Retirement Updates
Latest Retirement Updates
On December 10, 2024, the IRS updated its FAQs for retirement plan and IRA required minimum distributions (RMDs). The FAQs are updated periodically to incorporate new guidance and provide clarity as needed. As we discussed in our July issue of Compliance Corner IRS Issues Updated Guidance on Required Minimum Distributions, the IRS released final regulations updating the RMD rules under the SECURE Act and SECURE 2.0 Act (SECURE 2.0). These FAQs, in part, provide additional clarification for plans and plan participants.
The recent updates address six of the existing FAQs:
- Definition of RMDs: The SECURE Act and SECURE 2.0 made significant changes to the applicable required beginning date (RBD) for commencing plan distributions and how to handle RMDs after a participant’s death. The FAQ defines RMDs and discusses the timing of distributions for participants and their beneficiaries.
- Types of plans subject to RMD rules: The rules apply to all employer-sponsored retirement plans and also to traditional IRAs and IRA-based plans such as SEPs, SARSEPs, and SIMPLE IRAs. RMD rules also apply to Roth IRA and Designated Roth accounts, but only after the death of the account owner.
- Timing of RMD from IRA: The updated guidance explains that the first RMD from an IRA applies for the year in which an individual turns 73, although they can delay taking the first RMD until April 1 of the following year.
- Failure to take RMD: Failure to withdraw the RMD may result in an excise tax of up to 25%, though it may be reduced to 10% if timely corrected within two years.
- Employer requirements for RMDs: Employers must continue to make contributions for employees even if they are receiving RMDs and must allow the employee to continue to participate if the plan rules permit.
- RMD rules for pre-1987 contributions to a 403(b) plan: Pre-1987 amounts may be exempt from RMD rules in certain situations.
Sponsors of retirement plans should be aware of the updated FAQs and update plan documents accordingly.
On November 1, 2024, the IRS issued Notice 2024-80, which provides certain cost-of-living adjustments for a wide variety of tax-related items, including retirement plan contribution maximums and other limitations, effective January 1, 2025. Several key figures are highlighted below.
The elective deferral limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government's Thrift Savings Plan increases from $23,000 to $23,500 in 2025. Additionally, the catch-up contribution limit for employees age 50 and over who participate in any of these plans remains at $7,500, so participants who have reached age 50 will be able to contribute up to $31,000 in 2025. Furthermore, pursuant to SECURE 2.0, the catch-up contribution limit for participants who reach age 60, 61, 62, or 63 in 2025 is $11,250 for 2025 for a total contribution limit of $34,750.
The annual limit for Savings Incentive Match Plan for Employees (SIMPLE) retirement accounts has increased from $16,000 to $16,500. The catch-up contribution limit for employees 50 and over who participate in SIMPLE plans remains $3,500 for 2025. A higher catch-up contribution limit, $5,250 for 2025, applies to SIMPLE plan participants who reach age 60, 61, 62, or 63 in 2025.
The annual limit for defined contribution plans under Section 415(c)(1)(A) increases to $70,000 (from $69,000). The limitation on the annual benefit for a defined benefit plan under Section 415(b)(1)(A) also increases to $280,000 (from $275,000). Additionally, the annual limit on compensation that can be considered for allocations and accruals increases from $345,000 to $350,000.
The threshold for determining who is a highly compensated employee under Section 414(q)(1)(B) increases to $160,000 (from $155,000). The threshold concerning the definition of a key employee in a top-heavy plan increases from $220,000 to $230,000.
Employers should review the notice for additional information. Sponsors of benefits with limits that are changing will need to determine whether their plan documents automatically apply the latest limits or must be amended to recognize the adjusted limits. Any applicable changes in limits should also be communicated to employees.
Recently, the IRS issued an Issue Snapshot addressing participant consequences when excess 401(k) deferrals are made. Elective deferrals include both pre-tax salary reduction contributions and any designated after-tax Roth contributions.
As a refresher, IRC Section 402(g) limits the amount of elective deferrals a participant may exclude from taxable income each year. Excess deferrals can cause a tax liability unless corrected. A participant can generally correct an excess deferral by distributing the excess amount, plus any amounts earned on that excess (for the calendar year during which the deferral is made), no later than April 15 following the close of the calendar year in which the deferral is made. If the correction is not made by April 15, the excess can only be distributed during a time prescribed in the plan document. If not timely distributed, the excess amount is included in the participant’s taxable income for the year in which it was contributed and would be taxed a second time when the deferral is eventually distributed from the plan.
