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2012
Final Regulations Under ERISA §408(b)(2) Extend Effective Date to July 1, 2012
The new regulations have been issued by the Department of Labor. We have not yet had time to review and analyze them, but will do so and will send another Flash in a few days with this information. However, a quick review of the effective date reflects that it has been extended from April 1, 2012 to July 1, 2012. If our firm prepared your fee disclosure client service agreement(s) under the interim final regulations, we will be contacting you about updating your letter as needed.
> View the entire article in PDF format.
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2011
How Do You Spell "Disclosure Relief"? - 7/19/2011
In new regulations issued on July 16, the Department of Labor (DOL) again extended the deadline for service provider contracts to conform to the new regulations under ERISA §408(b)(2). The new deadline for these rules is April 1, 2012.
In addition to this extension, the DOL has linked the deadline for the new participant disclosure regulations to the §408(b)(2) rules by making the initial disclosures due by the later of (a) 60 days after the first day of the first plan year beginning on or after November 1, 2011; or (b) 60 days after the effective date of the §408(b)(2) regulations. Therefore, the earliest date for the initial participant disclosures is May 31, 2012. Furthermore, the quarterly disclosures must be furnished by 45 days after the end of the quarter in which the initial disclosures are required to be furnished, i.e., August 14, 2012 for a calendar year plan.
> View the entire article in PDF format.
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Clues From the Ivory Tower: What the DOL and IRS Had to Say - 6/21/2011
As one of the co-chairs of the ASPPA Government Affairs Committee (GAC), Ilene had the pleasure of meeting with the IRS and the Department of Labor (DOL) on June 13, 2011, to discuss the current status of governmental thinking on a myriad of issues. There were two issues discussed that may impact you:
- The DOL's take on a new trend in retirement plan administration called multiple employer plans, and
- The IRS's concerns regarding historic retirement plan documentation.
> View the entire article in PDF format.
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Why? BCOS We Like You! - 4/28/2011
What is "BCOS?" BCOS is the Benefits Conference of the South, the once-a-year opportunity for folks in the Southeast to hear and talk to representatives from the Washington DC National offices, as well as the southern regional offices of the IRS and the DOL, about benefits issues. We are writing to encourage you to attend. This year's BCOS is on Thursday, May 12 and Friday, May 13 at the Doubletree Hotel in the Buckhead area of Atlanta.
> View the entire article in PDF format.
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Are You Kidding? The Fall Will Probably Kill You! - 3/29/2011
In a recent Ferenczy Flash, we outlined our thoughts about the flood of advice being published by practitioners nationwide in relation to ERISA's fiduciary rules. Certainly, fulfilling your fiduciary responsibilities is really important and failure to do so can subject you to lawsuits and penalties.
However, concentrating so hard on the fiduciary issues can in some respects be like the Sundance Kid worrying that he would drown after jumping off a cliff into a river because he couldn't swim. As Butch Cassidy reminded him, the jump into the river itself would probably be fatal. Similarly, while worrying about fiduciary issues has value, placing all of your concentration there may be missing the point.
> View the entire article in PDF format.
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All You Need to Know About Fiduciary Duties, You Learned in Kindergarten - 2/8/2011
It seems as if everyone in the country is going hog-wild to better advise, educate, or scare plan officials about their fiduciary duties with regard to retirement plans. There are numerous notices and booklets, audits, compliance reviews, and advisors out there all attempting to make sure that participants' assets are properly protected. While the intent of all these people and entities is good – to ensure that retirement plans and those who are in charge of them operate for the benefit of plan participants – it has gotten quite overwhelming.
> View the entire article in PDF format.
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DOL Déjà vu - 1/31/2011
It appears that the Department of Labor (DOL) has sent out a recent mass mailing to companies that showed late deposits on their Form 5500 Annual Report. The notice acknowledges that the Form 5500 indicates late deposits and invites the company to enter the DOL's Voluntary Fiduciary Correction Program (VFCP).
> View the entire article in PDF format.
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2010
The Un-COLA Continues - 12/6/2010
Although we may not be responsible for keeping your nonqualified plans in compliance, we wanted to let you know about an opportunity to correct noncompliant plans without penalties that expires this year. Employers that correct all such plans by 12/31/2010 can avoid large penalties that could be imposed on executives.
> View the entire article in PDF format.
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The Un-COLA Continues - 10/29/2010
The IRS just released the cost of living adjustments for various retirement plan limitations that will take effect on January 1, 2011. For the second year in a row, there will be no change in the various limits for 2011.
> View the entire article in PDF format.
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PTIN Final Regulations Issued - 10/1/2010
As part of an effort by the Commissioner of the Internal Revenue Service to better control return preparers, the IRS issued proposed regulations on March 26, 2010, to require paid preparers of returns to acquire a Preparer Tax Identification Number (PTIN), pay a fee, and meet examination and continuing education requirements.
> View the entire article in PDF format.
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Service Provider Fee Disclosure - 7/19/2010
Those of us who are retirement plan service providers have been anxiously awaiting the Department of Labor's (DOL's) Regulation on fee disclosure. (Those of you who are not in this business likely think we're nuts, but you're probably glad we are on the lookout for things that concern your plan!) Well, the Regulation was issued on Thursday, July 15.
