Posted on Tue, Feb 07, 2012
The final date for 408(b)(2) compliance is July 1st, 2012.
408(b)(2) regulations require that service providers, to retirement plans that are subject to ERISA, make a written disclosure of their total compensation, services, fiduciary & RIA status.
It has been generally accepted that amendments to the 408(b)(2) regualtions would be forthcoming as the DOL was still inviting comments and the regualtion itself was in “interim final” status. In August of this year, the DOL publicly announced that it was working on an amendment and as a result extended the compliance date. Now, in issuing the final rule, the compliance date has once again been extended, though for only three months.
Service providers should note July 1, 2012 on their calendars to make sure they are in full compliance by that date for existing clients and that they are prepared to comply with advance disclosures for any new clients.
Posted on Fri, Feb 03, 2012
403(b) Plans with old individual annuity contracts are excluded from the types of pension plans that are covered by the final rule.
The excluded contracts and accounts are those which were issued to affected employees before January 1, 2009, where the sponsoring employer ceased making contributions, where rights or benefits of individual owners of the contracts or accounts are enforceable against the insurer or custodian without employer involvement, and where such individual owners are fully vested in benefits provided under the contract or account.
Posted on Thu, Feb 02, 2012
The DOL issued the final 408(b)(2) regulations on Thursday February 2nd. The key points in the final regualtions include:
• The extension of the effective date to July 1, 2012;
• The fact that service providers are not required to provide a summary of the disclosures, though the DOL provided a sample “guide” that is not mandatory;
• The addition of a requirement to describe the arrangement between a covered service provider and the payer of indirect compensation;
• Clarification that electronic transmission of the disclosures is permitted;
• Relief from the disclosure requirements for “frozen” 403(b) contracts;
• A new requirement that plan sponsors terminate the relationship with a service provider who fails or refuses to provide information on request;
• Limited relief for disclosures for brokerage accounts and similar arrangements.
Posted on Sat, Jan 21, 2012
January 17, 2012
--A federal appellate court has found that a profit-sharing plan must pay back more than $1 million in assets wrongly transferred from a participant’s account, even thought it has not recovered the misplaced funds.--
http://www.planadviser.com/Plan_Must_Restore_Misplaced_Assets_Although_not_Recovered.aspx
The opinion in Milgram v. Orthopedic Associates et al. is here.
Posted on Sat, Jan 21, 2012
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401(k) Plan Limits for Plan Year
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2012
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2011
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2010
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401(k) Elective Deferrals
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$ 17,000
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$ 16,500
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$ 16,500
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Annual Defined Contribution Limit
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$ 50,000
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$ 49,000
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$ 49,000
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Annual Compensation Limit
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$ 250,000
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$ 245,000
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$ 245,000
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Catch-Up Contribution Limit
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$ 5,500
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$ 5,500
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$ 5,500
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Highly Compensated Employees
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$ 115,000
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$ 110,000
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$ 110,000
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|
|
|
|
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Non 401(k) Related Limits
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|
|
|
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403(b) / 457 Elective Deferrals / SEP
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$ 17,000
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$ 16,500
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$ 16,500
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SIMPLE Employee Deferrals
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$ 11,500
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$ 11,500
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$ 11,500
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SIMPLE Catch-Up Deferral / SEP
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$ 2,500
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$ 2,500
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$ 2,500
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SEP Minimum Compensation
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$ 550
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$ 550
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$ 550
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SEP Annual Compensation Limit
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$ 250,000
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$ 245,000
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$ 245,000
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Social Security Wage Base
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$ 110,100
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$ 106,800
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$ 106,800
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Defined Benefit Limit
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$ 200,000
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$ 195,000
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$ 195,000
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Posted on Fri, Jan 20, 2012
The Internal Revenue Service has addressed when a plan administrator may answer “yes” to Question 8 on the new Form 8955-SSA, affirming that the required information was timely furnished to participants. A plan administrator may answer “yes” to Question 8 if the statements or other documentation issued to the participants include the following information:
- Name of the plan
- Name and address of the plan administrator
- Name of the participant
- Nature, amount, and form of the deferred vested benefit to which such participant is entitled.