It is important to note that catch-up contributions can affect the limits under Section 402(g). Catch-up contributions must be permitted by the plan and the participant must otherwise be eligible to make these catch-up contributions (e.g., at least 50 years old by the end of the calendar year in which the contribution is made and elective deferrals have been made up to the applicable limit). If the requirements for catch-up contributions are met, amounts that exceed the deferral limit will not be treated as excess deferrals and, thus, no corrective action may be needed.
Employers sponsoring 401(k) plans should work closely with their plan administrators or vendors to ensure it has procedures in place to identify potential excess deferrals and implement corrective actions as needed.
IRS, Issue snapshot — Consequences to a participant who makes excess deferrals to a 401(k) plan
On October 1, 2024, the IRS announced disaster tax relief for all individuals and businesses affected by Hurricane Helene, including the entire states of Alabama, Georgia, North Carolina, and South Carolina and parts of Florida, Tennessee, and Virginia.
The relief includes the postponement of filing until May 1, 2025, for any Form 5500 series returns that were or are required to be filed by “affected taxpayers” on or after September 24, 2024, and before May 1, 2025, and applies to both retirement and health and welfare plan filings. By regulation, permitted postponements by the IRS under these circumstances are also deemed permitted by the DOL and Pension Benefit Guaranty Corporation for similarly situated plan administrators and direct filing entities.
For these purposes, “affected taxpayers” are generally plan sponsors located in covered disaster areas as well as plan sponsors unable to obtain information necessary for completing the forms from a bank, insurance company, or any other service provider on a timely basis because such service provider’s operations are in a covered disaster area.
Per Form 5500 instructions, plan sponsors relying on this special extension should check the appropriate box on Form 5500, Part I, line D, and enter a description of the announced authority for the extension. For these purposes, one or more of the below IRS announcements should be referenced as applicable:
On August 20, 2024, the Sixth Circuit ruled in Parker v. Tenneco, Inc., that 401(k) plan provisions mandating individual arbitration are invalid as a prospective waiver of rights and remedies guaranteed under ERISA.
Tanika Parker and Andrew Farrier (the plaintiffs) were employees of and participants in 401(k) plans sponsored by subsidiaries of Tenneco Inc. Together, they sued in federal court on behalf of the plans, themselves, and other similarly situated participants through a putative class action, alleging breaches of fiduciary duties owed pursuant to ERISA. Specifically, the plaintiffs claimed that the plans’ fiduciaries breached their duties by failing to employ a prudent process for selecting, monitoring, and removing investment options from the plans’ menus. This resulted in investment options that were nearly identical to other available options but were more expensive. Furthermore, the plaintiffs alleged that the fees charged for services, recordkeeping, and account administration were higher than other comparable fees and services.
In terms of relief for these breaches, the plaintiffs requested “all losses caused by their breaches of fiduciary duties,” restoration of “any profits resulting from such breaches,” and “equitable relief and other appropriate relief.” The plan fiduciaries moved to compel individual arbitration, arguing that the plans’ individual arbitration provision compelled arbitration of Parker and Farrier’s claims on an individual basis and barred them from suing on behalf of the plans or in a representative capacity. The district court denied the motion, stating that the individual arbitration provision limited participants’ rights under ERISA because it eliminated their substantive statutory right to bring suit on behalf of a plan and pursue plan-wide remedies.
The Sixth Circuit affirmed the district court under the “effective vindication doctrine,” which holds that provisions within an arbitration agreement may not prevent a party from effectively vindicating statutory rights. As such, the plans’ individual arbitration provision was unenforceable. In support of its decision, the court cited similar reasoning used by the Third, Seventh, and Tenth circuit courts in past cases as well as the Second Circuit’s decision in Cedeno v. Sasson earlier this year.
While this decision adds to what appears to be a growing consensus in favor of the effective vindication doctrine, the effect of mandatory arbitration provisions in benefit plans subject to ERISA remains a developing area of the law. Plan sponsors that already include such language in their plans or are considering including such language in their plans should consult closely with counsel before making any ultimate determinations in that regard.
On September 6, 2024, the DOL issued Compliance Assistance Release No. 2024-01, which provides updated cybersecurity guidance for employee benefit plans. The DOL also clarified that the cybersecurity guidance applies to all employee benefit plans, including retirement plans and health and welfare plans.
