FOR GOVERNMENTAL OVERSIGHT OF RETIREMENT PLANS, YOU NEED TO WORRY ABOUT THE AGENCY WITH THE THREE INITIALS – SPOILER ALERT; IT’S NOT THE IRS

FOR GOVERNMENTAL OVERSIGHT OF RETIREMENT PLANS, YOU NEED TO WORRY ABOUT THE AGENCY WITH THE THREE INITIALS – SPOILER ALERT; IT’S NOT THE IRS

By: David I Gensler, MSPA, MAAA, EA

Governmental oversight and compliance of retirement plans has largely shifted away from the IRS over to the Department of Labor (the DOL). At the American Society Of Pension Professionals and Actuaries (ASPPA) national conference in Washington, two speakers, J.K. Nowiejski and Heather Agribo made it abundantly clear that the DOL means business. They cited some daunting statistics. In 2016, the DOL’s Employee Benefit Security Administration (EBSA – remember, the government loves acronyms) engaged in the following enforcement activities: Read More

When Is A Retirement Plan Really Terminated? When The IRS Or The Department of Labor Says So, That’s When!

By: David I Gensler, MSPA, MAAA, EA

Yogi Berra once said “it ain’t over ‘til it’s over.” He was not talking about terminating a qualified retirement plan, but he could have been. If the steps necessary to terminate a retirement plan are not adhered to, and in the right order, the plan termination process can become a nightmare. As long as the plan continues to have assets in it, you are responsible for its ongoing administration (filing Form 5500, keeping track of the benefits of the participants who have not been paid out, etc.). Indeed, in certain cases failure to properly distribute all of the plan’s assets can force you to start the whole plan termination process all over again.

Note – All of the following pertains to terminating a defined contribution plan (a profit-sharing plan, a 401(k) plan, etc.).  It is not intended to be a guide to terminating a pension plan (a defined benefit plan). Terminating a defined benefit plan is a good deal more complicated than terminating a defined contribution plan.  I will deal with the nuances of that in a future blog.

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The Department of Labor Does Not Giveth But It Sure Can Taketh

By: David I Gensler, MSPA, MAAA, EA

Ever heard of the 2015 Inflation Adjustment Act? Well neither had I.  The act provides a formula as to how the Department of Labor should adjust its civil monetary penalties for inflation. The new civil penalty amounts will be applicable to penalties assessed after August 1, 2016 where the associated violation occurred on or after November 2, 2015.

These violations and their associated financial sanctions already exist under Title I of ERISA. However, the dollar amounts that may be assessed as financial sanctions have not changed in many years. What the Inflation Act does is update them for inflation. After this, in accordance with the Act, the sanctions will be adjusted annually for inflation.

So what are these violations and how much have the financial sanctions been increased? Read on:

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Automatic Enrollment and Automatic Escalation – The IRS and the Department of Labor Love Them – But Should You?

By: David I. Gensler, President

Both the IRS and the Department of Labor (DOL) love the concept of automatic enrollment and its sibling, automatic escalation of an employee’s salary deferrals. But just because the government is in love with the concept doesn’t mean that you need to be.  Or (more importantly) that you are administratively geared up to handle it.  So if you are thinking seriously about modifying your plan document to change your 401(k) plan to be an “auto enroll” 401(k) plan, there are some real potential administrative speed bumps that you need to be aware of.

The concept is fairly simple. You modify your plan document, via an amendment, to automatically enroll participants at some specified deferral percentage (the one that I have seen most often is 3%).  Some plans extend the concept to all participants, others have it impact only new participants.  Now, in order to stop the deferrals, rather than formally opting in, the participant must, in writing, opt out.

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