In Notice 2015-49, the IRS said is will not permit defined benefit plans to allow participants to switch from an annuity to a lump-sum benefit while “in pay status” during minimum required distribution years (generally, after age 70½).  The IRS is taking the position that such a plan provision violates IRC §401(a)(9).    However, it is unlikely that such a provision violates §401(a)(9), ...

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Per IRS Announcement 2015-19, determination letters for individually designed retirement plans will be a thing of the past after 2016.  Determination letters will generally be issued only upon plan creation and termination.  The IRS will attempt to provide model amendments, etc. to ease the pain.  The move will push even more employers towards prototype plans.     ...

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A class action lawsuit has been filed against Dave & Buster’s, Inc. for “right sizing” hours of employees to avoid coverage under the ACA.  The lawsuit was brought under ERISA section 510, that prohibits firing and other actions designed to prevent employees from becoming entitled to employee benefits.  The possibility of such a suit was noted in the November 20, 2014 edition of the ...

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The U.S. Department of Labor (DOL) has issued proposed regulations expanding the definition of “fiduciary” and actions that are potentially subject to fiduciary duties under ERISA and the prohibited transaction rules of the Internal Revenue Code.  Distributions and IRA rollovers advice would be added to the list of things subject to fiduciary duties.  The DOL is aware that many companies ...

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Recent articles about Social Security show that uncertainty in the security of Social Security system makes planning next to impossible.  A May 2015 Money magazine article states that, generally, a single beneficiary breaks even on taking early benefits if he or she lives to age 80½.  The article presumably assumed benefits will not be cut in the future.  It also notes that a 65 year old has a ...

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A common question:  What is the best legal entity?  I have a chart of the various types of legal entities (sole proprietorship, partnership, LLC and corporation) and their possible tax classifications.  From a legal perspective, an LLC is, in my opinion, the superior form of entity in Georgia.  (It likely is the superior form in most other states.)  An LLC with a single member is, absent ...

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A recent article by Albert Feuer in the Journal of Pension Planning and Compliance argues that ERISA plans should be able to accept directions from agents under power of attorney for virtually any benefit matter, while noting case law stating that limits exist.  A noted relatively easy fix is for the plan to permit acceptance of such powers, possibly with plan-specified acceptable forms. ...

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A March 24, 2015 Fiduciary News article by Christopher Carosa suggests that 12b-1 fees may soon become a thing of the past.  The article notes that only about 10 percent of 401(k) plans continue to have these fees.  They make an easy target in a class action lawsuit.  If your plan pays these fees, you should inquire why. ...

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In Davidson v. Henkel Corp., the U.S. District Court for the Eastern District of Michigan ruled in favor of former employee executives in a class action against their former employer with respect to nonqualified plan benefits.  The employer failed to apply the “special timing rule,” whereby nonqualified plan benefits are subject to FICA tax when deferrals are made, instead of when benefits ...

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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 ...

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