On September 11, 2018, a participant in the Frontier Communications 401(k) Savings Plan filed a class action suit against Frontier Communications (the plan’s sponsor) and plan fiduciaries, claiming that they breached their ERISA duties of loyalty and prudence and their duty to diversify plan investments by retaining stock in Verizon and AT&T (both former owners… Read More
September was another month of modest improvement in pension finance, due to higher interest rates. Our traditional Plan A[1] improved for the sixth straight month – up less than 1% in September and now ahead almost 9% for the year, while the more conservative Plan B was flat last month but remains up almost 2% year-to-date:… Read More
As discussed in our Cash Balance (CB) Survey on “Cash Balance Plans – 2018 Survey and Trends”, professional service firms have significantly increased their adoption of Market Return Cash Balance plans over the past twelve years. In addition to the conversion of existing Fixed Rate plans, virtually every new Cash Balance Plan is incorporating the… Read More
On June 20, 2018, the Sixth Circuit Court of Appeals, in Pearce v. Chrysler, reversed a lower court decision in favor of the plan sponsor (Chrysler) on the issue of whether a participant may bring an equitable claim for plan reformation based on a conflict between the terms of a summary plan description (SPD) and… Read More
On September 10, 2018, House Republicans released their “Tax Reform 2.0” proposal, a package of three bills: the Family Savings Act of 2018 (H.R. 6757); the Protecting Family and Small Business Tax Cuts Act of 2018 (H.R. 6760); and the American Innovation Act of 2018 (H.R. 6756). The Family Savings Act (FSA) contains a number… Read More
Pension sponsors enjoyed more good news in August, marking five consecutive months of improvement for pension finances. Both model plans we track[1]gained ground last month – traditional Plan A improved almost 1% while the more conservative Plan B gained less than 1%. For the year, Plan A is more than 8% ahead, while Plan B… Read More
On August 31, 2018, President Trump signed an Executive Order on Strengthening Retirement Security in America. Summarizing, the order does three things: Agencies to consider authorization of Open MEPs: It instructs the Secretary of Labor to “examine policies” that would eliminate ERISA regulatory obstacles to the creation of Open MEPs; and it instructs the Secretary… Read More
As companies grow and pension benefit needs evolve, technology must adapt to serve any new conditions that may arise. When it comes to managing defined benefit (DB) plans, however, many administration platforms continue to operate with dated, inflexible systems. Such models can create extra workload, generate unnecessary expense, and cause frustration among sponsors and participants… Read More
On August 24, 2018, IRS published Notice 2018-69, extending through 2019 temporary relief from Internal Revenue Code nondiscrimination rules for closed groups. We discuss the “closed group” issue, the temporary relief provided by IRS under prior Notices (extended under Notice 2018-69 through 2019), and IRS’s January 2016 proposed regulations providing permanent relief, in detail in… Read More
On August 18, 2018, the Internal Revenue Service released Private Letter Ruling (PLR) 201833012, concluding that a 401(k) plan that provided for “an employer non-elective contribution on behalf of an employee conditioned on that employee making student loan re-payments” did not violate Internal Revenue Code section 401(k) prohibitions on conditioning a benefit on an employee… Read More
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