollovers

Retirement Plan Advisers Prep for Fiduciary Rule That Could Affect IRA Rollover Advice
Pensions & Investments Link to more items from this source
Jan. 29, 2024

"Nearly one-third (30%) of retirement plan advisers are now less likely to recommend an IRA rollover from a retirement plan with less than $50,000 ... Cerulli estimates that 63% of the $845 billion in assets rolled over from defined contribution plans in 2022 were rolled over into IRAs with the assistance of a retirement plan adviser."

Tags: Fiduciary Duties  •  Rollovers

IRS Announces Rollover Relief for Maryland Prepaid College Trust Accounts
Ascensus Link to more items from this source
[Guidance Overview]
Jan. 26, 2024

"[Notice 2024-23] allows an exception to the one rollover per 12-month period tax limitation on rollovers if [certain] criteria are met."

Tags: Rollovers

Detailing the DOL's Auto-Portability Proposal
planadviser Link to more items from this source
[Guidance Overview]
Jan. 23, 2024

"Service providers would be permitted to charge a reasonable fee to default the assets of individual retirement account holders to a new employer-sponsored plan under a proposal published [January 19] by the [DOL].... A service provider may make this default IRA-to-plan rollover without the participant's affirmative consent 'after such individual has been given advance notice of the transfer and has not affirmatively opted out of such transfer.' "

Tags: Retirement Plan Administration  •  Rollovers  •  SECURE 2.0

DOL Proposes Rules for Automatic Portability Transactions
Thomson Reuters Practical Law Link to more items from this source
[Guidance Overview]
Jan. 22, 2024

"SECURE 2.0 allows an automatic portability provider to receive a fee in connection with executing an automatic portability transaction if certain conditions are met ... The proposed regulations detail the conditions that must be satisfied for an automatic portability transaction to be covered by the new statutory exemption."

Tags: Retirement Plan Administration  •  Rollovers  •  SECURE 2.0

Plan Sponsor Concerns About 401(k)-to-IRA Direct Transfers
Fiduciary News; free registration required Link to more items from this source
Jan. 17, 2024

"Between SECURE 2.0 auto-portability requirements and the impact of the DOL's new Fiduciary Rule on IRA Rollovers, we may be entering a new world when it comes to money moving into IRAs from 401k plans.... The first thing to recognize is, while often referred to as 'IRA Rollovers,' technically, these money movements are not rollovers."

Tags: 401(k) Plans  •  Retirement Plan Administration  •  Rollovers

The Beauty of Taking Early IRA Distributions
Forbes; subscription may be required Link to more items from this source
Jan. 3, 2024

"Why should you take money out of retirement accounts if you don't need it? ... [To] utilize lower tax brackets; for married couples, to take advantage of 'wider' tax brackets while both of you are alive; to provide a bigger cushion in your 'post-tax' accounts should you ever have a large cash flow need; and with the new 10-year withdrawal rule, to reduce the income tax your heirs may have to pay on your retirement accounts."

Tags: Retirement Plan Administration  •  Rollovers

ARA Comment Letter to DOL on Proposed Retirement Security Rule (PDF)
American Retirement Association [ARA] Link to more items from this source
[Opinion]
Jan. 3, 2024

"When ERISA was enacted and the 1975 Rule was promulgated, defined benefit pension plans of large companies dominated the market. The 401(k) plan did not even exist.... The ARA supports this expanded, transactional definition and believes it better aligns with the statutory language and intent of ERISA to protect all retirement investors. However, [ARA recommends] certain revisions to avoid unintended effects on certain parties and particular circumstances."

Tags: Fiduciary Duties  •  Retirement Plan Investments  •  Rollovers

Backdoor Roth IRA: Common Roadblocks
Morningstar Link to more items from this source
[Guidance Overview]
Dec. 28, 2023

"[M]any advisors will have mass-affluent clients with all their qualified funds inside of company retirement plans, which are ignored for the purposes of calculating backdoor Roths (assuming the funds aren't rolled over into an IRA during the year).... Unfortunately, things get complicated quickly if taxpayers have existing IRA dollars (in any account) and/or if they plan to roll over funds from a qualified account at any point during the year."

Tags: Rollovers

Why the DOL Hearings Generated More Heat Than Light
ThinkAdvisor Link to more items from this source
[Opinion]
Dec. 21, 2023

"[R]ecent hearings on the DOL's proposed fiduciary rules generated more heat than light because most participants failed to note that the word 'fiduciary' means and requires different things in different contexts.... [C]hanging the definition of ERISA-fiduciary to encompass virtually anyone who makes a recommendation about retirement savings is not an effective way to help consumers. It would actually water down the meaning of 'fiduciary' by forcing its application to salespeople who are not fiduciaries in other contexts."

