Tibble v. Edison – The Gift That Keeps On Giving

Tibble v. Edison – The Gift That Keeps On Giving

By: David I Gensler, MSPA, MAAA, EA

A lawsuit that began in 2011 is finally approaching its conclusion. The plaintiffs claimed that the 17 investment options selected by the plan back in March of 1999 were retail funds instead of lower cost institutional shares. The funds remained in the plan beyond August 16, 2001. That date is particularly relevant since that is as far back as the statute of limitations could go.

The case went all the way to the Supreme Court. While the Supreme Court found neither for the plaintiff nor for the defendant, Read More

Every company offers a 401(k) plan, don’t they? & What do 401(k) participants want?

By: David I Gensler, MSPA, MAAA, EA

401(k) plans are so ubiquitous that we assume that every employer offers a retirement plan to their employees. But that perception is just that; a perception. There are a fair number of small to mid-size firms that do not sponsor a 401(k) retirement program for their employees. The question is why don’t they?

According to research from Pew Charitable Trusts, the two primary reasons given for not offering a 401(k) plan was that they were “too expensive to set up”(37% of the respondents) or “my organization does not have the resources” (22%).

I find both of those statements curious. Read More

Beneficiary Designation Forms: Do They Matter?

By: David I Gensler, MSPA, MAAA, EA, AIF®

Do Beneficiary Designation Forms Matter? And Whose Responsibility Is It To Keep Them Up To Date?

Does keeping your beneficiary designation up to date matter? And should your retirement plan have a clear procedure as to how a beneficiary form should be modified? The short answers are yes and yes. You see, the beneficiary designation is the ultimate arbiter in deciding to whom a participant’s death benefit should be paid to. It trumps your will and any other non-plan related documents that a participant may have completed. It certainly trumps any verbal agreements that a participant may have engaged in.

People’s family circumstances change. Weddings, divorces, blended families are all a fact of life. In my experience, no document is as important and no document is given shorter shrift than the plan’s beneficiary designation form.

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Pension Overpayments: Who’s At Fault? What’s The Deal?

By: David I. Gensler, Enrolled Actuary

An error is made and an employee’s monthly benefit is overstated. The employee relies on that information and decides to retire, rather than continue working. The error is uncovered. How does this get fixed (if indeed, it gets fixed at all)?

When a pension plan overpays an employee’s monthly benefit, many plans believe that as a matter of fiduciary duty, that they are required to seek repayment of those benefits, with interest. In a recent lawsuit (Lebahn v. Owens), the courts agreed, but not necessarily for the reasons that you might think.

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Cash Balance Plans: Putting More Tax-Deferred Money Away for Retirement

By David Gensler, President

Cash balance plans are the fastest-growing retirement plan in the country—flooding a market saturated with 401(k) profit-sharing plans, which are on a flat to slightly downward trajectory. According to market research, cash balance plans—hybrids of defined benefit (DB) and defined contribution (DC) plans—increased in number by 500 percent during the 10-year period ending in 2011.

So, what’s the big deal with cash balance plans? In a nutshell, they offer business owners the opportunity to avail themselves of considerably higher tax deductible contribution limits compared to 401(k) plans, reducing their tax bill and allowing them to accumulate more retirement wealth at an accelerated rate.

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