In late February, the IRS issued a newsletter that provides that 457(b) plans can self-correct operational defects. (It had previously so stated in very informal guidance.) However, the guidance states that the relief does not potentially apply to plan form defects (i.e., failure to timely amend for tax law changes). IRS says it will possibly grant rulings on operational defects if the ...
22
Apr 2015
457(b) Operational Defect Corrections
April 22, 2015 By
21
Apr 2015
The Supreme Court, King v. Burwell, Obamacare and Equal Protection
April 21, 2015 By
The U.S. Supreme Court will issue its second major decision regarding the Patient Protection and Affordable Care Act (aka Obamacare or “ACA”) in the next few months in King v. Burwell. For the following reasons, it seems unlikely the U.S. Supreme Court will strike down the law. The issue is whether a “state exchange” includes the federal exchange. Whether premiums subsidies can ...
14
Apr 2015
401(k) Fees Gauge and Means of Reducing Fees
April 14, 2015 By
Brightscope, a company that tracks and compares 401(k) plans of many large employers, has issued a chart that gauges 401(k) fees. There have been many lawsuits in recent years, challenging fees as being excessive. In general, the suits have been unsuccessful. Not surprising, fees diminish as plan size increases. Large plans (over $100M in assets) almost uniformly have fees under one ...
10
Apr 2015
SPDs and ERISA Benefit Rights
April 10, 2015 By
In Fulghum v. Embarq Corp., the U.S. Court of Appeals for the Tenth Circuit ruled that a summary plan description (SPD) is part of the plan when neither party asserts that the SPD conflicts with the terms of the plan, contains terms unsupported by the plan, or contains provisions not authorized by or made part of the plan. In 2011, the U.S. Supreme Court ruled in CIGNA v. Amara that plan terms ...
03
Apr 2015
Roth IRA Considerations
April 3, 2015 By
If you have made substantial investments in oil & gas stocks through your IRA, now might be a great time to make a Roth conversion of one or more of such investments. If such stocks recover (and a recent article in The Atlanta Journal and Constitution reported that local gas prices are expected to hit $2.85 per gallon by summer (and they are near $2.20 now), there is a very good chance that ...
31
Mar 2015
Target Date Fund Additional Warnings
March 31, 2015 By
A recent article in Fiduciary News by Christopher Carosa is titled “Are Target Date Funds a Ticking Time Bomb?” I believe the answer is “yes.” I believe the article essentially reaches the same conclusion. What’s the problem? The main problem is that these funds are largely invested in long-term bonds for people close to retirement age, and interest rates are at historical ...
02
Oct 2014
Revocable Trust or not?
October 2, 2014 By
In estate planning, the issue often arises whether a revocable trust should be used. Unlike Georgia, some states have onerous or costly (or both) probate laws. There, using a revocable trust and a “pour over” will (to pick up anything not owned by the trust at death, with the will providing for payment of the assets covered by the will to the trust) often makes sense. Otherwise, unless ...
16
Sep 2014
In Tatum v. RJR Pension Investment Committee et al., the U.S. Court of Appeals for the Fourth Circuit ruled on facts including procedural imprudence that “appear[ed] to be unprecedented in a reported ERISA case” that R.J. Reynolds Tobacco (RJR) could be liable for failing to follow a plan’s terms and liquidating its 401(k) plan’s Nabisco stock (contrary to plan terms) following the split ...
10
Sep 2014
IRS Loses on Contingent Fee Tax Refund Claim Issue
September 10, 2014 By
Citing heavily the recent Loving v. Internal Revenue Service case, the U.S. District Court for the District of Columbia ruled in Ridgely v. Lew that the IRS cannot prevent a person from entering into a contingent fee arrangement with respect to a tax refund claim. The IRS may appeal the decision. The time for the government to appeal expired in September. Thus, the ruling stands. Not ...
05
Sep 2014
The IRS has issued regulations permitting participants in defined contributions plans such as 401(k) plans and traditional IRAs to purchase longevity annuities. Basically, a longevity annuity begins payment of an annuity at a particular age, not to exceed 85. The IRS issued regulations to deal with Internal Revenue Code §401(a)(9)’s minimum required distribution (MRD) requirements. The ...