In recent years, the DOL has increasingly focused on cybersecurity measures for ERISA plans. Release No. 2024-01 enhances the DOL’s 2021 cybersecurity guidance and is intended to help plan sponsors, fiduciaries, service providers, and participants safeguard plan data, personal information, and plan assets. The latest updates are reflected in three publications, which address service provider selection, cybersecurity program best practices, and online security tips.
The first publication, “Tips for Hiring a Service Provider,” helps plan sponsors and other fiduciaries prudently select service providers with strong cybersecurity practices and monitor their activities. Among other tips, the DOL advises fiduciaries to ask about the service provider's information security standards, practices and policies, and audit results, and compare these to the industry standards adopted by other financial or health institutions. Fiduciaries should also verify if the service provider maintains insurance to cover losses caused by cybersecurity and identity theft breaches. When contracting with service providers, fiduciaries should seek terms that provide cybersecurity protections for the plan and participants (e.g., regarding the use and sharing of confidential information) and require compliance with applicable privacy and security laws.
The second publication, “Cybersecurity Program Best Practices,” focuses on assisting plan fiduciaries in their responsibilities to manage cybersecurity risks by hiring service providers that follow certain best practices. These practices include having a formal, well-documented cybersecurity program, conducting prudent annual risk assessments, and having a reliable annual third-party audit of security controls. Additionally, sensitive data should be encrypted, whether stored or in transit, and periodic cybersecurity awareness training should be conducted.
Finally, the “Online Security Tips” publication is directed at plan participants and beneficiaries who check their retirement accounts or other employee benefit plan information online and is designed to reduce their risk of fraud and loss. The tips advise participants to routinely monitor their online accounts, create strong and unique passwords, and use multifactor authentication, which requires a second credential to verify identity (e.g., entering a code sent in real-time by text message or email).
Plan sponsors and fiduciaries should clearly recognize their fiduciary obligations with respect to the protection of plan and participant confidential data from cybersecurity threats. They should carefully review and incorporate the DOL’s updated and practical cybersecurity guidance into their policies and procedures for selecting, contracting with, and monitoring service providers. Additionally, sponsors should educate participants regarding measures they can take to protect their own retirement account or other employee benefit plan data and inform participants about the availability of the DOL Online Security Tips.
On August 19, 2024, the IRS released Notice 2024-63, which provides interim guidance pursuant to the SECURE 2.0 Act for employers that want to provide matching contributions based on eligible student loan payments made by participating employees.
In brief, among many other changes to retirement plan rules, SECURE 2.0 permits employers to amend their 401(k), 403(b), 457(b), and SIMPLE IRA plans to make matching contributions with respect to qualified student loan payments (QSLPs) for plan years beginning after December 31, 2023.
The notice addresses various plan administration issues related to matching contributions and QSLPs, such as:
- What qualifies as a QSLP: Generally, a payment made by an employee – who must also be a loan signer or cosigner – during a plan year to repay qualified education loans used for the higher education expenses of the employee, their spouse, or their dependent.
- Dollar and timing limitations: The total amount to take into account for matching contributions may not exceed the lesser of 1) the annual deferral limit in effect for the year (e.g., $23,000 for 2024) or 2) the employee’s compensation. Furthermore, matching contributions must be based on qualified education loan payments made within the same plan year.
- Certification requirements: Plans can require separate certifications for each or allow for a single annual certification. Certifications must specify payment amounts, payment dates, proof of payment, that the loan is for qualified education expenses, and that the employee incurred the loan.
- Reasonable matching contribution procedures: Plans may establish reasonable administrative procedures to implement QSLP match features, including but not necessarily limited to having a single claim deadline for a plan year or multiple deadlines for claim submissions, provided that each deadline is reasonable under all relevant facts and circumstances. The guidance indicates that an annual deadline that is three months after the end of a plan year will be deemed reasonable.
- Special nondiscrimination testing relief: Plans may choose to apply separate Actual Deferral Percentage tests for employees who receive QSLP matches and those who do not receive QSLP matches. The guidance also provides several methods that plan sponsors can use to apply these tests.
While the notice applies for plan years beginning after December 31, 2024, employers can rely on it for plan years beginning in 2024 as an example of a good faith, reasonable interpretation of these changes made by the SECURE 2.0 Act.
