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Adam C. Pozek
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Plan sponsors may no longer be able to cost-effectively use the long-standing new comparability (a/k/a cross-tested) profit sharing plan formula if the Treasury Department finalizes its proposed rule. The Good In January of this year, the Treasury Department proposed a new rule that would ease some of the nondiscrimination rules that apply to certain defined benefit plans. Sounds great, right? What could be wrong with easing the rules? Well, nothing, but unfortunately, the proposal doesn't stop there. The Bad Almost as an "oh, by the way" they also threw in a provision that would make it more expensive for defined... Continue reading
Posted Apr 7, 2016 at DWC ERISA Blog
Boston, MA, March 12, 2015 – DWC ERISA Consultants, LLC (DWC) is pleased announce that, effective March 4, 2015, Destel-Bergen Corporation (Destel) is merging its retirement plan administrative services practice into DWC. DWC and Petaluma, California-based Destel have worked closely over several months to ensure a smooth transition for all clients. Each Destel client will not only continue to work with the same consultant to maintain the high level of client service they have come to expect, but they and their other professional service providers will have access to a more comprehensive suite of plan administration, consulting and management services.... Continue reading
Posted Mar 13, 2015 at DWC ERISA Blog
Whether we’re talking fashion or music or architecture or barber shops, it seems things that have faded from existence eventually come back around. See if this cycle looks familiar: cutting edge becomes status quo becomes so last week becomes so [insert decade] becomes retro becomes vintage. According to recent press coverage spurred by an IRS notice, a rarely-used retirement plan feature that pre-dates even the leisure suit seems poised for retro status. However, as is so often the case when the popular press attempts to cover complicated financial topics, they tend to leave out critical details to make the story... Continue reading
Posted Nov 14, 2014 at DWC ERISA Blog
At the end of August, I made my first trip to Burning Man, an annual event held in the Black Rock Desert of northern Nevada. With 10 guiding principles, it involves art, music and free-spiritedness. This experiment in temporary community sees 65,000+ attendees converge on a dried-up lake bed, build a temporary city and leave behind no trace that it ever existed only a couple of short weeks later. Katie Couric, Chris Taylor and Grover Norquist describe it better than I could. This year, Burning Man came to a close on September 2nd which just so happened to be ERISA’s... Continue reading
Posted Sep 16, 2014 at DWC ERISA Blog
When I was kid, I used to love Schoolhouse Rock during the commercial breaks of Saturday morning cartoons. Even now, I have them all on DVD as well as a CD of covers by various rock musicians, and I still sing along with all of them word-for-word! What does this have to do with 401(k) plans? Well, one of my favorite installments describes how a bill becomes a law. What “I’m Just A Bill” doesn’t mention, however, is what a plan sponsor must do when that law includes changes to retirement plan rules. In short, plan sponsors must amend their... Continue reading
Posted Apr 22, 2013 at DWC ERISA Blog
If you’ve spent any time working with retirement plans, you know how complicated they can be. It seems like every rule has an exception and an exception to that exception. It is no wonder that accidents occasionally happen despite everyone’s best efforts to follow the rules. Fortunately, the IRS also understands that accidents will happen, so they created a very useful program for plan sponsors to voluntarily correct those accidents and avoid the unpleasant experience of having oversights discovered during an audit. The first version of the correction program appeared in 1998. Now on its tenth incarnation, the IRS published... Continue reading
Posted Feb 24, 2013 at DWC ERISA Blog
I doubt Douglas Adams had retirement policy in mind when he said, “It’s not the fall that kills you; it’s the sudden stop at the end.” However, that quote explains why Congress should keep their mitts (hands, not a horde of Romney clones) off the employer-based retirement system as they try to solve our country’s economic woes. The deficit is big. Really big. You just won't believe how vastly hugely mind-bogglingly big it is. Whether or not we fall off the fiscal cliff, the country’s financial situation will fall further into decline unless we reverse course and start living within... Continue reading
Posted Nov 26, 2012 at DWC ERISA Blog
Ever see the movie Men In Black? One of my favorite lines is when Tommy Lee Jones says to Will Smith, “Fifteen hundred years ago, everybody knew the Earth was the center of the universe. Five hundred years ago, everybody knew the Earth was flat; and fifteen minutes ago, you knew that humans were alone on this planet. Imagine what you'll know tomorrow.” If you sit through enough plan investment committee meetings, eventually the conversation turns to whether to select ABC Fund that pays revenue sharing or XYZ Fund that doesn’t. After all, why not defray the employer’s cost of... Continue reading
