Market Beat is a series of articles on key topics in the 403(b) and 457 space. It is a product of NTSA’s Communications Committee, whose volunteer members collaborate in writing and reviewing each article. Prior to the launch of NTSA Net in April 2014, Market Beat existed as an e-newsletter for NTSA members produced six times a year.
The net result is a library of more than 60 Market Beat articles on topics ranging from charter schools to IRA rollovers. The topic index below provides the title and a brief summary of each article in the Market Beat library, organized by subject area. Within each topic area, the articles are listed in chron order, with the newest on top.
The 403(b) QLAC
The Treasury Department took a huge step into lifetime income when it issued regulations creating qualified longevity annuity contracts to be provided by 401(a) plans, 403(b) plans, 457(b) governmental plans and IRAs. Robert J. Toth discusses what QLACs do and how they work.
Longevity Annuities in Retirement Plans — Much Ado About Nothing?
The IRS and the Department of Labor are actively encouraging lifetime income and enhancing retirement security. The most recent part of that effort is a final regulation the IRS released that permits longevity annuities in retirement plans and IRAs. But will this guidance actually change participant behaviors? Or is it much ado about nothing? In MarketBeat, Michael Webb discusses the use of longevity annuities in 403(b) and other retirement plans and examines the potential impact of the IRS guidance.
The Impact of the DOL Fiduciary Regulations on Variable Annuities
Some argue that the DOL’s fiduciary regulations could be the death of variable annuities; others disagree. Ellie Lowder discusses the status and importance of variable annuities in light of the rule.
The Growth of Charter Schools
Forty-two states and the District of Columbia allow charter schools. They tend to treat their benefits packages in the same way as a typical for-profit employer and not in the way a traditional K-12 school does. Diane D. Capone of Lincoln Investment writes that it is important to know who is working with charter schools in your area and to develop a relationship, including one with third party administrators, that will facilitate a 403(b) retirement plan and allow you to help in properly establishing and running a charter school’s retirement plan.
Starting to Crack the Code on Governmental Plans
We may be getting a better understanding of when an employer-sponsored plan is considered to be a governmental plan if the employer is a charter school, based on Notice 2015-07. Linda Segal Blinn explains what this guidance means and the impact it could have.
Charter Schools: A Growing Market
According to the National Alliance for Public Charter Schools, there are 6,400 charter schools in 42 states, with 2.5 million students. Many NTSA members do include charter schools in their target market. Ellie Lowder discusses some unusual situations that may arise in administering a 403(b) plan for a charter school.
Charter Schools: Origin, Growth and Employer-Sponsored Plans
Charter schools are the fastest-growing school choice option in the U.S. public education system. Richard H. Ford offers a discussion of their origin and growth, and how and retirement plans are handled for their employees.
Ministers’ Housing Allowance as a Tax-Free Benefit
Ministers are subject to certain exclusions from federal taxation and an “in-kind” housing allowance under the federal tax Code, and regulations that implement that rule provides a broad definition of the term. Kimberly Flett discusses how the allowance works.
Church Plan Litigation is Headed for a Standoff in the Circuit Courts (or Beyond)
More than a year after five major Catholic-affiliated hospital systems were sued and accused of violating ERISA-plan laws, there have been conflicting developments in the courts on whether or not church-affiliated hospitals qualify for exemptions under the law. Thomas E. Clark breaks down the contradictions, case-by-case, and discusses the ramifications that could come as a result.
New: Legislation Affecting Church 403(b) Plans
The PATH Act made extraordinary and fundamental changes to church 403(b) plans. Robert Toth writes that merging 403(b)s and 401(a)s has been an ongoing issue in the tax-exempt marketplace, and discusses how the Internal Revenue Code now will allow such mergers and the transfer of assets from these two kinds of plans.
An Important Takeaway from the Church Plan Litigation: Know Thy Churches
There have been more than a dozen church plan cases filed in the past couple of years, and the Supreme Court has now decided to take up the matter. Robert Toth writes that the final decision could have a significant impact on a very large number of 403(b) plans of church-related schools, hospitals, nursing homes and others.
Facts and Myths of Corrective Distributions Regarding 403(b) Plans
One aspect of 403(b) plans that is not easily understood is the correction deadline for the actual contribution percentage (ACP) non-discrimination test. Farhad Mirzada provides an overview of the penalty-free and statutory deadlines for corrections for failed tests.
Distribution of Small Accounts Not Easy for 403(b) Plans
The IRS changed the 403(b) world with the regs it issued eight years ago, but Robert Toth says there still are circumstances with no easy solutions; he argues that addressing some of the more intractable daily 403(b) problems requires dealing with “small amounts” in former employees’ 403(b) annuity contracts.
Disability and the Premature Distribution Penalty May Not Be what You Think!
Disability is among the reasons premature may be allowed from most retirement plans, including 403(b) plans and IRAs, without penalty. David Blask answers questions that can arise concerning such distributions and examines how the definition of disability is in play.
Did Your Client Fail to Take the RMD?
Your client failed to take a required minimum distribution; this is a costly error, and your client is in a state of panic. Ellie Lowder tells us what the client should do.
Qualified Charitable Distributions Made Permanent
Qualified charitable distributions (QCD) are now permanent. Lynn Knight writes about what this feature allows IRA owners and beneficiaries who are at least 70½ or older to do.
The Taxman Cometh – Maybe
Ben Franklin once said, “In this world nothing can be said to be certain, except death and taxes.” But what if there was a way to avoid paying taxes on amounts in a retirement plan? Lynn Knight writes that there is a way to receive a tax-free distribution of amounts from a retirement plan through designated Roth contributions (DRCs) as long as certain conditions are met.
Lifetime Income and Retirement Security Through the IRA?
In early 2012, the Treasury released new regulations that laid out the basis by which defined contribution plans can provide lifetime income. Robert Toth discusses retirement plan annuity providers’ interest in taking advantage of these new opportunities and what he calls a growing innovation movement within the IRA marketplace.
What Are Subsequent Beneficiaries?
Simply put, a subsequent beneficiary is nothing more than a beneficiary naming a beneficiary! Susan Diehl discusses the beneficiary’s ability to designate a subsequent beneficiary in the event the original beneficiary dies before the entire account is distributed to that beneficiary. She also looks at some scenarios regarding what happens after the original beneficiary’s death.
General Rules and Exceptions to the 3 Required Minimum Distribution (RMD) Rules
Terminology is central to the rules around required minimum distributions (RMDs). Barbara Webb discusses some key terms fundamental to RMDs.
What Is the 'Step into the Shoes Rule' for RMDs?
Determining how assets must be disbursed from retirement accounts after a participant’s death can be quite complex. Barbara Webb discusses how required minimum distributions (RMDs) should be handled in certain circumstances.
Bipartisan Budget Act Revises Hardship Distribution Rules
After the Tax Cuts and Jobs Act (TCJA) was enacted in December 2017, who would have thought that more retirement changes would be issued a few months later?! Susan Diehl points out that the Bipartisan Budget Act of 2018 contains retirement plan changes that were a surprise to many in the retirement benefits community.
TCJA Participant Loan Changes Compel Review of ‘Uncomfortable’ Loan Fiduciary Obligations
The Tax Cuts and Jobs Act included provisions that affect participant loans. Robert Toth writes that these changes trigger something he argues one would rather not look at: the way in which ERISA’s fiduciary rules apply to loans and their administration.
Yet Another EPCRS Update: Automatic Enrollment
IRS Revenue Procedure (Rev. Proc.) 2015-27 updated the Employee Plans Compliance Resolution System (EPCRS). On April 2, the IRS released Rev. Proc. 2015-28, outlining even more changes — this time, concerning autoenrollment. Michael Webb examines the autoenrollment changes to EPCRS regarding their specific impact on 403(b)/457(b) plan sponsors.