On July 24, 2024, in Kruchten v. Ricoh USA, Inc., et al., the US Court of Appeals for the Third Circuit (Third Circuit) reversed the dismissal of an ERISA excessive fee claim by the US District Court for the Eastern District of Pennsylvania (district court). During the appeal process, the Third Circuit reversed the opinion of the case on which the district court relied (Mator v. Wesco Distrib. Inc.) and clarified the pleading standards for excessive fee claims under ERISA, rejecting the narrow, more stringent standard suggested by the district court. As a result, the Third Circuit reversed the motion to dismiss and remanded the matter to the district court for further proceedings.
As background, the lawsuit alleges that Ricoh USA, Inc., et al. (the defendants), in their roles as plan sponsor and fiduciary of the Ricoh USA defined contribution retirement plan (the plan), allowed excessive recordkeeping and administrative (RK&A) services fees to be charged. The plaintiffs, who are former employees who participated in the plan, contend that the defendants breached their fiduciary duty by not controlling plan costs and not using their substantial bargaining power due to the plan’s size to negotiate lower plan fees. Due to the costs of the recordkeeping services, the defendants imposed administration fees on all investment options in the plan. Two of these options charged additional revenue-sharing fees that further raised the total recordkeeping fees paid by participants.
On appeal, the Third Circuit referred to the recent Mator ruling, noting that RK&A fees can be considered excessive based on factual comparisons to other similar plans. Applying that concept here, the Third Circuit observed that the plaintiffs established a meaningful benchmark to allege that plan fees were excessive by compiling a list of retirement plans and the RK&A fees they charged and explaining why those other plans were comparable. They also alleged that all plans above 10,000 participants cited as comparators received the same services, measured by Form 5500 service codes, and that larger plans have greater bargaining power to reduce fees. The Third Circuit concluded the plaintiffs had established that the comparisons they provided were appropriate and sufficient to plead a plausible claim.
Plan sponsors have fiduciary duties under ERISA to act in the best interest of plan participants and beneficiaries, which includes the duty of prudence and maintaining reasonable plan administration fees. Although the case is still at an early stage in the legal process, it serves as another reminder to employers of their ERISA fiduciary obligations to prudently select and monitor vendor relationships and to carefully document their processes. As with other cases we have discussed recently in our Compliance Corner on June 18, 2024, the ruling also provides insights as to a court’s considerations when considering an excessive fee claim and how the law in this area is evolving.
On July 18, 2024, the US Court of Appeals for the Fifth Circuit (Fifth Circuit) vacated a trial court’s determination that DOL’s final rule, on retirement plan ESG investments, enabling retirement plan fiduciaries to consider the potential financial benefits of investing in funds that take environmental, social and corporate governance (ESG) factors into account was not “manifestly contrary” to ERISA.
The Fifth Circuit rendered its decision in light of the US Supreme Court’s decision to discard “Chevron deference” in Loper Bright v. Raimondo. “Chevron deference” had been a longstanding principle established by the Supreme Court in 1984 that required federal courts to defer to an agency’s interpretation of ambiguous statutory language so long as the agency applied a reasonable or permissible construction of the statute.
Because the trial court applied the now-obsolete Chevron deference doctrine to the DOL’s ESG rule, the Fifth Circuit remanded the case to the trial court for further review. Notably, the Fifth Circuit acknowledged that it could have chosen to review the ESG rule itself in the interest of expediting a resolution to the issue, but the court deemed it more appropriate for the trial court to first conduct its own review of the rule unencumbered by Chevron deference, after which it would consider the matter in turn on appeal.
In just a few weeks, the demise of the Chevron doctrine has already affected agency rulemaking pursuant to the ACA, as reported previously; agency rulemaking pursuant to the No Surprises Act, as discussed in an adjacent article; and agency rulemaking pursuant to ERISA, as discussed above. Employers should expect continued developments in this area as agencies and courts contend with administrative rulemaking in the post-Chevron era.
On July 18, 2024, the IRS released final regulations updating the required minimum distribution (RMD) rules for retirement plans. The final regulations, which reflect certain changes made by the SECURE Act and the SECURE 2.0 Act, largely follow proposed regulations issued in 2022 (the 2022 proposed regulations). Simultaneously, the IRS issued new proposed regulations (the 2024 proposed regulations), addressing additional RMD issues under the SECURE 2.0 Act (SECURE 2.0).
