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Deadline Looming in the Distance for 403(b) Plans: What Plan Sponsors Should Be Doing Now

Last year when the IRS announced that the initial remedial amendment period for 403(b) plans will end March 31, 2020, the natural reaction to this very important (but rather remote) deadline was to immediately put it on the to-do list, somewhere near the bottom, where it has been languishing ever since.  If this describes your reaction, you are certainly not alone.

We think it is a good time to move this to the front burner and take some action.  As you may recall, 403(b) plan sponsors were required to adopt a written plan document for existing 403(b) plans on or before December 31, 2009.  At the time, there were no pre-approved 403(b) plans and no determination letter program was available for 403(b) plan sponsors to gain assurance that the document satisfied the requirements of section 403(b) and applicable regulations.  In order to provide a

IRS Views on Self-Certification of Financial Hardship

IRS Views on Self-Certification of Financial Hardship

March 15, 2017

Authored by: Richard Arenburg and Denise Erwin

DesolationIn today’s virtual world, we suspect most plan sponsors rely upon the self-certification process to document and process 401(k) distributions made on account of financial hardship. The IRS has recently issued examination guidelines for its field agents for their use in determining whether a self-certification process has an adequate documentation procedure.  While these examination guidelines do not establish a rule that plan sponsors must follow, we believe most plan sponsors will want to ensure that their self-certification processes are consistent with these guidelines to minimize the potential for any dispute over the acceptability of its practices in the event of an IRS audit.

The examination guidelines describe three required components for the self-certification process:

(1)        the plan sponsor or TPA must provide a notice to participants containing certain required

ISS Updates Proxy Voting Guidelines for 2017

ISS Updates Proxy Voting Guidelines for 2017

December 9, 2016

Authored by: Serena Yee and Denise Erwin

vote-do-not-useLast month, Institutional Shareholder Services (ISS) published updates to its proxy voting guidelines effective for meetings on or after February 1, 2017.  Key compensation-related changes include the following:

Non-Employee Director Compensation Programs

In the case of management proposals seeking shareholder ratification of non-employee director compensation, ISS will review such proposals on a case-by-case basis utilizing the following factors:

  • Amount of director compensation relative to similar companies
  • Existence of problematic pay practices relating to director compensation
  • Director stock ownership guidelines and holding requirements
  • Vesting schedules for equity awards
  • Mix of cash and equity-based compensation
  • Meaningful limits on director compensation
  • Availability of retirement benefits or perquisites
  • Quality of director compensation disclosure

To the extent the equity plan under which non-employee director grants are awarded is on the ballot, ISS will consider whether it warrants

PBGC Proposed Rule May Offer DC Plans New Tool for Finding Missing Participants

where-are-youFor many years, the PBGC has been helping reunite missing participants with their benefits under single-employer defined benefit plans. Now, a new PBGC proposed rule may open up the program to missing participants under other terminated plans.

Under this proposed rule, terminated defined contributions plans may choose to transfer benefits of missing participants to the PBGC or to establish an IRA to receive the transfer and send information to the PBGC about the IRA provider.   The PBGC will attempt to locate the missing participants and add them to a searchable database. The PBGC notes that once the program is established, it may issue guidance making the reporting requirement mandatory for defined contribution plans as authorized under section 4050 of ERISA.

The PBGC will accept the transfer of accounts of

Department of Labor Fiduciary Rule: Employers Should Not Overlook Impact on HSAs

HSAThe new Department of Labor rule defining the scope of who is an ERISA fiduciary (see our prior post here) has caused much consternation among investment professionals.  Much of the new rule is focused on reworking the outer fringes of the ERISA landscape capturing those in the investment industry offering IRA and annuity products.

Given that investment professionals appear to be the primary target of the new fiduciary rule, employers may believe that this is one room in the ERISA house of horrors that they do not have to enter.  To a large extent that is true because the concept of fiduciary status and the fee disclosure rules, as applied to traditional retirement plans, are already well entrenched.  Still, employers need to consider whether certain providers to their retirement

The FAST Act – If You Blinked You May Have Missed It.

The FAST Act – If You Blinked You May Have Missed It.

January 7, 2016

Authored by: Denise Erwin

MovingDeadlinesOn December 3, 2015, the President signed into law the Fixing America’s Surface Transportation Act (the “FAST Act”) which provides for five years of funding for highway projects.  If you just skimmed the news on this one, you may not have noticed that the FAST Act included a repeal of the extension to the Form 5500 filing deadline that was provided under the stop-gap Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 that was passed in August.

As we reported in our previous blog post, the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 provided that, beginning in 2016, the automatic extension for the Form 5500 would be extended from 2½

The Tax Man Cometh Not to ID Protection Recipients Either

The Tax Man Cometh Not to ID Protection Recipients Either

January 5, 2016

Authored by: Chris Rylands and Denise Erwin

ID TheftLate last year, while you were probably busy picking out which bubbly to pop at the stroke of midnight, the IRS gave us another reason to celebrate. You may remember (as we wrote previously) the IRS said it would not require identity theft victims to include the value of identity theft restoration and protection services in their income. But what about for employers or others who provide ID theft in advance of a breach?

Well, after receiving a total of only four comments, the IRS decided to broaden the nontaxability of ID theft protection services. In providing this relief, the IRS cited comments indicating that organizations are increasingly providing ID protection services before a data breach occurs as a strategy to help with early detection of a breach and to minimize the

The Tax Man Commeth Not to Data Breach Victims

The Tax Man Commeth Not to Data Breach Victims

September 3, 2015

Authored by: Denise Erwin and Chris Rylands

ID TheftThe IRS has issued some favorable guidance on the tax treatment of identity protection services provided to data breach victims.  In Announcement 2015-22, the IRS indicated that when an organization experiences a data breach, and it provides identity protection services to individuals whose information may have been compromised, the IRS will not assert that the individual must include the value of the services in gross income.  In addition, the IRS says that when an employer provides such services as a result of a data breach involving the recordkeeping systems of the employer, or the employer’s agent or service provider, the employer will not be required to include the value of the services in the employee’s gross income and wages.  The Announcement also indicates that the IRS will not assert that these amounts

After Obergefell, Is it “Get Married Or Else”?

After Obergefell, Is it “Get Married Or Else”?

July 1, 2015

Authored by: Chris Rylands and Denise Erwin

Gavel and RingsAs has now been widely reported, the Supreme Court ruled on June 26 (the second anniversary of the Windsor decision) that same-sex couples have a right to marry in any part of the United States. Despite being hailed as a victory for marriage equality, as this New York Times article points out, it may not be such happy news for currently unwed domestic partners. Specifically, there is a concern, as the article points out, that employers who previously extended coverage to domestic partners out of a sense of equity may now decide not to since both opposite-sex and same-sex couples can now marry.

As the article mentions, there was a concern at one time that domestic partnership rules would be used by some employees to cover individuals with whom they

De-Risking? The PBGC Wants to Know About It

De-Risking? The PBGC Wants to Know About It

April 1, 2015

Authored by: Denise Erwin

Risk BoggleIn the past few years, several large pension plan sponsors have sought to decrease the risk associated with their pension plans by purchasing group annuities to cover future payments or by offering a lump sum window during which eligible participants were permitted to elect a cash lump sum buyout. Many other plan sponsors are considering following suit. This trend has been accelerating in response to higher PBGC premiums, lower interests rates and updated mortality tables reflecting increased longevity.

The PBGC has an interest in tracking this activity because the decrease in the number of participants reduces the per-participant premiums collected by the PBGC making it more difficult for it to fulfill its role in protecting pension benefits. As a result, beginning with the PBGC premium filings for 2015,

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