Retirement Plans
Subscribe to Retirement Plans's Posts

Worldwide Employee Benefits Network Program – New Developments for Roth 401(k)

Wednesday, March 26, 2014
Chicago, Illinois

Studies show that over 40% of large employers now include a Roth 401(k) feature in their defined contribution plan. New legislation in early 2013, and new IRS guidance issued late in December of 2013, expand the availability of in-plan Roth conversions. While 401(k) record keepers gear up to implement this new feature, now is a good time to take stock of Roth 401(k) and understand whether this is a good feature that should be added to your plan or whether the new expanded in-plan Roth conversions make sense as a next step for your plan.

Panelists will cover Roth 401(k) basics and the new guidance as well as discuss the successful utilization of the Roth feature in one employer’s plan that has a 99% employee participation rate. In addition, the experts will also provide helpful tips on how to successfully communicate the confusing Roth concepts to your plan’s participants.

Event speakers include:

Nancy Gerrie, Partner, Employee Benefits Practice Group, McDermott Will & Emery
Kathleen Davis, Benefits Manager, Sargent & Lundy

For more information or to register, please click here.




read more

View From McDermott: Conflicting Review Standards in Executive Retirement Plan Benefit Claims—Is There Really a Difference?

Under the Employee Retirement Income Security Act, retirement plans generally come in two flavors – (i) retirement plans qualified under Section 401 of the Internal Revenue Code (the Code) and (ii) executive retirement plans, called “top hat” plans, which aren’t Code-qualified.  What does that mean? While qualified retirement plans are subject to all of ERISA’s funding, participation and fiduciary provisions, top hat plans aren’t and may offer benefits exceeding those allowed under Code-qualified plans. Simply put, top hat plans are unique animals under ERISA.

Litigation involving top hat plans isn’t plentiful—likely due to the fact that such plans are available only to a small number of highly paid executives. However, within the limited top hat litigation realm, there exists a conflict among the federal courts of appeals over a seminal question—what review standard is to be applied to a benefit determination? While the U.S. Supreme Court has definitively answered this question for most ERISA plans in Firestone Tire & Rubber Co. v. Bruch, the unique nature of top hat plans has resulted in conflicting rules among the circuits.  Whether these conflicting standards elicit similar results is an open and complex question for most ERISA practitioners.

To read the full article, click here.




read more

IRS Expands Guidance on In-Plan Roth Conversions

Recent IRS guidance clarifies a number of outstanding questions regarding “in-plan conversions” of non-Roth balances to Roth balances in 401(k), 403(b) and governmental 457(b) plans.  In particular, the guidance confirms that converted balances are subject to the same distribution restrictions after the conversion as they were prior to it.

Click here to read the full article.




read more

View From McDermott: Multiemployer Union Plans Implement Aggressive Litigation Strategies to Fill $390 Billion Funding Deficit

While the funded status of single-employer corporate defined benefit pension plans has improved, the funded status of multiemployer union pension plans has remained stagnate and, in some cases, further deteriorated.  The Pension Benefits Guaranty Corporation recently reported to Congress that the aggregate funding ratio of all multiemployer plans was 48 percent.  From the most recent data available, the PBGC reports that multiemployer pension plans have $366 billion in assets to satisfy $757 billion in vested liabilities—in short, a funding deficit of $390 billion.

To read the full article, click here.

*Reproduced with permission from Bloomberg BNA Pension & Benefits Daily.




read more

Supreme Court Takes Case About Company Stock Funds and Presumption of Prudence

The Supreme Court of the United States granted certiorari in Fifth Third Bancorp v. Dudenhoeffer, suggesting that the Supreme Court will resolve the current division among U.S. circuit courts regarding the application of the “presumption of prudence” in employer stock cases.

To read the full article, click here.




read more

Supreme Court Upholds ERISA Plan’s Three-Year Deadline to File a Lawsuit

The Supreme Court of the United States ruled that an ERISA plan may properly impose a reasonable time limit on filing a lawsuit to recover benefits.  Such time may start to run even before completion of the required administrative review process.