> View the entire article in PDF format.
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Good News! We Got Funding Relief for Defined Benefit Plans! - 6/28/10
Late Friday afternoon, President Obama signed the American Workers, State and Business Relief Act (AWSBRA) into law. Among other things, this law provides funding relief to sponsors of defined benefit (DB) pension plans (including cash balance plans).
> View the entire article in PDF format.
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Did you receive a letter from the IRS asking you to complete the 401(k) compliance check questionnaire? - 6/1/10
If your company received one of the 1,200 letters issued by the IRS in mid-May requesting that the company respond to an extensive 401(k) plan questionnaire, you don't need to panic, but you do need to act. The 401(k) Compliance Check Questionnaire Project is not an audit of your plan or your company. Nonetheless, the IRS will follow up with employers that fail to complete the questionnaire, and continued refusal to comply could lead to a plan audit. Because this mailer is simply a questionnaire, you may be tempted to do your best to respond on your own, and not be too worried about the absolute correctness of your answers.
> View the entire article in PDF format.
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Stop Congress from Hurting Retirement Savings - 5/12/2010
Congress should not make it harder for small businesses to provide retirement benefits to their employees, but Rep. Lloyd Doggett (D-TX) introduced legislation that would make cross-tested plans less attractive for employers to offer. You can help fight these constraints with a few quick clicks by sending the prepared message below to your lawmakers.
> View the entire article in PDF format.
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ERISA Triple Play: Not Tinker to Evers to Chance, but EFAST to EGTRRA to FDLs! - 5/10/2010
In the recent few weeks, three important events and developments have happened in the retirement plan arena that we thought bear mentioning...
> View the entire article in PDF format.
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IRS Issues 401(k) Compliance Publication - 4/9/2010
Plan sponsors commonly don't know what is really involved in keeping a 401(k) plan in compliance. The IRS just published the 401(k) Fix-It Guide, which outlines several of the compliance issues and some methods for fixing mistakes.
> View the entire article in PDF format.
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IRS sets deadline for restatement of prototype and volume submitter defined benefit pension plans - 3/31/2010
Employers that have adopted preapproved defined benefit pension plans (that is, prototype and volume submitter plans), will need to restate the plans onto updated documents between April 1, 2010 and April 30, 2012. Defined benefit pension plans are plans that provide for a promised level of benefits at retirement and then utilize an actuary to determine the level of each year's required funding. Cash balance plans are also types of defined benefit pension plans, although these plans are not yet able to use preapproved documents.
> View the entire article in PDF format.
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BCOS is coming to town! - 3/30/2010
What is "BCOS"? BCOS is the Benefits Conference of the South, the once-a-year opportunity for folks in the Southeast to be able to hear and talk to representatives from the Washington DC National Offices of the IRS and the DOL about benefits issues. We're writing to encourage you to attend.
> View the entire article in PDF format.
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IRS Sets Deadline for Restatement of Prototype and Volume Submitter DB Pension Plans - 3/12/2010
Employers that have adopted preapproved defined benefit pension plans (that is, prototype and volume submitter plans), will need to restate the plans onto updated documents between April 1, 2010 and April 30, 2012. Defined benefit pension plans are plans that provide for a promised level of benefits at retirement and then utilize an actuary to determine the level of each year's required funding.
> View the entire article in PDF format.
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Quick Action Can Save Executives from Code Section 409A Penalties - 1/11/2010
The IRS just released new guidance permitting employers to correct deferred compensation arrangements that would otherwise subject executives and other highly valued employees to the large penalties under Code Section 409A. In the new guidance, the IRS provides special relief from penalties if employers correct plan documents by the end of 2010.
> View the entire article in PDF format.
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2009
Get your COLA here! IRS releases cost of living adjustments to variuos retirement plan limits - 10/19/2009
The IRS has released the cost of living increases for various retirement plan limitations that will take effect on January 1, 2009.
> View the entire article in PDF format.
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We need your feedback regarding IRS examinations of retirement plans - 8/19/2009
As many of you know, our firm is very active in representing clients in IRS and Department of Labor examinations and investigations. We frequently help negotiate the penalties the IRS charges our clients for failing to meet all of the complex rules relating to their retirement plans. It is our impression that there has been a marked change in the IRS's approach to these examinations during the past year or so.
> View the entire article in PDF format.
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The CHILL is on - how to temporarily freeze the 3 percent safe harbor 401(k) plan contribution - 5/19/2009
The IRS released new proposed regulations that grant relief to employers with safe harbor 401(k) plans that cannot continue to make the safe harbor contributions for their employees. These new regulations permit employers suffering from substantial business hardships to stop making the safe harbor contributions 30 days after appropriate notice is given to employees, assuming the plan is properly amended and other conditions are met.
> View the entire article in PDF format.
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We are pleased to welcome Matthew J. Cristy to The Law Offices of Ilene H. Ferenczy, LLC as an Associate. - 5/192009
By Ilene Ferenczy
> View the entire article in PDF format.