The EPCRS Changes and Their Impact on 403(b)/457(b) Plans
The IRS recently updated the Employee Plans Compliance Resolution System (EPCRS), a means to correct plan defects. Michael Webb examines the changes made to EPCRS and discusses their specific impact (or lack thereof) on 403(b)/457(b) plan sponsors.
Robert Toth uses his law expertise to explain plainly how plan advisors can make sense of recent IRS regulations that affect the industry.
Mitigating Factors in Calculating a 403(b) Plan’s Maximum Payment Amount Under CAP
Anyone who has had the pleasure of dealing with the 403(b) annuity recognizes that it is truly an “odd duck” — especially when looking at it through the lens of the 401(a) experience. Robert Toth writes that it should come as no surprise that this “odd-duckiness” shows up in settlements under the EPCRS Closing Agreement Program.
Changes to EPCRS: Voluntary Correction Program IRS User Fees…Good and Bad News
Effective Jan. 2, 2018, the IRS in Revenue Procedure 2018-4 simplified the user fees charged for most submissions made under the Voluntary Correction Program. Susan Diehl argues that the changes the IRS made are good news and really bad news — and explains why.
It's That Time of Year Again for ERISA Plan Sponsors!
For sponsors of large ERISA plans — including most ERISA 403(b) plans — with calendar year plans, it’s Form 5500 time. Michael Webb seeks to help make the 2014 5500 filing process easier for plan sponsors and those who work with them.
What Plan Sponsors Need to Know About Bonding Requirements for ERISA Plans
If you are working with ERISA plans, you will need to respond to questions from your employer clients about meeting the mandatory bonding requirements which must cover any employee handling assets of the plan. Ellie Lowder suggests how to answer the most common questions.
Basic Due Diligence Process for ERISA 403(b) Plans
Advisors working in the ERISA 403(b) marketplace often are asked to help plan sponsors meet their fiduciary duties under ERISA. Diane Capone provides some basics on the process an ERISA fiduciary plan sponsor needs to follow in order to comply with their obligations to the plan.
The Top Five Things You Need to Know About ERISA 404(c)
Section 404(c) is a historically misunderstood part of ERISA, with misconceptions rampant even before the 404(a)(5) participant fee disclosure regulations added to the confusion. Michael Webb addresses fundamental ERISA Section 404(c) issues every advisor should master.
Impact of 408(b)(2) Guide on 403(b) Advisors
The DOL has issued numerous fee disclosure rules, including regs under ERISA Section 408(b)(2), to help fiduciaries determine what a “reasonable” fee is. Kimberly Flett and Jeannine Souders discuss what those regulations require of service providers.
It Matters! Is This 403(b) Plan Subject to ERISA?
Plan sponsors that sponsor 403(b) plans sometimes struggle with whether the plan is subject to the requirements of ERISA. Some are; some are not! Ellie Lowder helps answer the question.
Annual Reporting and Disclosure Proposed Amendments — Issued Jointly by DOL, IRS and PBGC!
On July 21, 2016, three federal agencies issued proposed amendments to the Form 5500 series in a Notice of Proposed Forms Revisions. Susan Diehl writes that the proposed regulation, and related forms revisions, would improve employee benefit plan reporting for filers, the public and the Agencies.
ERISA 403(b) Plans — Service Model for K-12 Advisors
The differences between the Non-ERISA and ERISA 403(b) worlds are also found in the expectations and structure related to the servicing of 403(b) plans, writes Bill Fisher. He provides a primer for those interested in moving into the ERISA 403(b) marketplace.
In Tussey, Plaintiffs' Error Hands Win to ABB, Inc., in Fund Change Case
A recent ruling on remand in the long-running Tussey v. ABB litigation, which favored the fiduciaries, was largely under the radar screen. Farhad Mirzada offers a look at the recent developments.
DOL Provides Key ERISA Guidance on QLAC/DC Lifetime Income
The DOL recently published its first serious guidance on supporting lifetime income with the publication of Field Assistance Bulletin 2015-2. Robert Toth discusses the guidance and why it is very necessary for the success of the qualified longevity annuity contracts as well as defined contribution lifetime income.
NTSA Conference Presentation Sheds More Light on DOL’s Fiduciary Rule
During the first round of breakout sessions at the 2015 NTSA 403(b) Summit in Nashville, an expert panel led a lively and engaging discussion about the Department of Labor’s re-proposed fiduciary rule, and the potential impact on common business practices. Amy L. Simonson summarizes the who, what, when, where, why and how of the proposed rule.
Five Fast Facts Regarding the New DOL Proposed Fiduciary Rule
On April 14, 2015, the Department of Labor released a proposed fiduciary rule that expands the definition of who a fiduciary is and attempts to broaden the scope of its fiduciary oversight. Michael Webb makes some observations regarding the possible impact of the proposed rule.
Reps. Kline, Roe Press for Details on DOL, SEC Coordination
The formal roll out of the latest iteration of the fiduciary regs appears to be imminent, and it has generated plenty of attention. Nevin Adams discusses the letter two members of the U.S. House of Representatives who seek details sent to the DOL.
Who Is in Charge Here? Will the Real Fiduciary Please Stand Up?
Distinguishing who the fiduciary is within a 403(b) plan or other qualified plan is an important determination, but that doesn’t necessarily mean that it’s an easy or clear determination. Quite the contrary: it is a highly confused, misinterpreted and somewhat gray area that many plan sponsors wish to forgo and would gladly delegate the role to another third-party. Kimberly Flett, CPA, QKA, QPA, discusses if and how that can be done, as well as some common applications of the role of the fiduciary.
Am I A Fiduciary? Well, That Depends...
Michael Webb and Cammack LaRhette break down the caveats and exceptions in the IRS’ current definition of what a fiduciary is, depending on which kind of non-profit clients you represent.
Fiduciary Responsibilities (or Lack Thereof) in Non-ERISA Plans
Depending on the state, or even on the type of organization within a state, fiduciary responsibility can be a) nonexistent b) comprehensive, or c) somewhere in between. Mike Webb attempts to assist plan sponsors and those who work with them in determining what fiduciary responsibility, if any, they have, depending on where they live and who they work for.
What Plans do the Final DOL Fiduciary Rule and its Exemptions Cover?
Financial advisers need to grasp what plans the new fiduciary rule and its exemptions cover, in order to understand how they affect their business. Diane Capone argues that the rule will affect your business and offers a discussion that provides background information on the rule and the types of plans it covers.
DOL Makes Some BIC Fixes
The Department of Labor (DOL) has made some “technical corrections” to the Best Interest Contract (BIC) Exemption of the fiduciary regulation. Nevin Adams discusses the corrections, which either fix typos, clarify provisions that might be confusing, or bring the text of the exemption into agreement with what the DOL viewed as “common understanding.”
Issues Related to the University 403(b) Lawsuits
The recent flurry of lawsuits against major universities on their (very large) 403(b) plans has raised significant concerns in the market related to what has been very common plan designs. Robert Toth discusses what the differences between 403(b) plans and 401(k) plans mean regarding the application of ERISA’s fiduciary rules to the investments.
Fiduciary Rule Set to Trigger Surge in Fund Reviews
A new report claims that the Labor Department’s fiduciary rule will cause a surge in mutual funds being reviewed and replaced in defined contribution plans, even before the Jan. 1, 2018 deadline for full compliance. The NTSA Net staff takes a look at that report.