To read the full article, click here.




read more

IRS to Begin Compliance Checks of Non-governmental Section 457(b) Plans

The Internal Revenue Code of 1986 (the Code), permits governmental and tax-exempt entities to sponsor tax-advantaged retirement plans meeting the Code Section 457(b).  Although governmental Section 457(b) Plans primarily operate and act like Code Section 401(k) plans and Code Section 403(b) Plans (i.e., a “qualified” retirement plan).  Section 457(b) plans maintained by tax-exempt entities must be “top-hat”  plans, thereby limiting participation to a select group of highly-compensated individuals and management employees.  Numerous non-profits sponsor Section 457(b) Plans as a means of providing additional nonqualified deferral opportunities for their highly-compensated executives.  The Internal Revenue Service (IRS) has decided to take a closer look at these arrangements, announcing recently that it would begin conducting “compliance checks” of Section 457(b) Plans maintained by non-governmental entities (e.g., health systems, educational institutions, museums, etc.).  Though the compliance checks are not full audits, plan sponsors can expect the IRS to request extensive information regarding written and operational plan compliance.

To read the full article, click here.




read more

Recent Case Opens Door to Civil Enforcement Claims for Negligent FICA Tax Withholding

A District Court in Eastern Michigan recently rejected a motion to dismiss a participant’s benefit claim, holding that an employer legally could be liable to a participant in a nonqualified deferred compensation plan when the employer did not properly withhold FICA tax in the manner most advantageous to the participant. As a best practice, plan administrators should scrutinize any participant communications or claim responses because they can open the door to estoppel claims under ERISA.

To read the full article, click here.




read more

New California Law Affects State Taxation of Employer Tax Gross-Ups for Domestic Partners

The California state legislature recently enacted a law that may affect the taxation of benefits an employer provides to same-sex domestic partners in the state. California AB 362 excludes from gross income for California state income tax purposes the amount of any tax gross-ups paid by an employer to an employee for benefits for that employee’s same-sex spouse or domestic partner. The law was approved by California’s governor on October 1, 2013, and is effective immediately through January 1, 2019.

Earlier this year the Supreme Court of the United States ruled in U.S. v. Windsor that Section 3 of the Defense of Marriage Act (DOMA) is unconstitutional (see “Supreme Court Rules on DOMA and California’s Proposition 8” for more). Section 3 of DOMA had provided that, for purposes of all federal laws, the word “marriage” means “only a legal union between one man and one woman as husband and wife,” and the word “spouse” refers “only to a person of the opposite-sex who is a husband or wife.” Subsequent Internal Revenue Service (IRS) and U.S. Department of Labor guidance clarified that, as a result of Windsor, favorable federal tax treatment of spousal benefit coverage would extend to all same-sex couples legally married in any jurisdiction with laws authorizing same-sex marriage, regardless of whether the couple currently resides in a state where same-sex marriage is recognized (see “IRS and DOL Guidance Clarifies Employee Benefits Impact of Supreme Court’s DOMA Ruling” for more information).

As a result of Windsor and the subsequent IRS guidance, the impact of California AB 362 appears fairly limited. Pre-Windsor, some employers provided a federal tax gross-up on the imputed value of coverage provided to an employee’s same-sex spouse or domestic partner. Post-Windsor, same-sex married couples in California no longer need a tax gross-up for either state or federal tax purposes because they no longer have to be taxed on the value of the coverage provided to their spouse. Because of this treatment, application of California AB 362 would be limited to a situation where an employer provides a federal tax gross-up to an employee who is in a California-registered domestic partnership. Such a gross-up, which would have been taxable under prior state law, is now no longer taxable in California. Employers in California will need to update their payroll and tax procedures accordingly. Employers both inside and outside of California that previously provided tax gross-ups may find it desirable to revisit their gross-up policies in light of the Windsor decision and the IRS guidance.




read more

IRS Announces Employee Benefit Plan Limits for 2014

The Internal Revenue Service (IRS) recently announced cost-of-living adjustments to the applicable dollar limits on various employer-sponsored retirement and welfare plans for 2014. Although many dollar limits currently in effect for 2013 will change, some limits will remain unchanged for 2014. This On the Subject provides a chart of these 2014 cost-of-living changes.

To read the full article, click here.




read more

BLOG EDITORS

STAY CONNECTED

TOPICS

ARCHIVES

Top ranked chambers 2022
US leading firm 2022