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March 15 deadline to updafe plan documents - 3/12/2009
An important retirement plan deadline is looming, and we want to make sure that you know about it and that you or another service provider is ensuring your compliance. If your company operates on a calendar year and your plan's year is also a calendar year, an amendment may need to be adopted on or before your tax return due date in 2009, which is generally March 15, 2009. (Different deadlines apply for noncalendar years.) This amendment will bring your plan into compliance with regulations issued by the Treasury Department in 2007. The amendment is required even if your plan is frozen or if you intend to terminate the plan in the near future.
> View the entire article in PDF format.
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The IRS's SEP and SIMPLE-IRA audit initiative: Picking on the small folks - 2/24/2009
The IRS has initiated an audit program to examine Simplified Employee Pensions (SEPs) sponsored by small employers. Not surprising to those of us who work with qualified retirement plans for a living, many of these plans have significant compliance problems. What is surprising, however, is the IRS's approach to resolving these problems.
When a qualified plan is audited and an error is found, the IRS offers to resolve the error under the Closing Agreement Program (CAP). A CAP resolution includes three elements:
- Correction of the error;
- a written agreement between the taxpayer and the IRS under which the IRS agrees not to "disqualify" the plan – that is, to remove all of the tax benefits from the program retroactively; and
- the payment of a penalty or "sanction" by the taxpayer.
> View the entire article in PDF format.
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2008
BCOS is coming to town! - 12/17/2008
What is "BCOS"? BCOS is the Benefits Conference of the South, the once-a-year opportunity for folks in the Southeast to be able to hear and talk to representatives from the Washington DC National Offices of the IRS and the DOL about benefits issues. We're writing to encourage you to attend.
BCOS will be held in Atlanta on January 15th and 16th. Here's why you should attend:
> View the entire article in PDF format.
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Is the DOL out to get you for late 401(k) deposits? - 12/4/2008
Based on inquiries we've received from some clients, it appears that the Department of Labor has sent out a mass mailing recently to companies whose Form 5500 Annual Report filing showed late deposits of 401(k) deferrals in 2007. The notice acknowledges that the Form 5500 contained this information and invites the company to enter the DOL's Voluntary Fiduciary Correction Program (VFCP).
> View the entire article in PDF format.
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Get you COLA here! IRS release cost of livign adjustments to variuos retirement plan limits - 10/16/2008
The IRS has released the cost of living increases for various retirement plan limitations that will take effect on January 1, 2009. They are as follows:
- Maximum Defined Benefit Plan Benefit (IRC §415(b)): $195,000, up from $185,000 – effective for limitation years ending in 2009.
- Maximum Defined Contribution Plan Annual Addition (IRC §415(c)): $49,000, up from $46,000 – effective for limitation years ending in 2009.
- Salary Deferral Limit (IRC §402(g)): $16,500, up from $15,500.
- Catch-up Limit for 401(k), 403(b), and 457 Plans (IRC §414(v)): $5,500, up from $5,000.
> View the entire article in PDF format.
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"But the pension was just sitting there!" - 9/29/2008
The other day, an old Doonesbury comic came to mind. The character, Duke (modeled after the late Rolling Stone writer, Hunter S. Thompson) was the head of the Washington Redskins, and he made a questionable investment with the pension assets of the team. When asked about it, his response was – you guessed it – "But the Pension Fund was just sitting there!"
> View the entire article in PDF format.
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Is the IRS beoming less kind and gentle in audit resolutions? - 6/30/2008
Our office recently handled an IRS audit for a client that has led us to believe that resolving problems discovered on audit is becoming more costly than it has been historically. This makes pre-audit plan reviews and problem resolution even more important than they were before.
> View the entire article in PDF format.
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IRS chasing down unfiled or late files forms 5500 - 5/22/2008
By Ilene FerenczyThe IRS recently sent out a spate of letters to plan sponsors referencing late or missing Forms 5500, asking for the filings to be made and threatening that late filing penalties will be levied.
Although your Form 5500 and attachments are filed with the Department of Labor (DOL), the forms are shared with the IRS. The law provides that either or both agencies may levy penalties for late filings. The DOL penalties can be as high as $1,100 per day per late form (although they generally run in the range of $50 to $300 per day). The IRS penalties are $25 per day up to $15,000 per late form.
> View the entire article in PDF format.
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IRS sets deadline for restatement of prototyping and volume submitter defined contribution - 3/17/2008
Employers who have adopted preapproved defined contribution retirement plans (that is, prototype and volume submitter plans) will need to restate the plans onto updated documents between April 1, 2008 and April 30, 2010. Defined contribution plans include individual account plans, such as profit sharing plans, 401(k) plans, and money purchase pension plans..
> View the entire article in PDF format.
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Salary deferrals deposited within 7 business days are okay, says DOL - 2/29/2008
The Department of Labor (DOL) has proposed a new "safe harbor" for deposit of employee contributions to small pension and health and welfare plans. Employee contributions in this context include salary deferrals to a 401(k) plan or employee payments to a health or welfare plan. A "small" plan is one that has fewer than 100 participants.
> View the entire article in PDF format.