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DOL finalizes RCH clearinghouse PTE

On July 31, 2019, DOL published a Notice of Prohibited Transaction Exemption (PTE) Involving Retirement Clearinghouse, LLC (RCH), addressing a potential prohibited transaction issue presented by RCH’s clearinghouse “locate, match, and transfer” model. In what follows, we begin with a discussion of the RCH clearinghouse model generally. Then we review the PTE, consider sponsor fiduciary…Read More

A Prudent Response to Actuarial Equivalence Lawsuits

Frequently Asked Questions Class action lawsuits were recently filed against five large defined benefit plan sponsors and their plan committees. The complaints allege that participants’ early retirement or optional benefits (i.e., joint and survivor annuities) were understated due to the use of outdated and unreasonable plan actuarial assumptions or conversion factors. A prudent response against these…Read More

Blockchain and retirement plan administration

Blockchain technology is currently being developed as a way to fundamentally transform our systems for, e.g., authenticating securities transactions and tracking securities ownership. In this article we review the possible impact of blockchain technology on retirement plan administration. Background We generally use the term “blockchain” to describe what might more accurately be described as “distributed…Read More

Plan reformation litigation — Pearce v. Chrysler

On June 20, 2018, the Sixth Circuit Court of Appeals, in Pearce v. Chrysler, reversed a lower court decision in favor of the plan sponsor (Chrysler) on the issue of whether a participant may bring an equitable claim for plan reformation based on a conflict between the terms of a summary plan description (SPD) and…Read More

How much in taxes do I save by saving in a 401(k) plan vs. saving outside the plan?

Basic Assumptions Contribution Earnings rate (%) Years in plan Annual Household Income at Contribution Annual Household Income at Distribution Filing StatusSingleMarried Filing JointlyMarried Filing SeparatelyHead of Household Tax earnings yearly?YesNo Calculate October Three does not provide legal or tax advice, and the information provided above is general in nature and should not be considered legal…Read More

PBGC issues policy statement on calculating an employer’s withdrawal liability from a multi-employer pension plan

ERISA requires that when an employer leaves a multi-employer pension plan, the plan actuaries calculate a complete or partial withdrawal liability in order to shore up any proportionate underfunding that could arise in the future.  There are two key aspects of withdrawal liability — the method for determining a withdrawing employer’s allocable share of the…Read More

Legislative update – June 2018

In March 2018 there was a possibility that all or part of the Senate’s bipartisan Retirement Enhancement and Savings Act of 2018 (RESA), which addressed a number of important retirement policy issues, would be included in omnibus spending legislation that was passed on March 23, 2018. That ultimately did not happen, because of objections raised…Read More

The SEC proposes broker/investment adviser conduct rules

We concluded our article Fiduciary Rule vacated: significance for plan sponsors with the observation that sponsor fiduciaries will want to review follow-on guidance on broker/adviser conduct that the Department of Labor or the Securities and Exchange Commission publishes. On April 18, 2018, the SEC, by a 4-1 vote, proposed (1) a “Regulation Best Interest” providing…Read More

The PBGC Premium Burden

PBGC premiums are one of the costliest components of a company’s Defined Benefit plan. For many plans these premiums are in excess of 1% of assets annually. As PBGC premiums continue to rise, managing these premiums has become critical for Plan Sponsors of DB plans. For the second year in a row we have analyzed…Read More