Archives: Retirement plans

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About That Pension Check… A Miscalculation Case With Broader Implications

The Ninth Circuit Court of Appeals recently addressed several issues of first impression in Bafford v. Northrop Grumman (9th Cir. April 15, 2021), a lawsuit involving retirees who received vastly overstated pension benefit estimates from the plan’s recordkeeper reminds employers of the importance of careful administration.   The case highlights the need to ensure that electronic … Continue Reading

DOL Issues Cybersecurity Best Practices for ERISA Covered Retirement Plans

Today, the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) issued much anticipated cybersecurity guidance for employee retirement plans. This comes more than four and a half years after the ERISA Advisory Council, a 15-member body appointed by the Secretary of Labor to provide guidance on employee benefit plans, shared with the federal Department of … Continue Reading

Personal Data from Thousands of Pension Plan Accounts Breached…Third-Party Service Provider Blamed

One of the last things pension plan participants would want to learn as they get ready to celebrate the Christmas holiday is that personal data from their pension accounts may have been compromised. This is the case, unfortunately, for approximately 30,000 Now:Pensions customers whose names, postal and email addresses, birth dates and the equivalent of … Continue Reading

2021 Cost of Living Adjustments for Retirement Plans

The Internal Revenue Service recently announced its cost-of-living adjustments applicable to dollar limitations on benefits and contributions for retirement plans generally effective for Tax Year 2021 (see IRS Notice 2020-79). Most notably, many of the retirement plan limitations, including the limitation on annual salary deferrals into a 401(k) or 403(b) plan, remain unchanged. The more … Continue Reading

Is Personal Information of Retirement Plan Participants an ERISA Plan Asset?

A little more than one year ago, we reported on a settlement (Cassell et al. v. Vanderbilt University, et al.) involving the alleged wrongful use of personal information belonging to retirement plan participants, claimed to be “plan assets.” This year, similar claims have been made against Shell Oil Company in connection with its 401(k) plan. Retirement … Continue Reading

Eighth Circuit Affirms in Part, Reverses in Part University’s Early Win in ERISA Fee Suit

As the circuit courts continue to define the pleading standards for fiduciary breach claims challenging investments in defined contribution plans, the Eighth Circuit affirmed in part and reversed in part a district court’s finding that a group of 403(b) plan participants failed to state such a claim.  In Davis v Washington University, plaintiffs alleged that … Continue Reading

COVID-19 And Late Remittances of Employee Deferrals to 401(k) Plans

Many employers facing economic challenges because of COVID-19 have considered several possibilities for reducing their contributions to their 401(k) plans.  Whether freezing safe harbor matching or nonelective contributions or deciding against making discretionary matching and/or profit-sharing contributions, the goal has been the same: reduce their employee benefits costs. What many employers have not focused on … Continue Reading

Critical Qualified Plan Fiduciary Issues For Employers To Consider In Light Of Covid-19

With the business disruptions and market turbulence being wrought by COVID-19, many employers sponsoring qualified retirement plans are facing key decisions about their 401(k), profit sharing, defined benefit, and cash balance plans.  From considering potential cost-savings measures such as suspending safe harbor contributions to a 401(k) plan and/or discretionary contributions to a profit sharing plan, … Continue Reading

Northrop Grumman Agrees to Settle 401(k) Excessive Fee Suit

Northrop Grumman has agreed to pay $12,375,000 to settle a class action brought under the Employee Retirement Income Security Act (“ERISA”) by participants in its 401(k) plan. The parties reached the initial terms of this settlement last year minutes before the start of the trial. The plaintiffs alleged in their complaint that the company’s administration … Continue Reading

The SECURE Act, at Last

On December 19, 2019, the Senate passed, as part of the Further Consolidated Appropriations Act 2020 (Public Law No. 116-94), the Setting Every Community Up for Retirement Enhancement (SECURE) Act (Division O pg. H.R. 1865-604).  It is touted as the most significant retirement act since the Pension Protection Act of 2006.  President Trump signed the … Continue Reading

Court Rejects Equitable Exception to MPPAA’s ‘Pay Now, Dispute Later’ Regime

A withdrawing employer must make withdrawal liability installment payments during the pendency of an arbitration proceeding contesting the existence of withdrawal liability, a federal court has affirmed, rejecting the employer’s attempt to recognize an equitable exception to the general “pay now, dispute later” requirement. Boilermaker-Blacksmith National Pension Trust v. PSF Industries, No. 18-2467-JWL (D. Kan. Nov. … Continue Reading