The Fiduciary Underpinnings of Plan Loans
Prudence, diversifying investments and administering a plan in accordance with its documents are critical. However, writes Robert Toth, it is easy to forget that the fiduciary’s exclusive obligation is to provide retirement income from plans and that the point behind the rules governing plans becomes very real when dealing with plan loans.
2nd Set of COI FAQs Tackles Technical Issues
The Department of Labor released a much-anticipated second set of fiduciary regulation FAQs on Friday the 13th. Nevin Adams writes that they focus particularly on investment advice concerning ERISA-covered plans, IRAs and other plans covered by Code Section 4975(e)(1).
The Fiduciary Rule: Where Things Stand Now
On Feb. 3, 2017, President Trump issued an executive memorandum on the Department of Labor’s fiduciary rule. In fact, it issued a draft and a final version that differed from the earlier iteration. Nevin Adams discusses the memoranda and what they mean for the rule and those affected by it.
Ultimately No Turning Back on Fiduciary Rule?
The Trump administration's rapid-fire executive orders and regulatory announcements and reviews could delay, gut or even kill the fiduciary rule. But a recent analysis suggests the genie may be out of the bottle. John Iekel discusses a recent analysis that suggests changes in the industry may end up implementing the rule regardless of what the government does.
DOL Delays Fiduciary Rule 60 Days
The DOL delayed the fiduciary rule 60 days from April 10, 2017 to June 9, 2017. Kimberly Flett writes that although this postponement is in effect, plan sponsors, retirement plan investors and advisers should be aware of the important components of this rule and prepare for the outcome.
The Requirement to Disclose Fiduciary Status — and When
The new fiduciary rule will convert many current non-fiduciary advisers into fiduciaries. We provide a blog post by Fred Reish in which he discusses what this means for newly minted fiduciary advisors.
The Value of Good Advice
Most of the debate about the fiduciary regulation has been focused on the cost of bad advice. But there’s another side to the issue, writes Nevin Adams, who discusses the value of advisors and what they do.
The 4th Impartial Conduct Standard
The Department of Labor recently issued a set of FAQs on the fiduciary rule. We discuss a blog post by Fred Reish in which he points out that one of those FAQs “raises some significant issues” for broker-dealers and RIAs.
Which Plans Are — and Are Not — Covered by the Fiduciary Regulation?
So what plans ARE covered by the fiduciary rule? Here we feature a blog post by Fred Reish (with help from some of his colleagues at Drinker Biddle) addresses that question, as well as which plans the rule does not cover.
Avoiding Harm in Harmonization of Fiduciary Standards
The Department of Labor’s fiduciary rule may be fairly straightforward, but there may be a more delicate dance to be done than many may think when it comes to reconciling it with the thrust of the Securities Exchange Act of 1934 and the Investment Advisors Act of 1940. John Iekel discusses a blog post by FiduciaryNews’ Christopher Carosa that examines the matter.
Does the Best Interest Standard Require ‘Best Investment’?
Here we look at a discussion by ERISA attorney Fred Reish concerning what he terms “another mistaken belief” about the fiduciary regulation. Reish explains that under that regulation, and the transition Best Interest Contract Exemption (BIC) — which has been in effect since June 9, 2017 — when an advisor gives conflicted advice to IRAs, plans or participants, the advisor must adhere to the Impartial Conduct Standards, and what that means.
Does the Best Interest Standard Require ‘Best Investment
ERISA attorney Fred Reish looks at another “mistaken belief” about the fiduciary regulation. In a recent blog post on the fiduciary regulation, he discusses what the best interest standard really requires.
The 3 Biggest Mistakes Fiduciaries Make
Being a fiduciary has never been easy, and it only seems to be getting more complicated. It doesn’t seem difficult to make a mistake in fulfilling those duties. Nevin Adams discusses what he considers to be the three biggest mistakes fiduciaries make.
5th Circuit Decision: A Win for Fiduciary Rule’s Foes — or Ultimately a Loss?
The 5th Circuit’s ruling in Chamber of Commerce et.al. v. U.S. Dept. of Labor vacating the Department of Labor’s (DOL) fiduciary rule was a win for opponents of the rule — at the very least in the states in that circuit. John Iekel discusses a recent analysis that suggests that in the long run, opponents who took that particular dispute to court may be their own undoing.
Did the 5th Circuit Drive a Stake Through the Fiduciary Rule’s Heart?
In its recent decision, the U.S. Court of Appeals for the 5th Circuit vacated the Department of Labor’s (DOL) fiduciary rule. But did that ruling really kill the rule? The Ferenczy Benefits Law Center provides an analysis of the ruling and its effects.
State-sponsored 457(b) Plans: How Do Public School Employees Decide?
Public school employees can contribute to a 403(b) plan, or to a 457(b) plan. Sounds great, but doing so can have negative ramifications. David Blask notes that these plans differ in several important ways and observes that the determination regarding which plan is best yields different answers depending on key details in a participant's life and career.
Proposed 457 Regulations Sweep Out Legislative Cobwebs for 457(b) Plans
The IRS recently issued proposed 457 regulations, which generally apply to compensation deferred under a 457(b) plan for calendar years beginning after the date that the final regulations are published. Linda Segal Blinn tells us what this means for sponsors of a 457(b) plan.
Finally Proposed Regulations Issued for 457(f) Plans and 409A Plans
After almost nine years of waiting, finally IRS has issued proposed regulations for 457(f) plans! Susan Diehl writes that the new proposed regulations for government and tax-exempt 457(b) and 457(f) plans and for profit-companies’ top-hat plans under Internal Revenue Code Section 409A made expected changes and discusses what the regs mean.
When Is a Sick or Vacation Leave Plan Bona Fide?
School districts with an unused accumulated leave procedure may consider monitoring the IRS’ 457 regulatory project, which would define what constitutes a bona fide vacation or sick leave plan. Linda Segal Blinn discusses such leave plans, how Internal Revenue Code Section 457 applies and what that means.
SEC Approves Split Rule on Money Market Funds
The SEC adopted new rules affecting the $2.6 trillion money market industry late in July. The purpose of the rules is to alert investors about the risk of investments that were thought to be guaranteed, and they impose floating net asset value like other mutual funds rather than a fixed $1 value. Fred Barstein notes that the rules will apply only to funds institutions hold, and also discusses more about what the rules mean.
The New Money Market Fund Rules: What's All the Fuss About?
The SEC earlier this year amended Investment Company Act Rule 2a-7, otherwise known as the “Money Market Fund Rule.” Despite years of discussion concerning the rule, confusion about it may persist. Byron Bowman explains the changes made to the rule and their effect on firms and their customers.
Socially Responsible Investing: Investing with a Conscience
A plan sponsor has many investment options it can make available to plan participants. Should the plan offer funds that are invested in stable value or mid cap growth funds? Emerging markets? Real estate investment funds? Target date funds? But there is something else a plan sponsor can keep in mind. Earle Allen posits the notion that a plan sponsor also should consider whether it will offer funds that are invested in companies that act with a social conscience.
The Different Flavors of 457(b): Tax-Exempt and Governmental Employers
Those who are familiar with 457(b) plans know that they come in two separate and distinct “flavors” — governmental and private sector. In MarketBeat, Michael Webb discusses the similarities and differences between the flavors.
A 403(b) Collective Trust? A Note of Caution…..
Collective trusts have seemingly become all the rage in plan investment circles, and for some very good reasons. But what of a 403(b) plan purchasing collective investment trusts (CITs)? Robert Toth discusses issues that need to be addressed concerning 403(b)s and CITs.
