IRS Confirms Review of Changes to VCP Enforcement, Audit Process
"Tammy Ripperda, Commissioner, Tax Exempt and Government Entities Division, IRS, ... emphatically stated that no changes have been made to the VCP program.... [As] part of their ongoing internal training efforts, however, the IRS found that procedures outlined in the Internal Revenue Manual and in the EPCRS Revenue Procedure (Rev. Proc. 2019-19) have not been adhered to by the IRS. Thus, although the technical aspects of the program have not changed, the enforcement of the existing rules is under scrutiny. Said another way, the shift being considered -- and it apparently is under consideration -- in the long-standing process with the VCP is apparently seen by the IRS not as a change in official practice, but rather
an adherence to the black letter of the stated procedures."
National Association of Plan Advisors [NAPA]
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Ignorance Is Bliss (If You Are an ERISA Plaintiff)
"[T]here will be a groundswell of decisions involving fiduciary assertions of willful blindness [and that] the courts will struggle to reconcile the tension inherent in the decision's primary holding regarding 'actual knowledge' with its secondary holding that fiduciaries may still be able to prove 'actual knowledge' through 'inference from circumstantial evidence.' ... [F]iduciaries will experiment with various ways to obtain more specific validations that their disclosures were accessed by participants." [Intel Corp. Investment Policy Comm. v. Sulyma, No. 18-1116 (S. Ct. Feb. 26, 2020)]
Hanson Bridgett LLP
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Oracle to Pay $12 Million to Settle ERISA Suit
"The suit, filed in 2016, alleged that ... Oracle caused participants of its 401(k) savings and investment plan 'to pay unreasonable record-keeping and administrative fees' to its record keeper, Fidelity Management Trust Co."
Pensions & Investments
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Arizona Tees Up Best-Interest Annuity Sales Rules
"The bill would change Arizona's suitability requirements to be consistent with the annuity sales model approved by the National Association of Insurance Commissioners Feb. 13. This includes a best interest standard based on the following four obligations: care, disclosure, conflict of interest and documentation."
InsuranceNewsNet.com
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A Detailed Look at Retirement Distributions Reported on Tax Returns
"Among taxpayers of all ages in 2010, 28 percent received gross distributions -- either directly or through a spouse -- and 26 percent received non-rollover distributions. Incidence increases dramatically with age, with nearly 60 percent of taxpayers age 59 to 69 and nearly 85 percent of taxpayers age 70 or older receiving non-rollover distributions. Among taxpayers 59 or older with distributions, non-rollover distributions average $20,000 per person. Overall, taxpayers age 59 or older received 80 percent of the dollars distributed through non-rollovers."
Peter J. Brady and Steven Bass, via SSRN
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Can Low Retirement Savings Be Rationalized?
"[C]onstant consumption with age is only optimal under the precise and unlikely condition that the subjective rate of time preference is equal to the real interest rate. Most people exhibit a positive rate of pure time preference and additionally discount the future by both mortality and morbidity risks. In comparison, the real interest rate is roughly zero percent and the term structure of interest rates suggests that this condition is likely to persist. These considerations suggest that optimal consumption in the life cycle model declines with age. This finding has major implications for optimal retirement saving."
National Bureau of Economic Research [NBER]; purchase required for full document
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403(b) Sales Practices in Question
"When your vendor(s) and/or their competitors are being formally investigated, ... it is prudent to identify if and how the potential areas of concern could negatively affect your plan and your participants.... Conducting a participant survey can help you identify potential areas of weakness with your current vendor(s).... [M]any vendors do not offer fee reductions to their long-term clients, even as they are offering better pricing to their new clients."
PlanPILOT
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[Opinion]
Plan Participants Benefit in Pension Risk Transfer Agreements
"Corporate pension plans are governed by federal law, while insurance and annuities fall under state regulation. Surely, the critics complain, the hard-earned retirement benefits of America's workers are safer with Washington as the cop on the beat.... Actually, they are not. The state regulatory system that oversees annuities and the life insurers that issue them impose a higher level of regulatory and solvency scrutiny than the federal regulations governing pension plans."
Pensions & Investments
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[Opinion]
How Much Can I Afford to Spend in Retirement?
"[These] free planning tools and processes made available here.... employ basic actuarial and financial economics theory by using the theoretical cost of inflation-adjusted annuities to derive our default assumptions for the cost of lifetime retirement income.... [The authors] believe the expected lifetime income from retirement accounts communicated to participants should be expressed in inflation-adjusted dollars, just like Social Security income."
Ken Steiner, FSA Retired
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Selected Discussions on the BenefitsLink Message Boards
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Deadline for Making Requested Distribution
"What with a current downturn in the market, how long can a plan sponsor wait to distribute assets, having received completed distribution forms, including 30-day waiver (for a pooled account)?"
BenefitsLink Message Boards
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