The SECURE Act and SECURE 2.0 made significant changes to the RMD rules applicable to retirement plan participants during their lifetimes and to beneficiaries after their deaths. For participants, a key change was the applicable required beginning date (RBD) for commencing plan distributions. Prior to the SECURE Act, the RBD was defined as the later of April 1 of the calendar year following the year in which the participant attained age 70½ or the year the participant retired from employment with the employer maintaining the plan. The RBD age was increased by the SECURE Act from 70½ to 72, and then to 73 or 75 by SECURE 2.0. Accordingly, as implemented under the final regulations, the applicable RBD age for a participant is:
- Age 70½, if born before July 1, 1949.
- Age 72 if born on/after July 1, 1949, and before January 1, 1951.
- Age 73, if born on/after January 1, 1951, but before January 1, 1959.
- Age 75, if born on/after January 1, 1960.
Although not addressed by the final regulations, the 2024 proposed regulations clarify that the applicable age for a participant born in 1959 would be 73.
Notwithstanding the foregoing, the preamble to the final regulations notes that a plan is permitted to use age 70½ as the required commencement date for all participants, regardless of their birthdates. This option may be of particular interest to sponsors of defined benefits plans, which are generally required to actuarially increase the benefits of participants who commence benefits after attainment of age 70½. Additionally, in-plan Roth accounts are exempt from the lifetime RMD requirements, effective in 2024.
As expected, under the final regulations, distributions to a beneficiary after the participant’s death can no longer be spread over the lifetime of the beneficiary but must be paid out within 10 years unless the beneficiary is an “eligible designated beneficiary” (i.e., a spouse, minor child, disabled or chronically ill, or not more than 10 years younger than the participant). Furthermore, the final regulations confirm that if the participant’s death occurs after their distributions have begun, the benefits to the beneficiary must continue “at least as rapidly” as required by Code section 401(a)(9) and comply with the 10-year rule. As with the 2022 proposed regulations, the final regulations interpret the Code language to require the beneficiary to continue annual distributions after the participant’s death rather than allowing the beneficiary to delay receipt of the remaining benefit, provided the full amount is distributed within 10 years of the death.
Additionally, the final regulations reflect a SECURE 2.0 Act rule that allows a surviving spouse who is the sole eligible designated beneficiary to elect to have the post-death RMDs calculated using the actuarial table applicable to a participant’s lifetime distributions, which would generally allow for smaller annual distributions than under the single life table normally applicable to beneficiaries. The final regulations and 2024 proposed regulations discuss the application of this rule and default rules applicable where the plan terms are silent.
Overall, the final regulations are very comprehensive and address many other aspects of RMDs, including distributions to minor children upon attainment of age 21 and to beneficiaries under certain types of trusts.
Sponsors of retirement plans should be aware of the issuance of the final regulations and work with their service providers to bring their plans into compliance by January 1, 2025. For prior years, a good faith reasonable interpretation of the SECURE Act and SECURE 2.0 Act amendments applies. Importantly, plan sponsors will need to update their plan documents to address the new RMD rules. However, plan amendments are generally not required until December 31, 2026.
The 2024 proposed regulations provide further details about many SECURE 2.0 Act RMD changes, including certain corrective distributions, and are proposed to apply beginning January 1, 2025. Plan sponsors wishing to submit comments on the 2024 proposed regulations can do so by September 17, 2024, in accordance with the instructions. Additionally, a public hearing is scheduled for September 25, 2024.
On June 20, 2024, the IRS issued Notice 2024-55, which provides guidance on two exceptions to the 10% tax under Code section 72(t)(2) on early retirement plan distributions that were included in the SECURE 2.0 Act. The two exceptions are for emergency personal expense distributions and domestic abuse victim distributions.
The Code defines an emergency personal expense distribution as any distribution made from an applicable eligible retirement plan to an individual for purposes of meeting unforeseeable or immediate financial needs relating to necessary personal or family emergency expenses. A domestic abuse victim distribution is defined as any distribution from an applicable eligible retirement plan to a domestic abuse victim if made during the one-year period beginning on any date on which the individual is a victim of domestic abuse by a spouse or domestic partner.
Notice 2024-55 provides additional guidance on the application of these two exceptions to the 10% tax, including:
- The administrator may rely on an employee’s written certification that the employee is eligible for these distributions.
- The distribution for an emergency personal expense is limited to the lesser of $1000 or the individual’s total nonforfeitable accrued benefit over $1000 per calendar year, and the aggregate distribution for a domestic abuse victim is limited to the lesser of $10,000 (indexed for inflation) or 50% of the vested balance.
