Search the News Archive

What Will the Benefits Service Provider of the Future Look Like? (PDF)

"[W]hat we have seen in the retirement plan administration industry mirrors what we have seen nationally -- an Industrial Revolution of sorts ... One would think that this makes the servicing of retirement programs easier and less expensive, but the opposite is often true... As computers increasingly do what we used to do by hand with an HP 12C calculator and a pencil, Congress, the [DOL], and the [IRS] have also increased the compliance burdens.... Are we going to see the benefits equivalent of the 'citizen-driver' experience, where you can pick up administration on any street corner with a cell phone and get the same ride to your destination as you would with a taxi or a limo?"

The IRS Giveth ... and the IRS Taketh Away (PDF)

"[T]he IRS has finally given permission for plan sponsors to adopt many -- if not most -- types of amendments to safe harbor 401(k) plans during the plan year.... [But in] a recent set of proposed regulations ... nominally intended to provide nondiscrimination relief for certain 'closed' defined benefit plans, the IRS proposes to make general nondiscrimination testing in DC plans harder to pass. The proposal will limit the availability of the 'each participant in his or her own group' method of determining profit sharing allocations, if the average benefit percentage test is to be used."

June 9 Is the Date for Fiduciary Rule Applicability.... for Now

"The level-to-level exemption ... resolves the difficulties with which plan fiduciaries have struggled for years to provide participants with access to good distribution and rollover advice, while avoiding engaging in impermissible behavior. And it has the added benefit of holding all advisors to the same standard, whether they work with the plan or not.... [T]he part of the Rule that makes someone who responds to a client's request for the name of a reliable investment advisor a potential fiduciary needs to be removed or modified so that it does not disrupt the good relationship between financial advisors and TPAs."

New IRS Revenue Procedure for Qualified Retirement Plan Document Determination Letters (PDF)

"An interesting -- and likely unintended -- side effect of these rules is that restating an [individually designed plan (IDP)] onto another individually designed document, such as when a plan sponsor changes benefits counsel, will come with considerable risk. While the existing plan document will be able to rely in large part on its existing [favorable determination letter (FDL)], whenever it was issued, the new document will not be able to do so and a new FDL will be unavailable."

Hurricane Relief Summary Charts

Chart of hurricane relief provided by IRS, DOL and PBGC, as of September 29, 2017.

You Are (or Are Not) a Professional -- and You Are (or Are Not) Covered by the PBGC

"[D]eduction rules for PBGC-covered and non-covered plans are different.... The IRS averred in our client's situation that a financial advisor is a professional, so his plan is exempt from PBGC coverage.... A coverage ruling was requested and ... the PBGC ruled that the financial advisor was a professional.... [T]he PBGC considered significant objective and subjective elements.... [A] search of a Form 5500 database ... found that 68% of the 650 plans in that category had been coded as being PBGC-covered. That is a lot of surprised folks who have been paying premiums, calculating contributions, and operating as if they were PBGC-covered."

Fiduciary Rules and 401(k) Hardship Distributions: The Latest

"An interesting byproduct of the regulatory process over the past several years is that both advisors and plan-related clients have been sensitized to many of the issues addressed -- albeit sometimes clumsily -- in the fiduciary regulation. For example, should a plan require that its investment advisor act as a fiduciary, even if the regulation ends up not requiring this? If not, why would a plan want to retain someone who is not required to act in the plan's best interest?"

DOL's Fiduciary Reg: Recent Developments (PDF)

"[F]or the TPAs: Neither the original regulations nor the first set of FAQs addressed what we considered to be the most important question for you: is the recommendation of a financial institution to act as recordkeeper and fund holder a fiduciary recommendation under the new rules? ... [T]he second set of FAQs revealed that the answer to this question is a definitive 'no,' so long as you are not giving advice about the actual investments.... The second set of FAQs clarified that ... [if] there is no prohibited transaction, there is no need for an exemption, including BICE. This means that the business model of advisors using the offset model for compensation will likely be able to continue unchanged."

The New Fiduciary Regs: A Practical Review, Part 3 (PDF)

"[The authors have seen] a continuous fluctuation in the level of practitioner or pundit confidence that they have correctly interpreted certain sections of the regulation or the prohibited transaction exemptions. Points that we all thought were clear on first or second glance through the rules don't seem so understandable on our third or fourth look. What one practitioner questions is different from what another sees as problematic. And, the more discussions we have with others in the industry, the more unclear much of the regulation appears. Here is a selection of the material unanswered questions[.]"

The New Fiduciary Regs: A Practical Review, Part 2 (PDF)

"It is clear from the Preamble to the exemption, as well as the exemption terms themselves, that the DOL is trying to structure an environment where the participant remains protected and the advisor acts in the participant's best interests. The DOL approaches this in two ways: on the one hand, forcing the fiduciary to behave within constraints, and on the other, giving a disappointed participant access to litigation as an enforcement mechanism." [Also see Supplement: Best Interest Contract Exemption.]