The nonenforcement policy only applies to the Department of Labor, and, theoretically, a private lawsuit could still cite the regulations in support of a fiduciary claim.
As of the end of February 2021, market interest rates are up significantly since the beginning of the year. For many plans, this will mean that 2021 lump sums are valued at interest rates that are lower than current market rates.
Even for plans not at the VRP headcount cap, with respect to (relatively) smaller benefits, annuity settlement may be an efficient strategy. For almost all pension plans, there exists a threshold, greater than zero, below which these settlements make sense.
Under the proposal, employers would generally be required to maintain an “automatic contribution plan.” Failure to comply would trigger an excise tax.
With a presidential election coming up next month, tax policy will be one of the issues on the table. And, while it seems reasonable to assume that if President Trump were to be re-elected his tax policy would not change, we also know that if former Vice President Joe Biden gets elected, there will be changes.
As we have discussed, when a sponsor terminates a defined benefit plan, the cost of the plan termination will typically exceed the book value of plan liabilities by 15%-35% for non-retirees and 5%-10% for retirees. This write-up of liabilities reflects the cost of buying annuities, attributable to annuity carrier regulatory (and business) overhead and profit margin,…Read More
On February 4, 2019, the United States District Court for the Southern District of Texas found for defendant fiduciaries in Fentress v. Exxon, an insider information-based stock drop case. In this article we briefly review the decision, considering it in the context of stock drop litigation generally and the recent decision (for plaintiffs) by the…Read More
In this article we consider the “gains” and “losses” sustained by retirement plans of different designs, based on the performance of the asset and interest rate markets in 2018. How, and in what different ways, did 2018 market performance affect participants in and sponsors of these plans? Summary We consider four different basic plan designs:…Read More
The landscape surrounding physician employment has changed, and it has changed significantly. Where once physicians were largely self-employed and thus could enjoy earnings tied to each individual’s own level and choices of specialization and work, they now find themselves mostly employed by large health systems. And, as that new reality evolves, those health systems are…Read More
On August 18, 2018, the Internal Revenue Service released Private Letter Ruling (PLR) 201833012, concluding that a 401(k) plan that provided for “an employer non-elective contribution on behalf of an employee conditioned on that employee making student loan re-payments” [emphasis added] did not violate the Internal Revenue Code section 401(k) prohibition on conditioning a benefit on…Read More