The State 403(b) Plan CIT
There are substantial legal challenges related to offering to 403(b) plans the type of collective trust investments that are sold to 401(k) plans. Robert J. Toth points out the legal and regulatory requirements one must meet, and discusses one plan provider’s unique way of applying the collective trust rules to make just such an offering.
Tibble v. Edison International: What's All the Fuss About?
The U.S. Supreme Court's Tibble v. Edison International decision seems relatively mundane, and yet it has captured the attention of media outlets everywhere. Michael Webb examines this case and gets to the bottom of its implications for retirement plan sponsors and those who work with them.
The Windsor Decision: One Year Later
The U.S. Supreme Court issued its decision in U.S. v. Windsor — in which it said that retirement plans must treat a same-sex spouse just they would any other spouse for purposes of benefits under the retirement plan — almost one year ago, on June 26, 2013. That makes this an opportune time for Ellie Lowder to review some of the latest guidance that implements the Court’s ruling and with which you must comply.
403(b) Lawsuits — Fees vs. Value
The drumbeat of lawsuits against large 403(b) and qualified plan sponsors continues, and the publicity surrounding these suits is causing concern among employers sponsoring much smaller 403(b) plans. David Blask discusses the cases and what they entail.
Delivering Investment Advice: Key Differences between 403(b) vs. 401(k) Plans
Asset allocation models are among the key drivers that advisors use to provide education and advice that will help participants make the best possible decisions about saving, investing and preparing for retirement. Amy L. Simonson and Robert J. Toth provide a discussion of the use of such models and the sensitive issues that can entail.
Social Security: What is the Prognosis?
One of the important sources of retirement income, Social Security, is seriously misunderstood. Ellie Lowder discusses the importance of Social Security and of projecting its role in funding retirement.
Are You Ready for Retirement Readiness?
Retirement readiness is an increasing concern among 403(b) plan sponsors. Michael Webb examines retirement readiness and argues that while it is not an easy problem to solve, it also is an opportunity for advisors and plan vendors to provide valuable assistance.
Voluntary Participation Rates are Awful — Or Are They?
While there is room for improvement in 403(b) participation rates, those rates are not as doom-and-gloom as those who market alternatives to 403(b) plan sponsors would like you to believe. Michael Webb explains why it’s a mistake to compare participation rates in 401(k)s to that of 403(b)s and jump to conclusions.
DOL Missing Participants Guidance Gets a Tech Savvy Refresh
The Department of Labor has issued updated guidance on how plan fiduciaries can find missing participants and beneficiaries in expired or terminated defined-contribution plans. Linda Segal Blinn parses through the language to help advisors understand what officially qualifies as due diligence in tracking lost benefactors down.
Increasing Participation Rates in 403(b) Plans
Low participation rates in 403(b) plans — in particular plans in the public education K-12 market segment — is generating concern among employers. Recent studies have not provided specifics of current participation rates in that sector, but individual employers are reporting that it is not uncommon to see 18-20% participation rates. Ellie Lowder discusses why the industry needs to change that, and offers suggestions as to how.
Financial Literacy Workshops: Helping Your Employees Fill Their Savings Gaps
A new report of reductions in state pension benefits (published by the Center for Local Government Excellence in April 2014) should cause employers to have a new sense of urgency in helping employees participate more fully in their voluntary retirement savings (403(b) plans) and deferred compensation (457(b) plans) plans so that employees can comfortably retire at normal retirement ages. Ellie Lowder discusses the report, and the changes that a number of states have made their sponsored retirement plans.
Personal Bankruptcy and Retirement Plans Revisited
The U.S. Supreme Court ruled recently that an inherited IRA is part of a bankruptcy estate and subject to creditors’ claims. This raises questions: if that is the case with IRAs, does that then have implications for retirement plan assets belonging to those who declare bankruptcy? In MarketBeat, Michael Webb discusses what the Court’s ruling means for those who are just such a place.
Outside of the Box: An Approach for Providing Participant Level Advice
Amy Simonson writes how more Americans than ever are feeling worry about their ability to retire one day, and she discusses how advisors can help them save and grow their nest-egg, starting right now.
Robo Advisors: 'Danger Will Robinson'
Robert Young discusses the increasing use of robo advisors and argues that they are here to stay,. but that nonetheless human advisors remain important.
Saver's Tax Credit Can Boost 403(b) Participation
Employers are required to provide meaningful opportunity to employees to participate in their 403(b) plans or make contribution changes — and that includes low-income employees. Ellie Lowder discusses how the saver’s tax credit can help make it possible for those employees to participate.
Health Savings Accounts as a Retirement Savings Tool?
Health savings accounts provide a tax-free vehicle for participants to accumulate investments in order to reimburse out-of-pocket medical expenses. Kimberly Flett discusses the advantages of establishing one, as well as how they relate to retirement plans.
Participants Trending to Lifetime Income With 403(b) & 457(b) Savings
In the past, financial advisors will remember having a discussion with the clients participating in 403(b) and/or 457(b) plans about the potential for using retirement savings for lump sum needs, by withdrawing amounts as needed. Ellie Lowder examines what has changed to contribute to the trend of using voluntary savings for additional lifetime income.
When Timing Is Everything: Understanding Includible Compensation in Special Pay Plans
Special pay features became popular among 403(b) plans after EGTRRA enabled 403(b) sponsors to make employer nonelective contributions to the 403(b) account of a former employee. Linda Segal Blinn argues that as is often the case, the devil can be in the details and discusses how the rules work for such features.
What Should You Do if the Retirement Account Holder Can’t Be Located?
ERISA plans have a procedure that is typically followed by financial institutions if a participant is “lost.” Susan Diehl tells us what you do in a non-ERISA 403(b) or under an IRA if the participant can’t be found.
Employers Ready to Ramp up Financial Wellness Tools
A new survey released at the start of 2017 finds evidence that interest in financial wellness is growing, and that plan sponsors are looking to beef up the tools to support that focus. The NTSA staff discusses some of the highlights of the report.
Knowing How to Satisfy the Best Interest Standard
The new “transition” exemptions soon will apply to recommendations for IRAs.The NTSA staff discusses a blog post in which Fred Reish looks at how to prepare for that shift.
Coverage Vacuum + State Plans = Opportunity
A handful of states have put in place plans intended to help make sure that retirement plan coverage and participation expands. John Iekel covers a recent conference session that points out that the fact that states are acting to fill the coverage gaps doesn’t spell the end of opportunity for the private sector and may enhance its attractiveness.
Why Switching from a 403(b) to a 401(k) May Not Be the Best Choice
Internal Revenue Code Section 501(c)(3) organizations that sponsor an ERISA 403(b) plan may have to choose between terminating or freezing its 403(b) plan and sponsoring a 401(k) plan instead. Lynn Knight discusses a few advantages an ERISA 403(b) plan has compared to a 401(k) plan.
Improve Your 403(b) Plan by Adding the Roth Option
In its “How America Saves” 2017 report, mutual fund giant Vanguard makes it clear that adding a Roth option to the plan makes an important difference in improving participation in the plan. Richard H. Ford discusses the effects that adding that option can have.
Behavioral Finance — the Next Frontier
The notions that people rely on heuristics when making complex decisions, fear loss more than they value gain, tend to diversify across the number of options provided without regard to what lies within those choices, and tend to treat “old” money differently than “new” money are widely accepted. Nevin Adams discusses the research of Nobel Prize winning Professor Richard Thaler and how it relates to saving for retirement.
Auto-Enrollment: Elixir and Intoxicant
The belle of the retirement plan participation ball is auto enrollment. But a recent article suggests it may not only be a magic elixir — it also may cause a delayed hangover of unfavorable side effects; John Iekel takes a look at the piece.