Posted Jun 26, 2012 at DWC ERISA Blog
Back in March, Assistant Secretary of Labor Phyllis Borzi testified before a Senate committee, expressing concern about whether open MEPs can be treated as single plans under ERISA since there is no commonality among adopters. A recording of her testimony is here, with the MEP comments beginning around the 36th and 43rd minutes. Some commentators thought the testimony was a sign of what DOL’s official position would be, while others suggested it gave no cause for concern, because the Internal Revenue Code does not require the commonality that Asst. Sec. Borzi described. Earlier this month, the DOL filed a memo... Continue reading
Posted May 29, 2012 at DWC ERISA Blog
In a recent presentation, Monika Templeman (IRS Director of Employee Plans Examinations) announced that it has come to the attention of the IRS that a number of safe harbor 401(k) plans may not be in compliance. As a result, they are planning an audit initiative to investigate the matter. You may be asking what many have asked me on numerous occasions…“So, what? Safe harbor plans get a free pass, what compliance issues are there to worry about.” The reality is that the rules that apply to safe harbor 401(k) plans can be more stringent than those that apply to regular... Continue reading
Posted Mar 14, 2012 at DWC ERISA Blog
The fact is, I’m not anti-MEP. I’m anti-ostrich. Ostriches see danger around them and put their heads into the sand and pretend that they are safe. I don’t want a single one of my TPA clients or one of their plan sponsor clients to get into horrible trouble if the DOL ultimately decides that Open MEPs are not single plans. Continue reading
Posted Feb 7, 2012 at DWC ERISA Blog
I have been trying to resist the urge to blog about the “new” phenomenon of Multiple Employer Plans, but temptation got the better of me. In very broad terms, there are two general types of MEPs – the “common” MEP and the “open” MEP. The gist of the common MEP is that it covers companies that, though unrelated by ownership or direct business relationship, have some sort of commonalty, e.g. members of a Chamber of Commerce or doctors’ offices in a certain geographic area. By contrast, an open MEP covers businesses that have no commonality. Although open MEPs seem to... Continue reading
Posted Aug 9, 2011 at DWC ERISA Blog
Living in the Boston area these days, there is plenty of talk about the Bruins’ inexorable march to the Stanley Cup finals as well as the continuing series of checks, hits, fights and bites. While “no harm, no foul” may apply on the ice, those who seek to apply it to qualified retirement plans may face more than just a few minutes in the penalty box. ERISA Section 406 prohibits individuals who have a relationship with a plan (referred to as parties-in-interest) from engaging in certain transactions with the plan if there are conflicts of interest. In many circumstances, these... Continue reading
Posted Jun 13, 2011 at DWC ERISA Blog
In Part 1 of this post, I discussed some of the DOL rules that can make real estate not all it’s cracked up to be as a 401(k) investment. Here in Part 2, we will take look at some IRS wrenches that get thrown into the works. Nondiscrimination More often than not, real estate holdings in a qualified plan are limited to one or several of the highly compensated employees. There might be any number of seemingly valid reasons for this limitation. Nonetheless, the option to invest in a particular type of asset is generally considered to be a benefit,... Continue reading
Posted May 19, 2011 at DWC ERISA Blog
“Real estate doesn't interest me. It's no doubt a great flaw in my personality, but I can't think in terms of boundaries. Those imaginary lines are as unreal to me as elves and pixies.” -- Kurt Vonnegut, Jr. When it comes to real estate in 401(k) plans, unfortunately, not everyone shares Mr. Vonnegut’s disinterest. Rather, some subscribe to the Donald’s statement, “It’s tangible; it’s solid; it’s beautiful. It’s artistic, from my standpoint, and I just love real estate.” Regardless of one’s beliefs about the prudence of real estate investment, when the location, location, location is inside a qualified plan, life... Continue reading
Posted Apr 25, 2011 at DWC ERISA Blog
It’s funny how the human brain (or maybe it’s just my brain) forms associations with words or phrases. Whenever I hear the word “revoked,” I immediately think of a scene from one of the Lethal Weapon movies. The bad guy had been using his diplomatic immunity to get away with all sorts of nefarious deeds. At the end of the movie as he lay clinging to life after being on the wrong end of a shoot-out, Danny Glover’s character says rather pithily, “Your diplomatic immunity has just been REVOKED.” The Pension Protection Act of 2006 created a new filing requirement... Continue reading
Posted Apr 19, 2011 at DWC ERISA Blog