- An individual may, at any time during the three-year period beginning on the day after the date on which the distribution was received, repay all or any portion of an emergency personal expense or domestic abuse victim distribution.
- It is optional for an applicable eligible retirement plan to permit emergency personal expense distributions and domestic abuse victim distributions.
The IRS indicates that they intend to issue regulations under the tax exception section of the Code and invite comments in the meantime, so these will likely not be the final say on these exceptions. If a plan sponsor wants to include these exceptions to the 10% tax on early distributions in its plan, it should discuss the process with its plan service providers and amend the plan accordingly.
Notice 2024-55: Certain Exceptions to the 10% Additional Tax Under Code Section 72(t) »
On June 24, 2024, the DOL released a report to Congress regarding Interpretive Bulletin 95-1 (the bulletin), which addresses ERISA fiduciary obligations of defined benefit (pension) plan sponsors when they select an annuity provider. The report was issued pursuant to Section 321 of the SECURE 2.0 Act, which directed the DOL to determine whether the bulletin’s guidance required amendment and to assess any risks to plan participants associated with an annuity provider selection.
Pension plans promise participants a specific benefit (e.g., monthly payment) at retirement based upon a formula set forth in the plan. Plan sponsors are generally responsible for ensuring their plan contributions and related investment income are sufficient to pay the promised benefits. However, a sponsor can purchase an annuity contract to transfer liability for all or some of the plan’s payment obligations to the insurer issuing the annuity. The annuity purchase in this context is referred to as a “pension risk transfer” or a “de-risking” transaction.
In 1995, the DOL issued the bulletin to provide guidance to plan sponsors regarding their ERISA fiduciary duties as applied to the selection of an annuity provider in a pension risk transfer or de-risking transaction. The bulletin provides that plan fiduciaries must take steps calculated to obtain the safest annuity available unless, under the circumstances, it would be in the interest of the participants and beneficiaries to do otherwise. Fiduciaries must conduct an objective, thorough, and analytical search to identify and select annuity providers.
The bulletin emphasizes that fiduciaries should not rely solely on insurance ratings to assess an annuity provider’s claims-paying ability and creditworthiness; rather, fiduciaries should consider the following six factors, among others:
- The quality and diversification of the annuity provider’s investment portfolio.
- The size of the insurer relative to the proposed contract.
- The level of the insurer’s capital and surplus.
- The lines of business of the annuity provider and other indications of an insurer’s exposure to liability.
- The structure of the annuity contract and guarantees supporting the annuities, such as the use of separate accounts.
- The availability of additional protection through state guaranty associations and the extent of their guarantees.
Furthermore, plan fiduciaries who lack the necessary expertise to evaluate these factors should obtain the advice of a qualified, independent expert.
The DOL conducted a broad review of the bulletin, which included a study of historical and legal developments and current market trends. The DOL’s report observes that in 2022, pension risk transfer annuity purchases reached an all-time high with transactions totaling $52 billion in premiums. The report also notes the increase in private equity involvement with life and annuity insurers, including with respect to pension risk transfers, and questions whether this trend presents increased risk to participants (i.e., the annuitants).
Additionally, the DOL conducted more than 40 stakeholder meetings with representatives of organized labor, employer groups, and insurance companies, among others. The attendees expressed a range of opinions as to whether amendments to the bulletin were warranted. Although some believed the guidance remained appropriate, others indicated that significant changes are necessary to protect participants’ interests. Stakeholders advocating for changes believed the bulletin should focus plan fiduciaries’ attention on risks related to an insurance company’s ownership structure, including private equity interests, and the extent to which an insurer relies upon non-traditional and potentially riskier investments and liabilities as well as offshore and/or captive reinsurance, among other items.
Based on its review, which included consultation with the ERISA Advisory Council, the DOL concluded that the bulletin continues to identify broad factors that are relevant to a fiduciary’s prudent and loyal selection of an annuity provider. However, the DOL indicated they intend to explore the issues raised in their review further to determine whether some of the bulletin’s factors need revision or supplementation and whether additional guidance should be developed.
Employers that sponsor pension plans, particularly those considering a pension risk transfer, should be aware of the report and their fiduciary obligations with respect to the selection of an annuity provider. They should also monitor for further updates on this issue.
DOL Report to Congress on Employee Benefits Security Administration’s Interpretive Bulletin 95-1 »
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