4 Retirement Savings Benchmarks That (Generally) Miss the Mark
Behavioral finance tells us that human beings are prone to relying on heuristics — mental shortcuts — to solve complex problems. Nevin Adams writes that while such benchmarks may not be very accurate, there are four that workers use more often than we’d perhaps like to admit.
Are Your Retirement Savings Naughty or Nice?
Most respondents to surveys on retirement confidence and prep give irrational responses to gaps between retirement needs and saving habits. Nevin Adams discusses this disparity in a holiday way.
Overcoming School Access Issues
We all have the same goal — providing school employees with access to retirement plans and means to save. John Iekel provides a look at a panel discussion on that matter that took place at a Jan. 25 session of the NTSA Summit held Jan. 23-25 in Houston.
IRS Releases New Limits for HSA Contributions for Family Coverage for 2018
The IRS has released new limits for HSA contributions for family coverage for 2018. Susan Diehl notes that they are lower, and provides an overview.
Recent Update to SPARK Institute Best Practices for 403(b) and Related Plans
Guidelines for sharing participant data of 403(b) and governmental 457 plans provided by the SPARK Institute have been widely accepted and are used by the majority of plan vendors. Diane Capone discusses the updated standards and best practices.
Severance of Employment: When Has it Really Occurred?
Is having language in administrators’ employment contracts sufficient legal authority for a school district to adopt and implement a 401(a) plan, or is an additional governing board resolution needed to establish legal authority for the plan? Ellie Lowder tells us.
Breaking Up Is Hard To Do, But a 403(b) Plan Termination Checklist May Help
The Code Section 403(b) regulations allow employers to terminate their 403(b) plans. Linda Segal Blinn argues that the devil may be in the details, and offers questions and answers to help employers that intend to terminate their 403(b) plans.
The 403(b) Plan Document: LRM Housekeeping and Dealing with Plan Document Errors
Plan documents continue to demand advisors’ attention as we wait for the IRS to approve prototype and volume submitter plans sometime next year. Robert Toth discusses two particularly important plan document issues that advisors can help their 403(b) plan sponsors understand during this period.
As Clear As Mud? The 403(b) Plan Termination Rules
Michael Webb discusses the challenges of the termination of a 403(b) plan. It is worthy of note that the final problem for a plan sponsor may well be employee dissatisfaction of the take away of a valued employee benefit.
Are ETFs and Self-Directed Brokerage Accounts Available in 403(b) Plans?
There has been a lot of discussion recently regarding the use of exchange-traded funds (ETFs) and self-directed brokerage accounts (SDBAs) in 401(k)s. But what about 403(b)s? Diane D. Capone takes a look at ETFs and SDBAs and the challenges they present to the 403(b) plan sponsor.
403(b)s: Effective Opportunity
Keeping a finger on the pulse of how well a 403(b) plan is fulfilling the requirement that it provide effective opportunity to participate in the plan is one way to take stock of how well the plan is adhering to universal availability — and in the process avoiding not only errors but also the possibility of an audit. Here, MarketBeat offers ways to pursue effective opportunity.
From the NTSA Summit: New Best Practices Manual Being Developed
The NTSA Best Practices Manual has been in use for more than five years to help establish consistency in handling compliance procedures and to help the industry and plan sponsors meet regulatory requirements. Ellie Lowder gives us a look at the discussions at the recent NTSA Masters Summit concerning the manual.
Breaking Down Barriers for non-ERISA Automatic Enrollment
Ten years ago, the Pension Protection Act of 2006 (PPA) cleared a barrier for some defined contribution retirement plans to offer an automatic enrollment feature. But the PPA left intact state law barriers if a DC plan was not subject to ERISA. Linda Segal Blinn discusses how state laws continue to evolve 10 years later.
Designated Roth Contributions — Dispelling the Confusion
Designated Roth Contributions (DRCs) have been a permissible retirement plan feature since 2006; however, there is still confusion in the retirement plan community regarding DRCs. Lynn Knight tests your knowledge and dispels the mist.
Social Media and Your Practice
Why should you care about social media? A Dec. 14, 2017 NTSA webcast discussed how the financial industry is navigating compliance issues regarding social media and offered insights on why social media is important and how it can build and further a practice.
The Birth of the First Ever IRS Pre-Approved 403(b) Plan Documents!
On Friday the 13th, the IRS issued Revenue Procedure 2017-18 which provides employers with a three-year remedial amendment period that ends March 31, 2020. Susan Diehl writes that “now we are on our way” and discusses the revenue procedure and what comes next.
Take 2 - The Pre-Approved 403(b) Program and Certain 501(c) (3) Organizations
In January, the IRS issued Revenue Procedure 2017-18; since then advisors, investment companies, and employers have posed questions about certain 501(c)(3) organizations and the Pre-Approved 403(b) Program. Susan Diehl writes that these questions have primarily related to charter schools and faith-based organizations and discusses their unique features.
How Behavioral Biases Affect Financial Professionals
Apparently participants aren’t the only ones struggling with behavioral biases, according to a new report. We feature a recent paper that asserts that financial and investment professionals — along with their clients — reveal a wide array of psychological biases that can result in flawed judgments and decisions.
Cybersecurity More Than an Individual Concern
Cybersecurity is a special concern for the financial industry, a lawyer who handles cybersecurity cases said recently. But its importance goes well beyond the integrity of clients’ and plan participants’ sensitive information — it pervades inter-corporate business functions as well.
Thwarting Cyber Attacks on Retirement Plans
A stolen identity, a few clicks, and there it is — a handsome retirement plan balance, ripe for the picking. If only someone had done something to prevent it all. John Iekel discusses a blog entry and IRS ideas on how to protect retirement plans and balances from cyber attacks and criminals.
Advocacy Relationships and Practice Development
Bill Fisher, Chairman of the NTSA Professional Education Committee sat down with Jerry Miletics of AXA Advisors, LLC to talk about advocacy and practice development. The result illustrates how they are connected, and how it really is all about relationships.
Automatic Enrollment Is Getting a Lot of Attention, But Can it Be Done in Non-ERISA Plans?
ERISA plans are using auto enrollment more frequently to increase participation. ERISA supersedes state statutes, but what about when ERISA does not apply? Ellie Lowder discusses whether auto enrollment is for non-ERISA plans too.
Another Strategy for Increasing Participation in the 403(b) Plan: Add the Roth 403(b) Option!
Most 403(b) non-ERISA plans do not include employer matching contributions, which may decrease motivation for employees to enroll. But are there other ways to increase participation in such plans? Ellie Lowder has good news — there are, and she discusses them.
Roth Feature in a 403(b) or Governmental 457(b) Plan – What Every Employer (and Financial Advisor) Needs to Know
Carol Gransee writes that adding an upfront-tax option to your clients’ retirement plans is easier than it may seem, and can be a better option for many younger workers.
Thinking of Adding a Designated Roth Option to Your Plan? Consider This
EGTRRA created the designated Roth contribution, an alternative to Roth IRA contributions for participants whose income exceeds the threshold limits. Barbara Webb writes that offering such a program is not without strings, and offers a list of elements to consider before implementing a designated Roth option under an employer plan.
Health Savings Accounts and How They Relate to 403(b)s
There is renewed interest in health savings accounts (HSAs). And current trends appear to be paving the way for HSAs to become an important retirement savings tool. Nathan Glassey discusses what this means for 403(b) plans and how can they be integrated in to a 403(b) offering.
Industry Leaders: Build on Existing Framework to Address ‘Challenges’
The Financial Services Roundtable hosted a policy forum on America’s retirement challenges on Sept. 27, 2017 — the same day President Trump and key congressional leaders released a framework for reforming the tax code. Ted Godbout discusses the insights shared at the forum.
