Archives: Resources

Permanent Increase in Contribution Limits
The Pension Protection Act of 2006 makes increased contribution limits for 401(k) plans and IRAs permanent. In 2001, Congress passed the Economic Growth and Tax Relief Reconciliation Act (EGTRRA), which, among other things, increased the contribution limits to 401(k) and 403(b) plans and Individual Retirement Accounts. In 2001, the maximum individual contribution to an employer sponsored 401(k) or […]

Women’s Railroad Retirement Reforms
The Pension Protection Act of 2006 requires the payment of benefits to the former wives of railroad employees when the employees reach retirement age, and after their deaths. Payment of “Tier I” benefits when employees’ reach retirement age Under prior law “Tier I” Railroad Retirement benefits (which are similar to Social Security benefits) could not be paid to divorced wives of […]

Women’s Private Pension Reforms
The Pension Protection Act of 2006 provides two new protections for women who are entitled to a portion of their current or former spouse’s private pension. Clarification of divorced spouse rights Private retirement plans are required to pay private retirement plan benefits to former spouses only if the former spouses submit a special kind of court […]

Limits on Shutdown Benefits
The Pension Protection Act of 2006 limits the federal pension insurance protection for shutdown benefits when pension plans terminate. Some defined benefit pension plans offer shutdown benefits payable in the event that companies close plants or shut down their operations entirely. Shutdown benefits are particularly important for workers whose plants close before they have reached retirement age, when they are too old to begin […]

Cash Balance and Other “Hybrid” Plans
Pension Protection Act of 2006 legalizes future conversions of traditional pension plans to cash balance and other “hybrid” plans. It also legalizes the design of future cash balance and other hybrid plans. Cash balance and other hybrid plans have been very controversial. This is principally because when a company changes from a traditional pension plan to a hybrid plan, […]

Roth Contribution Feature
The law adds a Roth contribution feature to the Thrift Savings Plan (TSP), while keeping its traditional tax deferral feature. TSP allows employees to make contributions from their salaries into their accounts and the amount contributed is deducted from the employee’s income in the year the contribution is made. Employees do not pay taxes on […]

Disclosure of Fees and Conflicts to 401(k) Plan Administrators
The Fair Disclosure for Retirement Security Act of 2009 (H.R. 1984) would require that firms seeking to provide services to 401(k) plans submit disclosure and conflicts of interest statements to plan administrators before signing contracts with the plans. The required service disclosure statement would identify who would be performing services for the plan under the […]

Final 401(k) Fee Disclosure Regulations
On October 20, 2010, the Department of Labor issued final regulations that require private retirement savings plans, such as 401(k)s, to tell employees how much they are being charged in record-keeping, investment management and other fees. The regulations also include rules for disclosing information about the plan’s investment options. These rules apply only to plans where […]

Relief for Hurricane Victims
Katrina Emergency Tax Relief Act of 2005 Retirement Provisions On September 21, 2005 President Bush signed into law the Katrina Emergency Tax Relief Act of 2005 (KETRA). KETRA includes provisions specifically related to retirement plans to provide financial relief to those affected by Hurricane Katrina. Tax Favored Withdrawals from Retirement Plans The first provision in […]

Former Employees Can Sue Retirement Plans
The U.S. Court of Appeals for the 7th Circuit decided a case that preserves the right of former employees, including retirees, to sue their retirement plans even if they have already taken full distributions from the plan. The case is Harzewski v. Guidant Corporation [PDF]. The court found that if former employees have cashed out […]

Pension Plan Must Give Benefits to Surviving Spouse
An ex-spouse who files a qualified domestic relations order (QDRO) with a pension plan following the death of her ex-husband is entitled to benefits. In Marker v. Northrop Grumman Space & Missions Systems Corporation Salaried Pension Plan, the U.S. District Court for the Northern District of Illinois found that an order dividing a pension that was […]

Supreme Court looks at Attorney’s Fees
In Hardt v. Reliance Standard Life Insurance Co., the U.S. Supreme Court ruled that the Employee Retirement Income Security Act (ERISA), the federal law that governs private pension, disability, and health insurance plans, can allow courts to award attorney’s fees in cases in which the party is not the “prevailing party” as long the party […]