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:
- 2020 limits on contributions and benefits
- Changes in the Employee Plans Compliance Resolution System (EPCRS)
- Changes in the IRS determination letter program for 401(k) plans
- The IRS opinion letter program for pre-approved 403(b) plans
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The attractiveness of a 457(b) plan as compared with a 403(b) plan or a 401(k) plan may vary greatly depending on the circumstances. Read more
In recent years, several states have adopted laws requiring private (nongovernmental) employers to set up payroll deduction individual retirement accounts, individual retirement annuities, or Roth IRAs (collectively, IRAs) for their employees. Certain localities have also indicated an interest in setting up such programs. ERISA by its terms generally preempts any and all state laws relating to any employee benefit plan regulated by ERISA, other than state laws that regulate insurance, banking, or securities. ERISA § 515, 29 U.S. Code § 1144. Two questions were therefore raised by governmental arrangements covering private employers:
- Are the state or local laws setting up such programs preempted by ERISA?
- Aare the plans themselves subject to ERISA?
The Department of Labor issued final regulations on August 30, 2016 providing a safe harbor for statewide plans covering private employers. On December 20, 2016, it expanded on those regulations with further regulations providing a safe harbor for plans for private employers operated by local governments. This bulletin discusses how those programs work, and what employers can expect from them.
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On April 8, 2016, the Department of Labor (“DOL”) issued final guidance dealing with investment advice to ERISA plans and their participants. 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.
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This post was updated on June 26, 2015 to reflect the Supreme Court’s decision in Obergefell v. Hodges, which struck down all state bans on same-sex marriage.
The Treasury Department and the IRS announced on August 29, 2013 that all legal same-sex marriages will be recognized for federal tax purposes. On September 18, 2013, the Department of Labor took the same position for purposes of the Employee Retirement Income Security Act of 1974 (“ERISA“). The announcements and corresponding revenue ruling (Rev. Rul. 2013-17) apply only to marriages legal in the jurisdiction in which performed. They do not apply to civil unions or domestic partnerships. (Of course, parties to a civil union or domestic partnership could still obtain the benefits of the announcement and revenue ruling by getting legally married.) The Treasury and IRS position was later reinforced by the Supreme Court decision in Obergefell v. Hodges, which struck down all state bans on same-sex marriage.
Because employee benefit plans are extensively regulated by federal law, this announcement means that all employers will be required to recognize such marriages for many employee benefits purposes. Conversely, employers in states that treat civil unions or domestic partnerships as if they were marriages will nevertheless be forbidden from treating such arrangements as marriages for certain employee benefits purposes. However, the precise impact will depend on whether the plan is subject to ERISA or whether it is a governmental or church plan exempt from ERISA. The chart below sets forth areas in which the announcement will affect the operation of different types of plans.
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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
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