My good friend and benefits attorney Ilene Ferenczy sends out an e-newsletter from time-to-time. The Ferenczy Flash always includes timely, practical information for plan sponsors and service providers. The edition she sent earlier this week highlights a very important point that often gets lost in the 401(k) shuffle - while all of the fiduciary rules are important, it is failing to comply with the Tax Code that is more likely to land most plan sponsors in hot water. The text of the March 23rd Ferenczy Flash is posted below with permission from Ilene. Are You Kidding? The Fall Will Probably... Continue reading
Posted Mar 25, 2011 at DWC ERISA Blog
I was recently asked to write an article on ERISA Section 404(c). As I contemplated how to approach the article, I recalled many situations in which I have heard 404(c) pitched as the mythical silver bullet to save plan fiduciaries from the specter of liability associated with participant-directed investments. Despite the heading for the post, this is more a 401(k) issue than a pension issue; but “silver bullet” led me to werewolves which led me to this classic song from the late Warren Zevon. Werewolves of 401(k) just didn’t have the same ring to it. But, I digress. In short,... Continue reading
Posted Mar 17, 2011 at DWC ERISA Blog
The public discourse concerning same-gender marriage continues to be very heated with passionate advocates from one end of the spectrum to the other. Some argue it is a question of fundamental civil rights, while others believe the final decision should be driven by certain religious beliefs. To date, ten states have permitted or recognized same-gender marriage; however, when it comes to employee benefit plans, we must look to federal law for direction. The Defense of Marriage Act (DOMA) was signed into law by President Bill Clinton in 1996. Although the Obama Administration recently indicated it would no longer defend DOMA... Continue reading
Posted Mar 9, 2011 at DWC ERISA Blog
The 401(k) plan has failed. At least, that’s what an increasing number of articles and pundits would have us believe. It seems to me that unreasonable and unintended expectations have been placed on the plan that derives its name from the only section of the Tax Code that most people know. I wrote an article on this topic last year for the Journal of Pension Benefits; but with the emergence of more recent negative press, I couldn’t resist commenting. By now, it likely comes as no surprise that many U.S. households are projected to fall short of their retirement needs... Continue reading
Posted Mar 6, 2011 at DWC ERISA Blog
I have had several inquiries regarding previous articles I have written, so I decided to post a few of them for the perusal of anyone who cares. Click here or the link at the top of the page to see a sampling of some of the Articles I've Authored. Continue reading
Posted Mar 5, 2011 at DWC ERISA Blog
An article appeared yesterday on entitled “New 401(k) Obligations Heaped on CFOs” and it carried a tagline stating “New disclosure rules abound, but pay close attention or you could be sued by plan participants.” The article goes on to describe that, among other things, plan fiduciaries have a duty to “pay only reasonable plan expenses.” While this is certainly correct, it is not a new requirement. For many years, the law has imposed a duty on plan fiduciaries to ensure that any fees paid by the plan are reasonable in light of the services provided. Just as this rule... Continue reading
Posted Feb 24, 2011 at DWC ERISA Blog
I must confess that I have been very surprised by the vocal opposition to the new Preparer Tax Identification Number (PTIN) requirements. As a brief background for any readers who may be scratching their heads, the IRS announced a new initiative designed to ensure that those who are paid to prepare tax returns meet certain minimum standards related to expertise and accountability. In general, preparers must pass a competency exam, complete specified continuing education hours each year, comply with the ethical standards in IRS Circular 230 and obtain a PTIN. Many in the qualified plan arena have been less than... Continue reading
Posted Feb 23, 2011 at DWC ERISA Blog
Over the last several years, the answer has been a little of both. Beginning with the 2009 effective date of the IRS overhaul to the 403(b) regulations, it was establised that 403(b) plans could, indeed, be terminated. However, that legal fact has been somewhat of a practical fiction for plans funded by individual contracts. The reason being that sponsors of such arrangements had no authority to compel distribution of those individual contracts. Bob Toth has an excellent explanation of the conundrum here. Today's publication of IRS Revenue Ruling 2011-7 takes a step in the right direction by allowing individual contracts... Continue reading
Posted Feb 22, 2011 at DWC ERISA Blog
After my weekend post on "easy" plans not being so easy, I happened across this post by Ary Rosenbaum. It is a variation on the theme and focuses more on the size of the plan rather than its design complexity. The conclusion...size often matters when it comes to the quality of service. Small plans (often viewed by many as being synonymous with "easy" plans) often encounter more compliance issues simply because they are not receiving the level of expert attention as larger plans. They also tend to view their plans as being less expensive, because they are not aware of... Continue reading
Posted Feb 22, 2011 at DWC ERISA Blog