Retirement Plans Archives | Page 43 of 71

Department of Labor Issues New Rules on 401(K) Fee Disclosure to Participants

by Jackie Sinn | Dec 10, 2010 | Retirement Plans

by Paul J. Compernolle, Lisa K. Loesel and Karen A. Simonsen

On October 14, 2010, the U.S. Department of Labor (DOL) issued final regulations that require enhanced fee disclosures to participants in 401(k) plans and other defined contribution plans subject to the Employee Retirement Income Security Act (ERISA) with participant-directed investments. The DOL believes that participants previously did not have sufficient information to make informed investment decisions, and believes these new requirements provide enhanced and necessary investment information to participants. The new regulations are effective on January 1, 2012, for plans with a calendar year plan year.

The new regulations require disclosure of two major categories of information: “plan-related information” and “investment-related information. Some of these mandatory disclosures were previously included in ERISA 404(c) regulations. However, compliance with ERISA 404(c) regulations is voluntary, and thus, not all participants have previously received the information required under this new guidance.

Implementation of these new disclosure rules will require significant effort from plan administrators and plan service providers. Plan administrators should familiarize themselves with these new disclosure regulations and start working with service providers and investment issuers to ensure a smooth transition.

For more information on the timing of the new disclosures and the types of information that are considered plan-related information and investment-related information click here.

Proposed PBGC Rule Has Potential to Expand Liability of Pension Plan Sponsors

by McDermott Will & Emery | Nov 10, 2010 | Benefit Controversies, Retirement Plans

by Joseph S. Adams, Michael T. Graham, Diane M. Morganthaler, Maureen O’Brien, David E. Rogers and Patrick D. Ryan

The Pension Benefit Guaranty Corporation (PBGC) has issued proposed guidance interpreting Section 4062(e) of the Employee Retirement Income Security Act of 1974, as amended (ERISA), which requires defined benefit pension plan sponsors to notify the PBGC when more than 20 percent of plan participants are separated from employment when a facility or operation is shut down or ceased by an employer. The PBGC’s latest proposed rule greatly expands the universe of potential Section 4062(e) event triggers, reiterating the PBGC’s recent aggressive pursuit to monitor underfunded defined benefit pension plans.

The proposed rule reverses prior PBGC guidance suggesting that asset sales were immune from Section 4062(e)’s reach. The proposed rule also stretches the terminology in Section 4062(e) to provide the PBGC with discretion to impose Section 4062(e) liability on a wide variety of employer business decisions that were once thought exempt from that section. For example, the proposed rule’s definitions and interpretations of key terminology in Section 4062(e) including terms and phrases like “operation,” “facility,” “cessation,” “separation,” “result,” and “Active Participant Base,” grants the PBGC broad powers to assert that Section 4062(e) events have occurred.

The PBGC determines Section 4062(e) liabilities by multiplying (a) the liability that would have occurred if the defined benefit plan had been terminated by the PBGC immediately after the cessation date multiplied by (b) the ratio of the number of affected participants to the Active Participant Base (as newly defined under the proposed regulations). Depending on the funded status of the defined benefit plan, this liability can be significant.

Employers that sponsor defined benefit plans and that are considering layoffs, sales, product line discontinuances, plant closings or similar workforce restructurings should contact employee benefits counsel to determine if such actions could result in a Section 4062(e) event.

Click here for a MWE White Paper containing a detailed analysis of the new proposed regulations.

New Law OKs “In-Plan” Roth 401(k) Conversions; Year-End Action May Be Desirable

by Jackie Sinn | Oct 27, 2010 | Retirement Plans

by Joseph S. Adams, Paul J. Compernolle, Jeffrey M. Holdvogt, Maureen O’Brien, Patrick D. Ryan and Elizabeth A. Savard

Employers sponsoring 401(k) or 403(b) plans should give immediate consideration to recently enacted legislation that allows participants to convert their retirement accounts in such plans to Roth accounts in 2010 and avoid some of the plan sponsor concerns that existed under prior law. With a potential increase in individual income tax rates looming in 2011, plan sponsors may be under pressure from executives and other plan participants to permit such conversions prior to the end of the year.

Click here to read a the full article.