Tags: Fiduciary Duties  •  Retirement Plan Investments  •  Rollovers

Withholding Rules for Small Rollover Balances
PLANSPONSOR; free registration may be required Link to more items from this source
[Guidance Overview]
Dec. 19, 2023

"[If] total distributions to a participant in a tax year are less than $200, such distributions are not subject to the 20% mandatory withholding. Also, the plan is not required to allow participants to make a direct rollover of such amounts (though the participant may complete an indirect rollover), and no withholding notice and election is required either."

Tags: 403(b) Plans and Annuities  •  Misc. Distribution Issues  •  Rollovers

The New Fiduciary Rule, Part 12: Advisors and Agents with Restricted Investment Menus
FredReish.com Link to more items from this source
[Guidance Overview]
Dec. 18, 2023

"there are actually two best interest decisions -- the first is account type and the second is about the investment options within the account type.... [A]rguably, there are two steps to the limited menu analysis. If a determination is made that the limitations will not cause an imprudent recommendation, the bases for that conclusion must be reduced to writing. Then, the financial professional will need to engage in a best interest process[.]"

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs  •  Rollovers

At DOL Hearing, Some Urge Withdrawal of Fiduciary Proposal; Others Welcome Tougher Standards
Pensions & Investments Link to more items from this source
Dec. 13, 2023

"The public feedback on the [DOL's] new rule proposal ... ran the gamut Dec. 12, from stakeholders who say the initiative is needed to close coverage gaps and better protect retirement savers, to those who say it will hurt financial professionals, lead to fewer advice options for savers and should be withdrawn entirely."

Tags: Fiduciary Duties  •  Retirement Plan Investments  •  Rollovers

The New Fiduciary Rule, Part 10: What is An Investment?
FredReish.com Link to more items from this source
[Guidance Overview]
Dec. 11, 2023

"[T]he key point to be derived from the second definition of covered recommendations is that the DOL is taking a very broad approach to the types of recommendations that will be fiduciary in nature. In other words, for those types of recommendations to private sector retirement plans and participants in those plans. As a result, advisers and agents will need to engage in prudent processes to develop recommendations that are informed and in the best interest of the retirement investors."

Tags: Fiduciary Duties  •  Retirement Plan Investments  •  Rollovers

The New Fiduciary Rule, Part 9: What Is an Investment?
FredReish.com Link to more items from this source
[Guidance Overview]
Dec. 6, 2023

"The DOL's expansive interpretation of covered recommendations includes any asset with investment value, any strategies for investing, and any recommendations about how to invest rollovers, transfers or withdrawals from private sector retirement plans, participant accounts and IRAs."

Tags: Fiduciary Duties  •  Retirement Plan Investments  •  Rollovers

A Guide to the DOL's Retirement Security Rule Proposal
Proskauer Link to more items from this source
[Guidance Overview]
Nov. 28, 2023

"The Proposed Rule picks up an individualized recommendation to a retirement investor by an adviser that regularly provides investment recommendations to any investors and, therefore, many common 'one-time' advice scenarios that historically were not covered by the fiduciary standard ... The omission of a 'sales' or 'sophisticated investor' safe harbor may leave a lack of clarity for many common marketing activities."

Tags: Fiduciary Duties  •  Retirement Plan Investments  •  Rollovers

Editor's Pick DOL Fiduciary Rule Returns from the Dead
Debevoise & Plimpton LLP Link to more items from this source
[Guidance Overview]
Nov. 7, 2023

"At least for rollovers from qualified employer sponsored plans, the revised rule also affords both the recipient of the recommendation and the DOL enforcement authority that can subject institutions to judicial actions, including class actions, with the DOL being armed with access to the mandated compliance documentation and reports prepared to meet the conditions of the applicable prohibited transaction exemptions."

Tags: Fiduciary Duties  •  Retirement Plan Investments  •  Rollovers

DOL Would Oversee Annuity Sales, Rollovers Under New Proposal
PLANSPONSOR; free registration may be required Link to more items from this source
[Guidance Overview]
Nov. 1, 2023

"The proposal would scrap the traditional five-part test for determining if an adviser is acting in a fiduciary capacity and replace it with a three-part test in which satisfying any one of the three conditions would make the adviser a fiduciary.... [T]he proposal would assert the DOL's authority under ERISA over any retirement account and any annuity purchase made with plan assets, and recommendations in these spaces would be subject to ERISA fiduciary standards."