The Final Regulations For 401(k)/403(b) Hardship Distributions

On September 23, 2019, the Treasury Department and IRS published final regulations for hardship distributions from both 401(k) and 403(b) plans (the “Final Regulations”).  Essentially the hardship distributions changes relax the hardship distribution requirements (i.e., making it easier for participants to obtain hardship distributions) and eliminate many burdens following a hardship distribution (i.e., allowing participants … Continue Reading

How Multiemployer Pension Plans Continue To Extract More From Contributing Employers Than What They Bargained For

Contributing employers to multiemployer pension plans (“MEPPs”) are commonly surprised that their obligations to such a plan can extend well beyond the contributions required under a collective bargaining agreement (“CBA”) negotiated with a union.  The most significant extra-contractual obligation is withdrawal liability, a statutory exit fee imposed on employers that leave a plan that has … Continue Reading

Required Minimum Distributions

The aging of the baby boomer generation has increased the level of scrutiny with which the Department of Labor, Employee Benefits Security Administration (“EBSA”) will review the efforts of pension plans to locate missing plan participants who did not receive reported benefits.  The focus of the EBSA which began with a review of the efforts … Continue Reading

The IRS Reopens the Determination Letter Program for Merged Plans and Cash Balance Plans

On May 1, 2019, the IRS issued Revenue Procedure 2019-20, which reopens the determination letter program in a limited manner for individually designed plans that are merged plans or statutory hybrid plans, such as cash balance plans. The new IRS guidance provides that sponsors of merged plans may request determination letters going forward, while sponsors … Continue Reading

THEY’RE HEEEEERRRREE!! But Have No Fear – Long Awaited Changes to EPCRS Are Good News for Plan Sponsors

Long on the wish list of practitioners and plan sponsors alike, self-correction of certain common plan document issues and loan failures is finally an option under the Internal Revenue Service’s Employee Plans Compliance Resolution System (“EPCRS”), newly minted via Rev. Proc. 2019-19. It is no secret that the IRS is continually dealing with reduced budgets … Continue Reading

Could This Be Your Retirement Plan?

As reported by CBC, B.C. Pension Corporation announced a data breach involving pension plan records after discovering a box containing microfiche could not be found following a recent office move. The box contained personal information (names, social insurance numbers and dates of birth) on approximately 8,000 pension plan participants. The company employed those participants during the period 1982 to … Continue Reading

IRS No Longer Forbids Pension Plans From Offering Lump Sum Payouts To Retirees Currently Receiving Payments

Over the past several years, sponsors of defined benefit pension plans have examined and implemented ways to reduce their pension liabilities. This is sometimes referred to as “de-risking.” One de-risking option is for a plan to offer a limited-duration window where participants who normally do not have the option to do so can elect to … Continue Reading

Court Finds Union’s Withdrawal Liability Indemnification Obligation of Limited Duration

Congress enacted the withdrawal liability provisions of the Multiemployer Pension Plan Amendments Act (MPPAA) with the ultimate goal of protecting participants and beneficiaries entitled to benefits from multiemployer pension plans.  Congress observed that such plans are financially burdened whenever an employer withdraws and permanently ceases to pay contributions and decided that the burden should be … Continue Reading

Important Guidance and Relief for 403(B) Plan Sponsors Who Exclude Part-Time Employees

In the spirit of the holidays, the Internal Revenue Service gave a gift to sponsors of 403(b) tax-deferred annuity plans on December 4, 2018, by issuing IRS Notice 2018-95.  For plan sponsors that exclude part-time employees from their 403(b) plans, this gift provides a 10-year nod on their historical plan administration, despite noncompliance with the … Continue Reading

In Private Letter Ruling, IRS Approves 401(k) Student Loan Repayment Benefit

The IRS has released a Private Letter Ruling (“PLR”) 201833012, in which it approved a student loan repayment program as a 401(k) benefit.  Although the PLR can only be applied by the taxpayer/plan sponsor requesting it, it is a promising development for employers seeking to provide stronger incentives for a workforce increasingly saddled with student … Continue Reading

The President Urges Regulatory Action to Expand Access to Employer-Sponsored Retirement Plans

On August 31, 2018, President Trump issued an Executive Order (the “Order”) calling on the Department of Labor (“DOL”) and the Internal Revenue Service (“IRS”) to consider issuing regulations and guidance directed at expanding the availability of employer-sponsored retirement plans.  The Order mainly takes aim at the availability of retirement plans to all employees, noting … Continue Reading

The IRS Doesn’t Disappoint

As anticipated by plan sponsors of closed defined benefit pension plans, the IRS issued Notice 2018-69, the fourth extension for an additional year of the temporary nondiscrimination relief for “closed” defined benefit pension plans originally announced by the IRS during 2014.  The extended relief applies to plan years beginning before 2020 for those “closed” plans … Continue Reading
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