Private Letter Ruling 200452039 discussed the situation of a plan that provided a 3% cost-of-living adjustment to the benefits of each retired participant each year, beginning on the January 1 following the third anniversary of the participant’s retirement date. The private letter ruling held, in effect, that a participant whose annual benefit beginning in 2005 was equal to the dollar limit for 2005 ($170,000 per year), but whose benefit was subject to a cost of living increase starting in January 2009, would be in violation of the limit. Read more
Section 657 of the Economic Growth and Tax Relief Reconciliation Act of 2001 (“EGTRRA”) amended Internal Revenue Code (“Code”) section 401(a)(31) to provide that a distribution from an “eligible plan” of more than $1,000 had to be directly rolled over to an individual retirement account unless a participant affirmatively elected another form of distribution (e.g., to receive the amount in cash). The term “eligible plan” was defined as follows:
a plan which provides that any nonforfeitable accrued benefit for which the present value (as determined under section 411(a)(11)) does not exceed $5,000 shall be immediately distributed to the participant.
The effective date of the provision was tied to the issuance of regulations by the Department of Labor. Thus, the question arose as to whether a plan that was not subject to either Department of Labor regulations or section 411 (a governmental plan or a nonelecting church plan) would be subject to the EGTRRA change. Read more
If a state or local government hires new employees not covered by social security after January 1, 2005, it must do the following: Read more
After publication of this article, the Supreme Court issued United States v. Windsor. That decision overturned the Defense of Marriage Act, which had previously prevented federal recognition of same-sex marriage. Thus, this article is now obsolete as to same-sex spouses, although it continues to apply to domestic partners who are not legally married.
One issue that has been completely ignored in the press surrounding the Working Families Tax Relief Act of 2004, Public Law No. 108-311 (“Act”), is the apparently unintentional effect it will have on employers that sponsor employee benefit plans covering domestic partners or same-sex spouses of employees, and on employees whose domestic partners or same-sex spouses are covered by such plans. Because the relevant provisions of the Act will become effective starting in 2005, employers that sponsor such plans will have to act quickly to deal with the changes made by the Act. Read more
You can click here to see a copy of the outline for the presentation, given at the 12th Annual Guns & Hoses, the Annual Reunion of the Nation’s Police & Fire Pension Fund Leaders and Their Advisors, on October 5, 2004. Read more
Field Assistance Bulletin 2004-02 gives guidance on what a plan fiduciary needs to do in order to fulfill its fiduciary obligations under ERISA with respect to: (1) locating a missing participant of a terminated defined contribution plan; and (2) distributing an account balance when efforts to communicate with a missing participant fail to secure a distribution election.
The Department of Labor has issued a final regulation that establishes a safe harbor pursuant to which a fiduciary of a pension plan subject to Title I of the Employee Retirement Income Security Act of 1974, as amended (ERISA), will be deemed to have satisfied his or her fiduciary responsibilities in connection with automatic rollovers of certain mandatory distributions to individual retirement plans. Read more
You can click here to see a copy of the outline for the presentation, given at the Eighteenth Annual Advanced ALI-ABA Course of Study: Retirement, Deferred Compensation, and Welfare Plans of Tax-Exempt and Governmental Employers, on September 10, 2004. Read more