IRA Rollover Misconceptions and the New IRS Publication 590
The new IRS position that the one-per-year limit on IRA rollovers applies to all IRAs a taxpayer owns continues to evoke questions. David R. Blask discusses the rule, as well as the changes the IRS made to its Publication 590 to help taxpayers comply and better understand its new stance.
IRA Rollovers; Getting Ready for Change
Effective on Jan. 1, 2015, change is coming to the “once each 12 months” rule for indirect IRA-to-IRA rollovers. Ellie Lowder explains exactly what this ruling means to both your practice and your clients.
The SIMPLE IRA Change under the Path Act made ‘Simple’…Maybe…
The PATH Act, enacted Dec. 18, 2015, affects the money that can be rolled over into a SIMPLE IRA. Susan Diehl writes that many financial institutions have been struggling with such rollovers, and provides a breakdown of how this change affects SIMPLE plans and what institutions need to know before accepting these rollover contributions.
Will Fiduciary Reg Reduce Rollovers?
There are reasons why a plan sponsor might want to keep ex-participants’ accounts in their plan. Nevin Adams discusses the findings in a recent study about that, and whether the Department of Labor’s fiduciary rule will reduce rollovers.
What You Should Know About Rollovers from a 403(b) to a 457 and Vice Versa
The difference between 403(b) and governmental 457 plans does not seem significant at first glance, argues Diane Capone. She points out their similarities and differences, and offers insights into the rules and mechanics of rollovers between the two kinds of accounts.
Best Practices for Non-ERISA 403(b)s Rollovers
When a participant in a non-ERISA 403(b) plan wishes to roll assets over from another non-ERISA 403(b) plan into this plan, what best practices can the receiving plan sponsor or vendor take to ensure compliance with IRS guidance and Treasury regulations? Sue Diehl and Ellie Lowder use questions and answers to tell us.
Did You Know? There Are New Fees for PLRs for Waiver of 60-Day Rollover!
How much does the IRS charge for a private letter ruling (PLR) requesting a waiver of the 60-day rollover period? Susan Diehl tells us, in light of recent increases in fees that the IRS put in place.
IRS Says: Only One Coverdell ESA Account Rollover Per Year!
The IRS recently issued a technical advice memorandum on rollovers between Coverdell education savings accounts (ESAs). Susan Diehl notes that now a tax a taxpayer can only make one rollover from one Coverdell ESA to another ESA in a one-year period, regardless of the number of accounts they own.
IRS Establishes Waiver of 60-Day Rollover Requirement
In IRS Revenue Procedure 2016-47, which became effective on Aug. 24, 2016, the IRS simplifies the process for correcting late rollovers between IRA accounts in order to alleviate potential tax penalties. Kimberly Flett discusses what the guidance says and what it means for participants and administrators.
Rollover 403bs: Inheriting a Qualified Plan
One of the advantages of qualified plans and IRAs is the portability with rollover contributions. But can a 403(b) be rolled into an inherited IRA? Kimberly Flett writes that understanding the portability rules — in particular regarding 403(b)s and IRAs — can prevent an unwelcome tax consequence.
Are States Migrating from Traditional Pensions? A State-by-State Review of Alternative Models to the Traditional Defined Benefit Plan
We have been aware of the many changes taking place in a number of states which may substantially reduce the pension benefit for participants. This creates considerable opportunity in using voluntary plans to fill the gap. This article by Michael Webb examines those changes on a state by state basis, which NTSA members can use as a first step in understanding the state pension system in each specific state.
State Sponsored 403(b) Plans: A Closer Look
The news has been flooded with articles regarding the attempts of several states to sponsor 401(k) plans and obtain an exemption from ERISA for doing so. But did you know that some states currently sponsor 403(b) plans? Michael Webb takes a closer look at such often-overlooked plans and their impacts on the advisor community.
Orphan Accounts and How to Help Orphaned Clients
NTSA members will be dealing with orphan accounts and orphaned clients routinely.Ellie Lowder argues that advisors will want to have a clear grasp of the requirements as they assist clients with understanding those requirements and managing the 403(b) accounts held by de-selected providers.
IRS Advisory Council 403(b) Recommendations
The IRS’ Advisory Committee on Tax Exempt and Government Entities, professionals who provide recommendations on IRS programs and procedures which affect retirement plans, have substantial influence over the IRS’ policy positions decisions. Robert Toth discusses the council and its recommendations concerning 403(b)s.
What Plan Sponsors Should Know about the IRS EPCU
Since the IRS’ Employee Plans Compliance Unit (EPCU) was rolled out 10 years ago, plan sponsors have become increasingly familiar with the IRS Compliance Check questionnaire. In MarketBeat, Linda Segal Blinn offers a closer look at what the EPCU is, what it does and and how it works.
Employee vs. Independent Contractor and Retirement Plan Impact
Plan sponsors should always keep a close eye on whether a worker is classified as an employee or an independent contractor since this has a significant effect on retirement plans. Michael Webb outlines differences under current law between and employees and independent contractors, and explains the impact of that determination on 403(b) and other types of retirement plans.
IRS Audits of 403(b) Plans — Insights and Best Practices
An IRS audit is not exactly a sought-after experience. But it is possible to take a look at a plan and see if it is at risk of one, and there are best practices one can take after an audit. The recent 2015 NTSA 403(b) Summit offered insights on both, as Diane Capone discusses.
Digging Deep: How Does the 15 Year of Service Increased Limit Really Work?
The IRS has said that excess deferrals generally are caused by “misuse” of the 15+ years of service increased limit outlined in Internal Revenue Code Section 402(g)(7). Ellie Lowder provides some clarity on how it works.
Next Up from the IRS: Introducing the Section 409A Compliance Initiative Project
When the IRS writes its essay about how it spent its summer vacation, it will report about how it rolled out a new compliance initiative project focusing on whether nonqualified deferred compensation arrangements are operating in accordance with Internal Revenue Code Section 409A, so says Linda Segal Blinn in MarketBeat. She writes that an IRS official earlier had hinted that the project would focus on a limited number of large companies at the outset (approximately 50 corporate taxpayers), and would assess taxpayer compliance with Code requirements governing nonqualified arrangements.
Premiums on a Pre-tax Basis
Offering one employee benefit affects how another is offered, and the implementation of the Affordable Care Act is an example. Kevin Lurie discusses how that affects employers — something retirement plan administrators need to understand.
Understanding the IRS Audit Process for Your 403(b) Plan
With the right amount of planning and proper administration, plan sponsors can avoid audit pitfalls and provide for an employer-sponsored plan that effectively meets IRS guidance and regulations. Kimberly Flett explains the auditing process, and how sponsors can avoid possible trouble.
The IRS is enforcing rules that mandate all school employees have access to their district’s 403(b) program, and Ellie Lowder explains how plan advisors play an integral role in ensuring equal and fair access.
Using the Saver’s Tax Credit to Increase 403(b) Plan Participation
The saver's credit is one way to providing meaningful opportunity for employees to participate in a 403(b) plan. Ellie Lowder discusses how the saver’s tax credit works and provides a crib sheet of sorts from the IRS.
(b) Prepared for IRS Audit Activity to Continue
A statistic for 403(b) sponsors to ponder: An IRS official says that when the agency audits 403(b) plans, it discovers issues 80% of the time. And the IRS is hiring still more staff to audit 403(b) and 457(b) plans. Linda Segal Blinn discusses the five issues the IRS most often finds in such audits.
