A poorly drafted contract with a service provider can spell doom for a retirement plan in a worst-case scenario. All provider contracts should be carefully reviewed and negotiated to ensure the maximum possible protection for your retirement plan. In the September 2019 edition of 401(k) Advisor, attorney Jeff Herman addresses some of the specific concerns and provisions to watch out for in your contracts. Click here to read the full article in the publication.
Retirement accounts are a seemingly simple and effective way to protect assets from future creditors, but the subtle nuances of what is protected under Missouri law and what is protected in bankruptcy can be complex. In the July/August 2019 edition of the Journal of the Missouri Bar, attorneys Keith Herman and Jeffrey Herman analyze how you can use retirement accounts for asset protection and the potential loopholes to avoid.
The Internal Revenue Service has updated the Employee Plans Compliance Resolution System (EPCRS) to allow for the self-correction of more failures. EPCRS is a program that allows plan sponsors to correct errors involving qualified plans (such as 401(k) plans, profit sharing plans, defined benefit pension plans, etc.) and certain other types of plans that, if left uncorrected, could jeopardize the tax-favored status of the plan. Revenue Procedure 2019-19 expands the self-correction program to include correction of certain loan failures and more corrections via retroactive amendment.
The Bipartisan Budget Act of 2018 (H.R. 1892) was signed into law on Feb. 9, 2018. The Budget Act makes several changes to retirement plan rules, both now and in the near future.
Current rule changes
Section 20102: California Wildfire Disaster Victims: Distributions of up to $100,000 from an eligible retirement plan (e.g., a qualified plan, 403(b) plan or 457(b) plan) are allowed on or after Oct. 8, 2017, and before Jan. 1, 2019, without being subject to a 10 percent early withdrawal penalty. This rule applies to individuals who sustained losses to a home in a California wildfire disaster area (see below). The home must have been a person’s “principal place of abode” at some time between Oct. 8, 2017, and Dec. 31, 2017. These distributions may be repaid to the eligible retirement plan at any time within three years and essentially treated as rollover contributions.
The U.S. Supreme Court recently declined to address the issue of whether forum selection clauses are valid and enforceable in plans governed by the Employee Retirement Income Security Act of 1974 (ERISA). Three U.S. Courts of Appeals have allowed enforcement of plans’ forum selection clauses.
Effective Jan. 2, 2018, the Internal Revenue Service (IRS) simplified the fee structure for its Voluntary Compliance Program. Fees will now be based on the total amount of net plan assets rather than the number of plan participants.