Thus, for purposes of completing Form 8955-SSA, the plan administrator’s notice to the plan participant does not need to include the participant’s social security number, the codes on page 2 of the Form 8955-SSA used to identify previously reported participants, or any information regarding any benefits which are non-forfeitable if the participant dies before a certain date. The Form 8955-SSA was created because, as part of the redesign on the Form 5500 annual report several years ago, the requirement to report participants with deferred vested benefits on Form 5500 Schedule SSA was eliminated. However, the IRS still wants to gather information about participants who terminate with a deferred vested benefit.
More instructions from the IRS are available at http://www.irs.gov/retirement/article/0,,id=238959,00.html.
The new FAQ is available at http://www.irs.gov/retire
Posted on Wed, Oct 19, 2011
By reviewing the history of state aid unit values on the attached chart, you will notice a sharp increase in the 2011 unit value. This was a welcome increase, but not something you should plan on for 2012. The PA Auditor General’s office sent out a letter cautioning municipal managers on this issue, this letter is attached below.
History of Pennsylvania State Aid Unit Values
YEAR Unit Value % Change
2005 $2,926.77 0.53%
2006 $3,088.52 5.53%
2007 $3,206.39 3.82%
2008 $3,186.33 -0.63%
2009 $3,218.00 0.99%
2010 $3,234.84 0.52%
2011 $5,596.43 73.00%
Funding your pension plans becomes more difficult during prolonged market downturns. Act 44 expanded your asset smoothing options. Keep in mind that there is no free lunch. A reduced MMO today due to asset smoothing must be repaid sometime in the future. This is a topic you should review carefully in your planning meetings with your actuary and investment advisor.
This information has been compiled from sources believed reliable but cannot be guaranteed. Any statement of past Unit Values is not a guarantee of future Unit Values. Advisory services offered through Geneos Wealth Management, Inc. *www.auditorgen.state.pa.us
docs/2011 PA State Aid Letter.pdf
Posted on Wed, Sep 21, 2011
The Employee Benefits Security Administration (EBSA) has bowed to pressure from industry groups and members of Congress and now says it will repropose its controversial rule amending the definition of a fiduciary under the Employee Retirement Income Security Act (ERISA).
The EBSA is still seeking to amend a regulation that defines when a person providing investment advice becomes a fiduciary under ERISA. “The proposal’s goal is to ensure that potential conflicts of interest among advisers are not allowed to compromise the quality of investment advice that millions of American workers rely on, so they can retire with the dignity that they have worked hard to achieve,” said EBSA Assistant Secretary Phyllis Borzi.
The new proposed rule is expected to be issued sometime in early 2012.
Posted on Fri, Sep 16, 2011
Congressman Barney Frank Questions the New Fiduciary Proposal
Last Thursday Congressman Barney Frank (D-Massachusetts) wrote the DoL requesting they “withdraw and re-propose” their proposed expansion of the fiduciary definition. Frank conceded that the ERISA rules may need to be updated but added, “it is important to do this in a way that does not have adverse effects on the choices available to consumers, municipalities and pension plans, among others.”
Frank’s request comes on the heels of criticism from the Securities Industry and Financial Market Association and the Investment Company Institute. Their testimony in March highlighted their view that fiduciary status should only be attached to a genuine advisor relationship and simply selling an investment product cannot be a fiduciary act.
Frank’s position on the matter is of particular significance as he is the Ranking Member of the House Financial Services Committee.
Posted on Wed, Sep 07, 2011
The DOL & IRS are ramping up enforcement efforts for retirement plan compliance.
The Obama administration has been increasing the IRS and DOL staff to combat the large number of retirement plans that it says are not compliant with retirement planning rules and regulations.
The DOL says 77% of 401(k) plans are non-compliant in some form.
At a recent conference John Carl president of the Retirement Learning Center discussed the increased enforcement efforts. While 2009 was a bad year for the economy, Carl said, it wasn’t so bad for DOL — it added 997 employees that year — with 70% of those employees added to its enforcement division. The department’s Employee Benefits Security Administration (EBSA), for instance, saw a 28% budget increase in 2009, and EBSA added 29 enforcement personnel.
The targets for the IRS are U.S. companies owned by foreign entities; 403(b) plans; and small business owners.