An IRS Audit Roadmap: Report of the College and University Compliance Project
Michael Webb analyzes the report from the IRS’ Exempt Organizations Division that surveyed over 400 colleges and universities and explained some of the major issues that occur during a higher-ed audit.
The New IRS Employer Match: Linking 403(b) Plans to Former 501(c)(3) Organizations
The IRS has rolled out its next 403(b) Compliance Check questionnaire, focusing on whether an employer whose 501(c)(3) nonprofit status was revoked still offers a 403(b) tax-deferred annuity plan to its employees. Linda Segal Blinn analyzes what that means for you and your clients.
A 403(b) Collective Trust? A Note of Caution....
Robert Toth argues that when a 403(b) plan purchases collective trust interests there can be trouble in the details, and identifies two issues that must be addressed.
Nimbly Shifting Between 403(b) and 457(b) Plans
If you work with both 403(b) and 457(b) plans, it’s important to learn the key differences between 403(b) and 457(b) plans. Linda Segal Blinn offers a discussion of how they differ in several key respects.
After-Tax 403(b) Contributions: Too Good to Be True?
Is it true that the use of after-tax contributions can allow participants to contribute substantially more than the 402(g) limit of $18,000, and that such contributions can be immediately rolled over to a Roth IRA or to a Roth 403(b)? David Blask tells us and provides the basics behind understanding — and handling — the matter.
2015 ACA IRS Filing Requirements
The NTSA Communication Committee believes that understanding reporting requirements under the Affordable Care Act will be helpful in understanding other reporting obligations. Kimberly Flett provides a discussion of reporting under the ACA.
Permitted Mid-Year Changes to Safe Harbor 401(k) and 403(b) Plans
The IRS recently released Notice 2016-16 which addresses what can and cannot be amended in a safe harbor 401(k) or 403(b) mid-year. Susan Diehl provides an overview of this notice, which includes guidance for traditional safe harbor plans and QACAs and eliminates much of the uncertainty which has overshadowed this popular plan design.
Correcting Roth Deferrals made as Pre-Tax Deferrals
Many employees of a school district client elected to make a Roth 403(b) salary deferral, but they were all set up as regular pre-tax deferrals and no one caught this for six months. Susan Diehl tells us if the employees can change their election to pre-tax as a way to correct the situation.
New (Lower) EPCRS Fees Now Apply
Each January, the IRS publishes the new fees for pre-approved plans to be submitted — mass submitters vs. word-for-word adopters, cost of PLRs and miscellaneous costs for other rulings. Susan Diehl provides a reminder about the fees in place in 2016.
Taking it to the (Contribution) Limit
Public schools and 501(c)(3) nonprofit organizations may offer their employees more than one type of defined contribution plan — but not all of these plans follow the same Internal Revenue Code limits. Linda Segal Blinn helps readers to learn to separate fact from fiction to keep retirement plans operating within the limits.
IRS Compliance Unit Checking Tax-Exempt 457(b) Plans
The IRS Employee Plans Compliance Unit (EPCU) is sending letters to tax-exempt sponsors of 457(b) top hat plans when employee W-2s show that the basic 457(b) plan limit of $17,500 in 2011 has been exceeded. Ellie Lowder discusses what those letters contain and require of recipients.
The New 'Umbrella' Closing Agreement
Qualified plans must be restated every six years to maintain their reliance on the approved status of their plan, and the deadline for this most recent restatement is April 30, 2016. Susan Diehl discusses a new option that permits financial institutions and other service providers that offer a plan document to request a closing agreement on behalf of all clients that missed the deadline for adopting a pre-approved plan.
Counting Hours for Adjunct Professors for Eligibility and Vesting
As the first-time-ever Prototype/Volume Submitter 403(b) approvals approach, it may be necessary to include counting hours for adjunct professors in a plan’s operations manual, in order to protect the employer in the event of an audit. Susan Diehl provides a brief explanation of the verbal IRS guidance that has been presented.
Auditing Distributed 403(b) (and 401(a)) Contracts
The IRS specifically recognized the termination of a 403(b) plans as being a “distributable event” in its 2007 regulations. But that doesn’t mean that questions don’t arise. Robert Toth addresses issues that arise concerning 403(b) plan terminations and distributions.
Did You Hear About the New ABLE Account for the Disabled?
Among the restrictions of the traditional Section 529 qualified tuition programs was their inability to fit into the requirements of long term services programs for specially-abled individuals. But the ABLE Act, enacted as 2014 came to a close, changed that. Sue Diehl discusses the changes that have taken place as a result.
Errors Can Cause Auto Enrollment to Fail
By unintentionally overlooking little-known pitfalls, employers can inadvertently create a failure in their automatic enrollment programs. Barbara Webb identifies the most common errors related to elective deferrals that occur in 401(k) and 403(b) plans and discusses how they can be corrected.
Exploring the Exceptions to IRS 10% Penalty
When an individual takes a distribution from an IRA or retirement plan before reaching age 59½, the general rule is that the distribution is subject to a federal 10% penalty in addition to any federal and, if applicable, state income taxes. Lynn Knight discusses the most common exceptions to the penalty and whether each applies to distributions made from an IRA and/or a retirement plan.
DeGrassi to NTSA 403(b) Masters: Tax Reform May Trump Fiduciary Rule
At the recent 2017 NTSA 403(b) Masters Summit, NTSA Executive Director Chris DeGrassi said that this year’s game-changer won’t be the fiduciary rule — it’s going to be tax reform. Ray Harmon discusses DeGrassi’s assessment and what that could portend.
Reminder: Tax Filing Due Date Changes Effective for 2016 Tax Year
H.R. 3236 changed deadlines for filing business income tax returns for the 2016 tax year. Susan Diehl writes that this has created some confusion, and offers reminders to help dispel it.
Tax reform is a priority of the Trump Administration and many members of Congress The final form is not certain, but pre-tax deferrals to a 401(k), 403(b), or 457(b) plan could be in play. David Blask argues that now is the time to reach out to your clients in light of this debate.
A Road Map to 403(b) Transactions
It is always good to review transacti
ons, especially the definitions, since saying the wrong thing — or worse, filling out the wrong form — could prove disastrous for the plan participant. Sue Diehl reviews common transactions for 403(b) plans.
You’ve Heard of Fake News…Well, What About Fake 5305s?
In February 2017, the IRS posted to their website new Forms 5305 with a revision date of October 2016. Susan Diehl says that it became clear pretty quickly that many of their forms were incorrect and discusses the bigger picture.
IRS Webinar on Minimum Present Value Requirements Coming
The IRS on Sept. 8, 2016 issued TD 9783, which contains final regulations that modify minimum present value requirements for partial annuity distribution options under defined benefit plans. The NTSA net staff discusses the guidance and what a May 2017 IRS webinar on the subject will address.
Use of Forfeitures in Safe Harbor 401(k) and 403(b) Plans
The IRS has issued proposed regulations stating Qualified Non-Elective Contributions (QNECs) and Qualified Matching Contributions (QMACs) will be considered non-forfeitable at the time allocated to participant accounts. Kimberly Flett discusses what the regulations do and provide.
5 Ways to Fix the Saver’s Credit
At a recent policy forum sponsored by the Employee Benefit Research Institute, Catherine Collinson, President of the Transamerica Center for Retirement Studies, outlined five ways to “fix” the current Saver’s Credit.
Revisiting Universal Availability under the IRS 403(b) Pre-Approved Plans Program
All employees of an eligible employer must have the opportunity to make pre-tax deferrals (or, if the plan permits, Roth 403(b) contributions) to such an employer’s 403(b) plan, with only a few limited exceptions. Linda Segal Blinn discusses the universal availability rules under the IRS 403(b) Pre-Approved Program.
