Archives: Resources
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 […]
U.S. Supreme Court Says Plan Participants Can Sue For Individual Losses Resulting From Misconduct
The U.S. Supreme Court delivered its opinion in LaRue v. DeWolff, Boberg & Associates on Wednesday, February 20, 2008, reversing a decision by the U.S. Court of Appeals for the Fourth Circuit. James LaRue calculated that he lost approximately $150,000 when the administrator of his 401(k) plan failed to carry out investment instructions he gave […]
Lump-Sum Benefits Must Include Cost-of-Living Adjustments
The U.S. Supreme Court has let a Seventh Circuit Court of Appeals decision stand. The Court of Appeals for the Seventh Circuit ruled that when a pension plan calculates the amount of a retiree’s lump-sum distribution, the plan must take into account the cost-of-living-adjustments (COLAs) that would have been included if the pension had been […]
