Rev. Dec. 2024; 86 pages. "In tax years prior to 2018, user fees were allowed as miscellaneous itemized deductions subject to 2%-of-adjusted-gross-income (AGI) limit. However, under the Tax Cuts and Jobs Acts (TCJA), miscellaneous itemized deductions are suspended for tax years 2018 through 2025, and therefore user fees aren't allowed for tax years beginning after 2017 and before 2026.... Distributions from an annuity under a nonqualified plan are considered net investment income for the purpose of figuring the NIIT. "  MORE >>

"The Feb. 21 policy memo notes that Chinese companies can use American investment to develop new technologies, some with military applications, that can undermine America's national security interests.... [T]he memo directs the DOL to update 'fiduciary standards under [ERISA] for investments in public market securities of foreign adversary companies' ... Foreign adversaries' include China, Russia, North Korea, Venezuela, Cuba, and Iran."  MORE >>

"The proposed regulations clarify that a grandfathered plan will not lose its status as exempt from the mandatory automatic enrollment requirements simply because the plan is amended outside of the plan merger and spinoff context ... [T]he proposed regulations clarify that if an employer maintains a grandfathered plan and the plan then merges into a non-grandfathered MEP, the plan will retain its grandfathered status with respect to that employer."  MORE >>

"Typically, no employee salary deferral contribution will be made to a plan unless the participant affirmatively elects to have that contribution made. If no election is made, it is interpreted as if they chose not to participate. Automatic enrollment (also known as an 'automatic contribution arrangement') flips this assumption on its head.... Although the rules set certain minimum requirements, there is still flexibility in the mandatory automatic enrollment provisions"  MORE >>

[T]the complaint suggested that the trustees amended the Trust Agreements to secure unwarranted compensation, depriving the Benefit Funds of potential investment returns. Cudjoe argued that if the funds had been properly managed, they could have earned significantly more, enhancing the benefits available to union members. The court concluded that Cudjoe"s allegations of financial harm were sufficient to establish a concrete interest in the outcome, thus satisfying the standing requirement." [Cudjoe v. Building Industry Electrical Contractors Association, No. 24-921 (2d Cir. Feb. 28, 2025; unpub.)]  MORE >>

"Both supporters and opponents of the consideration of environmental, social and governance (ESG) goals can point to decisions by U.S. district courts in 2025 that are consistent with their positions on the permissibility of ESG-motivated investing in plans governed by [ERISA].... However, even though the two cases involve many of the same underlying legal principles, they did so in very different legal contexts.... [It] may well be the private litigation, rather than the litigation determining the legitimacy of the DOL's regulation, that will have the greater practical impact on future fiduciary conduct." [Spence v. Am. Airlines, Inc., No. 23-0552 (N.D. Tex. Jan. 10, 2025); Utah v. Su [Micone], No. 23-11097 (5th Cir. Jul. 18, 2024)]  MORE >>

"[In] mid-January ... the [DOL] quietly granted UBS a renewed license to manage billions in U.S. private pension assets -- following a protracted tussle over the banks' shared history of tax fraud, a LIBOR scandal, currency scams, and money laundering.... UBS's hard-won QPAM exemption ... came after loads of impassioned letters were sent by some of Wall Street's top financial firms and asset managers -- most of which did not want DOL to change its practice of granting waivers to even the worst-behaving banks."  MORE >>

"The beauty of the Funded Status metrics is that if all assumptions are realized from one year to the next ... the Funded Status is expected to remain unchanged. If the Funded Status increases (or decreases) from year to year, experience losses (or gains) have occurred. Using this self-adjusting process and monitoring these losses or gains over time will be valuable in determining when adjustments in the household plan may be required."  MORE >>

"Defined benefit (DB) plans sponsored by Fortune 1000 companies entered 2023 with an aggregate funded position of 100.1%, remaining almost unchanged at a level of 99.1% by year-end, stationed at fully funded levels. Throughout the year, discount rates remained relatively stable, though a slight decline contributed to higher pension liabilities as measured by projected benefit obligations (PBOs)."  MORE >>

"This post describes tax-related retirement plan decisions and tax impacts during working years, financial gap years (age 59½ to required minimum distribution (RMD) age), and after RMDs begin. Since RMDs are taxed as ordinary income, strategies to mitigate their tax impact are also described as well as related topics such as portfolio rebalancing, rollovers, and account withdrawal methods (e.g., Rule of 55 and the 72(t) rule). Also included is a summary of research about RMDs, which are often used as a de facto retirement savings income withdrawal strategy by older adults, and the impact of asset allocation on the volatility of RMDs. It concludes with three 'need to know' facts, and six take-away action steps."  MORE >>

"As you transition into retirement, your financial landscape can shift dramatically.... Retirement brings a complex mix of income sources, each with tax implications. Social Security, retirement account withdrawals, pensions, and investment income all play by different rules in the eyes of the IRS.... And it only complicates matters that tax policy is undergoing notable changes in 2025 at both federal and state levels, with potentially significant implications for retirees."  MORE >>

"Most small to mid-sized plans and even larger ones will never have the resources to hire a dedicated in-house DC professional, so they will continue to rely on their plan advisor or consultant with one big change. They are starting to realize that the most important decision they can make is hiring the right advisor. Their advisor has drilled into them the need to conduct regular investment due diligence and periodic record keeper RFPs, which is how many were hired."  MORE >>

"[T]he ERISA Advisory Council has not yet set a date for the year's first meeting, which typically occurs in March or April. The [DOL] has also not yet published reports the council presented to EBSA last year, including recommendations about lifetime income and qualified default investment alternatives[.]"  MORE >>

"The bill proposes that independent contractors open portable benefit accounts managed by providers, with contributions from hiring parties being optional and incentivized through state tax deductions. If passed, the new law will take effect on October 1, 2025."  MORE >>

"The case centered around Hankins's claim for benefits under a deferred compensation plan (DCP), which Crain denied based on the absence of an employment and confidentiality agreement between the parties that was referenced in the plan.... [T]he court determined that the DCP's language was clear in its terms regarding the vesting and payout conditions, and it did not explicitly require these additional agreements as a condition for receiving benefits." [Hankins v. Crain Auto. Holdings, LLC, No. 24-1555 (8th Cir. Feb. 28, 2025)]  MORE >>

"How can a successful family-owned business reward and retain key employees who drive company value -- without giving up ownership or control? This was the challenge facing a thriving power generation company as ownership transitioned to its third generation.... This case study demonstrates how a properly structured Performance Units Plan can solve complex compensation challenges while protecting company interests."  MORE >>