Tags: Fiduciary Duties  •  IRAs  •  Retirement Plan Investments  •  Rollovers

Livestream Video of White House Remarks on Protecting Americans’ Retirement Security
The White House Link to more items from this source
[Guidance Overview]
Oct. 31, 2023

Link is to YouTube live broadcast of White House announcement of DOL proposed regs, scheduled for 3:30 p.m. ET on October 31, 2023.  Recording should be available after the event; BenefitsLink will update this link if necessary.

Tags: Fiduciary Duties  •  Retirement Plan Investments  •  Rollovers

DOL Fact Sheet: Retirement Security Proposed Rule and Proposed Amendments to Class Prohibited Transaction Exemptions for Investment Advice Fiduciaries
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL] Link to more items from this source
[Guidance Overview]
Oct. 31, 2023

"This proposed fiduciary definition would apply to recommendations to roll over assets from a workplace retirement plan to an IRA if every element of the proposed fiduciary definition is satisfied.... The new proposed fiduciary definition ... focuses directly on the nature of the relationship between the advice provider and the investor. It is intended to extend to the type of interactions retirement investors commonly have in the financial services marketplace with trusted advisers.... The new proposed investment advice fiduciary definition is more narrowly tailored than the 2016 fiduciary rule, which applied to virtually all paid recommendations to retirement investors. In addition, the proposed amendments to the Department's exemptions do not impose any new contract or warranty requirements.... Under the proposal, the Department would make two exemptions available for the management of conflicts of interest with respect to advice. One exemption (PTE 2020-02) would be broadly available for advice with respect to the wide universe of investments recommended to retirement investors. A second exemption (PTE 84-24) would be tailored for use by independent insurance agents and is intended to facilitate their ability to make best interest recommendations under their business model."

Tags: Fiduciary Duties  •  Retirement Plan Investments  •  Rollovers

DOL Seeking to Add One-Time Rollover Advice to Fiduciary Standard
Pensions & Investments Link to more items from this source
[Guidance Overview]
Oct. 31, 2023

"[A] new rule proposal [will] require rollover advice be in the best interest of the saver ... The proposal would also apply a best interest standard to advice that plan sponsors receive about which investments to include in 401(k) and other employer-sponsored plan lineups.... The proposal ... would align with the [SEC's] Regulation Best Interest ... [T]he department is amending the five-part test to cover one-time rollover advice."

Tags: Fiduciary Duties  •  Retirement Plan Investments  •  Rollovers

Legacy IRA Rollover to Charitable Gift Annuity
Nerd's Eye View Link to more items from this source
Aug. 24, 2023

"The potential benefits of the new Legacy IRA rules are threefold. First, they allow donors to enhance their charitable giving legacy and ensure their future charitable intentions are fulfilled. Second, they reduce the donor's tax bill in the year the CGA is created by excluding the amount contributed to the CGA from taxable income. And third, they create a stable lifetime income stream that can be paid to the donor and/or their spouse."

Tags: IRAs  •  Rollovers

Fourth Circuit Upholds Lower Court Decision: 'Sales Pitch' for Services Is Not Fiduciary Advice
October Three Consulting Link to more items from this source
Aug. 11, 2023

"DOL's reinterpretation of the five-part test in the PTE is currently being litigated. And DOL has put on its agenda yet another re-write of its fiduciary advice regulation ... which itself will likely be litigated. One way or another, in this ongoing litigation, the courts will be asked to decide whether the application of advice fiduciary status to call center operators ... is authorized by ERISA. And included in that litigation will be arguments about when advice fiduciary status can be defeated by an assertion that the call center operator was a mere sales pitch and not investment advice." [Reetz v. Aon Hewitt Investment Consulting Inc., No. 21-2267 (4th Cir., July 17, 2023)]

Tags: Fiduciary Duties  •  Retirement Plan Investments  •  Rollovers

The DOL's Regulatory Agenda and a New Fiduciary Rule
FredReish.com Link to more items from this source
[Guidance Overview]
Aug. 8, 2023

"The anticipated DOL proposed fiduciary regulation could be sent to the Office of Management & Budget (OMB) in a matter of weeks. The proposal will likely say that a rollover recommendation to a participant in an ERISA governed retirement plan is a fiduciary act. The DOL will also likely propose amendments to prohibited transaction exemptions, including to PTE 84-24, the exemption used for fiduciary rollover recommendations into individual annuity contracts."

Tags: Fiduciary Duties  •  Rollovers

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