DOL Proposed Fiduciary Definition On April 14, 2015, the U.S. Department of Labor (DOL) issued its long-awaited proposed definition of “fiduciary.” When finalized, the new definition will have a major impact on who is considered to be a fiduciary. Historically, a 401(k) plan sponsor is a plan fiduciary. As such, the sponsor makes sure that investments made available to participants are prudent...
On March 27, 2015, the IRS published Revenue Procedure 2015-27. The new guidance revises certain correction methods under the Employee Plans Compliance Resolution System (EPCRS) and makes changes to Revenue Procedure 2013-12, the current version of EPCRS. The revisions provide plan sponsors with greater flexibility in fixing overpayment errors and reduce compliance fees associated with...
The April 2, 2015, edition of the IRS newsletter for plan sponsors (Employer Plan News) contained an important reminder: Plan sponsors that permit hardship distributions or participant loans should review their current practices to ensure they are operating in compliance with IRS requirements. Hardship Distributions. The IRS makes it clear that a plan sponsor is obligated to retain the following...
On May 18th, the Supreme Court delivered its decision in Tibble v. Edison International in favor of the plaintiff. The case involves the question as to whether a fiduciary has an ongoing duty to monitor a 401(k) plan’s investments. Case Summary: The plaintiffs in Edison’s 401(k) Plan sued their employer in 2007, claiming that plan fiduciaries imprudently offered six retail share class funds in...
During the quarter, the global markets experienced significant volatility, but ended relatively flat. Daily price fluctuations were largely driven by global macroeconomic headlines including a potential Greek default, Chinese market instability, and diverging global monetary policy. While the impacts of the strength of the U.S. dollar and depressed oil prices still remain relevant, their effects...
LEGEND a) Only pretax amounts from an IRA or SEP may be rolled to these plans. b) Rollovers from SIMPLE IRAs are prohibited until after two years of participation. c) Pretax amounts only. d) After-tax amounts may be received only by direct transfer or direct rollover. e) PPA permits direct rollover from a non-Roth qualified plan source, non-Roth 403(b) source, and...
IRA-to-IRA Rollovers IRS Announcement 2014-15 addressed the application of the one-per-12-month-period limit on tax-free rollovers between individual retirement accounts (IRAs). Prior to 2015, the limit applied to each IRA an individual owned. Beginning in 2015, the limit will apply to the aggregate of all an individual’s IRAs. IRS Announcement 2014-32 provides additional clarification and a...
Forms 5500, Annual Returns/Reports of Employee Benefit Plan and Forms 5500-SF have a two-part question about plan compliance with the blackout notice rules. The first part asks if an individual account plan had a blackout period. If the answer is yes, the follow-up question asks whether a blackout notice was provided or if one of the exceptions applied. The IRS is monitoring compliance with...
Introduction The Department of Labor (DOL) is moving into enforcement mode following a whole host of court rulings aimed at plan sponsors and plan providers regarding excess fees imbedded in 401(k) plans. This is a significant shift that all 401(k) plan sponsors need to anticipate. DOL auditors have added several very pointed questions to the list of items they request during “routine” audits...
Recent IRS guidance has created a new interest in “after-tax” contributions as a plan provision because they can be used to maximize plan contributions and reduce future tax liabilities. Note: After-tax contributions are not the same as designated Roth contributions. With proper plan design, after-tax contributions can be a valuable benefit to plan participants. Following is a discussion of some...
The global equity markets began the year with heightened volatility, but all major equity markets, with the exception of the United Kingdom, ended the quarter in positive territory. There was a divergence of central bank monetary policies as the U.S. Federal Reserve (the “Fed”) indicated interest rate normalization in the near term, while European, Japanese and Emerging Markets’ central banks...
The IRS has released the cost-of-living adjustments applicable to the dollar limitations for pension plans (and other items) for the 2015 tax year. IRS Limits 2015 2014 401(k), SARSEP, 403(b), and 457 plan deferrals/catch-up $18,000/$6,000 $17,500/$5,500 SIMPLE plan deferrals/catch-up $12,500/$3,000 $12,000/$2,500 Compensation defining highly compensated employee* $120,000 $115,000 Compensation...
Defined contribution (DC) industry representatives have resumed efforts to convince the Labor Department (DOL) that more extensive regulation of self-directed brokerage accounts is unnecessary and burdensome, Pensions & Investments reported recently. Existing rules protect participants and enable fiduciaries to follow the requirements of prudence of the Employee Retirement Income Security...
For years, it wasn’t clear whether plan participants with after-tax money* in their accounts could roll over the after-tax portion of an eligible distribution to a Roth individual retirement account (IRA) and the pretax portion to another employer’s plan or a traditional IRA (or a combination). In September 2014, the IRS provided the answer — and it was a thumbs up. Notice 2014-54 explains the...
The global equity markets ended the year with heightened volatility and uncertainty. Sluggish non-U.S. growth, global central bank policies and geopolitical events continue to be of focus for investors. At its November meeting, the Organization of Petroleum Exporting Countries (“OPEC”) voted not to cut production despite rapidly declining oil prices. The continued decrease in oil prices as well...
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