Employers know that benefits under a retirement plan can be split between a participant and a former spouse in the event of a divorce under the terms of a qualified domestic relations order (QDRO). A domestic relations order is qualified if it meets certain technical requirements. A recent decision from the Minnesota Supreme Court highlights
Understanding Employee Benefits and key developments in the employee benefits field and items of interest to our clients. MORE
Retirement Plans
Long Time Separation Does Not Equal Divorce
By Stinson LLP on
Most employers know that a married participant in a qualified retirement plan must name a spouse as beneficiary for at least a portion of the benefit unless the spouse signs a notarized written consent or the spouse cannot be located. A recent U.S. District Court decision, Gallagher v. Gallagher, involved a participant who named …
Target Date Retirement Funds – Tips for Plan Fiduciaries
By Stinson LLP on
Many plan sponsors have selected so-called “target date” funds as the default investment under the plan sponsor’s 401(k) or other qualified plan. A target date fund is one that includes investments in different asset classes (e.g., stocks, bonds, money market) where the balance among the asset classes becomes more conservative as the participant gets older. …
Bad Tax Consequences for Disqualified ESOP
By Stinson LLP on
A recent tax court decision considered the impact on a highly compensated participant of an ESOP that was disqualified retroactively for the period 2000-2004. The highly compensated participant was fully vested in the ESOP from its inception to its disqualification. The highly compensated participant argued that only the portion of the benefit that accrued during …
What is Publicly Traded Stock?
By Stinson LLP on
The Pension Protection Act of 2006 added Section 401(a)(35) to the Internal Revenue Code generally effective for plan years beginning after December 31, 2006. That section provides in general that defined contribution retirement plans that hold employer securities that are publicly traded must give plan participants the right to diversify their amounts out of the …
GAO Issues Multiple Employer Plan Report
By Stinson LLP on
The Government Accountability Office (GAO) has issued a report on Multiple Employer Plans, encouraging the federal agencies that regulate the plans to collect data and coordinate oversight of them. The report is interesting reading for those wanting more information about these types of plans.
Employer Avoids Excise Tax on Reversion from Defined Benefit Plan
By Stinson LLP on
An employer who wishes to terminate a defined benefit pension plan must make sure that the plan is fully funded in order to do so. Sometimes the employer must contribute funds to the plan in order to provide sufficient assets to pay all the benefits on plan termination. A recent private letter ruling addressed the …
DOL Publishes Submission Procedures for Employers to Report Delinquent Service Providers
By Stinson LLP on
As we have blogged before (here and here), certain service providers to qualified plans are required to provide plan administrators with fee disclosures. The initial disclosures were due July 1, 2012. The Department of Labor has now published a new mailing address and web based procedures for employers and plan administrators to report …
Participants Are Entitled to Specific Information About Their Service Credit Even Before They Are Entitled to Their Pensions
By Stinson LLP on
In a recent federal district court case, Whirlpool Corporation closed a factory and notified a number of former employees about the status of their pensions, including their years of credited service. The corporation’s records differed from the service records maintained by the union. Approximately five years after the factory closed, some of the participants …
Stuck Between the IRS and the NLRB
By Stinson LLP on
Employers who sponsor 401(k) plans know that distributions from those plans can be made only on certain allowable events, such as separation from service. While an employee is still employed, distributions can be made after age 59½ or as a result of financial hardship. Defined benefit pension plans face similar restrictions on in-service distributions before …