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On April 6, 2016, the Department of Labor (“DOL”) issued final guidance dealing with investment advice to ERISA plans and their participants. The guidance is scheduled to appear in the Federal Register of April 8, 2016. While this guidance does not by its terms apply to governmental and church plans (which are not subject to ERISA), such plans often use DOL guidance as an indication of best practices which they will follow. Moreover, the DOL suggests that a breach of contract claim may be available to enforce the standards with respect to individual retirement accounts (“IRAs”), which are not subject to ERISA. While the DOL has no authority to regulate governmental and church plans, it has laid out a road map which state courts may use to impose liability on governmental and church plans under a breach of contract theory.
The Comparison of 457(b) Plans, 401(k) Plans, 403(b) Plans, and Deemed IRAs chart has now been updated to reflect recent developments, including:
- 2016 limits on contributions and benefits
- Changes in the Employee Plans Compliance Resolution System (EPCRS)
- the IRS announcement that it is discontinuing most determination letters regarding individually designed plans
The article, dealing with the proposed IRS regulations dealing with the definition of normal retirement age for governmental plans, is subscription only. However, in relevant part, it said:
The proposed rules generally were favorable, allowing plans to maintain the status quo in most cases,
Carol V. Calhoun,president of the Bethesda, Md.-based Calhoun Law Group,told Bloomberg BNA on Feb. 4.
“They say a governmental plan does not have to define normal retirement age, that it will be at whatever point you can receive a normal retirement benefit under the plan that is not reduced actuarially,” Calhoun said. For instance, the rules said that if a governmental plan says that normal retirement age is 25 years of service, then that will be considered the normal retirement age, she said.
Qualified Government Plan
A qualified governmental plan is one that is established and maintained for its employees by the federal government, a state government or political subdivision thereof, or by any agency or instrumentality of the federal or state government. The proposed rules “basically took all of the normal retirement ages that any state-wide plan has and they said all of those were going to be acceptable,” Calhoun said.
On January 27, 2016, the IRS issued proposed regulations governing the extent to which governmental pension plans must comply with the rules governing normal retirement ages. In general, the rules are a positive step from the perspective of governmental plan sponsors, but they contain a few potential pitfalls.
On October 22, 2015, the Department of Labor issued new guidance, Interpretive Bulletin 2015-01, relating to the fiduciary standards under ERISA in considering economically targeted investments (“ETIs”), or investments chosen to foster specific social goals, such as economic development and/or home ownership in a particular state or area. What does this guidance mean for fund fiduciaries?
In a case that has obvious implications for employee benefit plans, the Veterans’ Administration (“VA”) has just provided survivor benefits to the partner of a service member, even though the partners were not married before the service member’s death.
On October 30, 2015, the IRS issued IRS Notice 2015-75, announcing the changes in pensions and benefits limits for 2016. Most limits were unchanged.
New materials include the following:
- IRS proposals to eliminate or substantially modify the determination letter process
- Proposed Department of Labor regulations concerning the definition of a fiduciary and fee disclosure requirements for service providers
- Notice 2015-07, discussing the extent to which a governmental plan can cover employees of charter schools
- Rul. Rev. Rul. 2014–9, which provided guidance to plans concerning the circumstances under which they could accept rollovers
- Recent developments concerning same-sex marriage, and Equal Employment Opportunity Commission guidance treating discrimination based on sexual orientation as sex discrimination in violation of Title VII of the Civil Rights Act of 1964
- Controversy regarding public plan divestment in fossil fuel stocks
- Update on state funding issues
- Recent court decision about whether a beneficiary designation must be in its maker’s handwriting.
- Domestic relations court order that treats a person who never was the participant’s spouse and never was even a putative spouse as though the nonspouse is the participant’s nonchild dependent, even if the facts known to the court make clear that the ostensible dependent is no longer in the participant’s household
- New discussion of use of domestic relations orders in child support cases
- Major state legislative changes
- Recent developments in case law affecting governmental plans