Employer Nonelective Contributions After a Former Employee’s Death
Plans established under Internal Revenue Code Section 403(b) have a unique plan design feature made possible by major pieces of legislation in the first years of the 21st century. Linda Segal Blinn discusses Section 403(b)(3) and its application.
The New Rule for Correcting IRA Excesses in 2018
The “in which/for which” saga continues, writes Susan Diehl. She discusses the new rule for correcting IRA excesses, starting with a look at the operational procedure for such corrections under Internal Revenue Code Section 408(d)(4).
Beneficiary Transfers Between IRAs
For beneficiaries of an inherited IRA, caution is necessary in order to avoid expensive tax consequences. Kimberly Flett addresses some relevant matters that merit specific focus.
The Internal Revenue Code describes the tax-exempt organizations the federal tax rules recognize, but only employers that satisfy Section 501(c)(3) can sponsor a 403(b). Linda Segal Blinn discusses steps that will be helpful in determining whether a tax-exempt organization is a 501(c)(3).
403(b) Document Delays: the 'Once in Always in' Rule and the 'Effective Date Addendum'
The implementation of the IRS’ 403(b) pre-approved plan program by a number of vendors has been delayed by at least one thorny issue which will cause concern for a number of 403(b) plan sponsors. Robert Toth discusses that issue.
403(b) Loans: Maximums and Cure Periods
What does the IRS have to say about 403(b) loans? Nathan Glassey writes that in 2017, the IRS issued two memoranda regarding 403(b) plan loans and how those loans should be administered.
Federal Disaster Tax Relief for Retirement Plans
Relief is provided to sponsors of qualified retirement plans due to recent hurricanes under the Disaster Tax Relief and Airport & Airway Extension Act of 2017. Kim Flett discusses opportunities the Act provides sponsors of qualified plans to offer employees access to their retirement funds without the typical tax consequences.
The goal: no audit. But if you ARE audited, the goal is then a 0% change rate. John Iekel provides a look at Susan Diehl’s Jan. 24, 2018 discussion at the 2018 NTSA Summit of IRS audits: their triggers, what to do if one is coming, and what could help keep the auditors at bay.
IRS Ups 2018 HSA Annual Deduction Limitation for Individual with Family Coverage
On April 26, 2018, the IRS issued Revenue Procedure (Rev. Proc.) 2018-27 which increased the health savings account (HSA) family coverage contribution back to $6,900 for 2018. Previously, Revenue Procedure 2018-18 had announced a reduction in the limit to $6,850 (a $50 difference). Susan Diehl discusses the basics of the new Revenue Procedure.
Ignore the 5500 Instructions: 403(b) Plans DO NOT Use Form 5330 for Late Deposits
A continuing confusion regarding how Internal Revenue Code Section 401(a) rules apply to 403(b) plans involves the reporting rules related to the correction and reporting on the Form 5500 of one of the most common errors in any elective deferral plan: the late deposit of those deferrals into the plan. Robert Toth offers some insights regarding how to handle that.
The IRS Has a 403(b) MEP Problem
There has been increasing interest in the market to put together Multiple Employer Plans for 403(b) plans, and with good reasons. In MarketBeat, Robert Toth writes that tax-exempt entities are really well-suited to the sorts of economies of scale that a MEP can bring, but a 403(b) MEP is “really complicated,” and discusses why.
Top Hat/Executive Plans
Great Opportunity: Top Hat 457(b) Plans
You’re one of the decision makers at your organization, and the nondiscrimination rules that apply to employer contributions to retirement plans don’t apply to you and your peers. If that describes you, then you are covered by a top hat plan. Ellie Lowder tells us how such an arrangement works under Internal Revenue Code Section 457(b).
Fundamentals of 457(b) Top Hat Plans
Financial advisors may find themselves discussing the adoption and implementation of top hat plans with one of the people who would most benefit from such a plan, says Ellie Lowder. In this essay, she provides a discussion about the fundamentals of top hat plans and what interested financial advisors should do about and with them.
Annual Updates and Events
Coming Attractions for 2015
It is challenging to predict what legislative and regulatory activity may be in store for retirement plans. Nonetheless, Linda Segal Blinn offers a look at some of the initiatives to watch this year.
Another Year, Another NTSA 403(b) Plan Compliance Calendar
There are critical deadlines 403(b) plans must meet in order to stay in compliance with the federal internal revenue Code. Adding to the complexity of this function, some deadlines only apply to particular plan types (such as ERISA plans). Mike Webb provides a 403(b) Plan Compliance Calendar for 2015.
2016 403(b) Plan Compliance Calendar
With the advent of a new year, a compliance calendar will be a handy tool for making sure that a plan follows all the rules and regulations. Diane D. Capone provides a 403(b) plan compliance calendar for 2016.
Year End Legislation Includes Employee Benefits Changes
Ellie Lowder discusses employee benefit-related changes contained in the huge appropriations bill enacted Dec. 18, 2015 that are of interest to NTSA.
Form 5500 Reporting Requirements for One-Participant Plans
Form 5500-EZ, Annual Return of One-Participant (Owners and Their Spouses) Retirement Plan can be easily overlooked by sponsors of one-participant retirement plans. Kimberly Flett writes that common mistakes in filing the form can be avoided by understanding the basic rules and offers a discussion of them.
2017 Retirement Plan Changes
Every year, the IRS issues thresholds and contribution levels relevant to retirement benefits, as well as their administration and taxation. Susan Diehl provides 2017 levels that will be of special interest to those who serve, provide and rely on retirement plans.
Documentation for Hardship Withdrawals and Home Loans
In two newsletters, the IRS surprised many in the retirement industry with the assertion that feailure to properly document hardship withdrawals or home loans is a qualification failure. Ellie Lowder discusses the positions the IRS articulated in the articles and the responses to them.
Cerulli Report on Leakage from Retirement Savings
A recent study outlines what employers can do to help limit plan leakage by placing significant limitations on loans in their plan documents. Ellie Lowder suggests that 403(b), and perhaps governmental 457(b) plans as well, face the same problems and discusses what they can do.
Should Your Clients Hold Multiple IRAs?
Suppose a client holds two traditional IRAs. They will be aggregated; thus, income taxes will be calculated on a pro-rata basis as though he had withdrawn from each of the IRAs. Ellie Lowder tells us whether there is any action that the client could take to change that scenario.
403(b) Policy Loan’s Continued Form 5500 Reporting Problem
ERISA 403(b) plan sponsors must deal with the “policy loans” issued by insurance carriers under the 403(b) annuity contracts held under the plans. Robert Toth argues that there is no good way to report these loans on the Form 5500, and the newly proposed Form 5500 changes do not address the problem.
Five Fast Facts Regarding Public Universities
The public university retirement plan market can test one’s knowledge and experience. Michael Webb discusses five basic features of public university plans for those who may be unfamiliar with this important segment of the nonprofit retirement plan marketplace.
The Real Value of NTSA Educational Opportunities
NTSA has long been the most valuable source of information specific to non-ERISA 403(b) issues available anywhere; in MarketBeat, Amy Simonson provides a look at what NTSA has to offer.
Laying the Foundation for 2017
A new year has begun — and 2017 is anticipated to be a year of change. Ellie Lowder suggests that attending the NTSA Master’s Summit will be a simple way to lay a firm foundation for it to be a success.
Thoughts on Social Security
By 2030, all Baby Boomers will be at least age 65 and more than likely drawing income on their Social Security record, and more than one in five Americans will be of retirement age. Frank Owen offers some thoughts on Social Security and how to address the challenges it faces.