Whether we’re talking fashion or music or architecture or barber shops, it seems things that have faded from existence eventually come back around. See if this cycle looks familiar: cutting edge becomes status quo becomes so last week becomes so [insert decade] becomes retro becomes vintage.
Topic Archive: IRS
When I was kid, I used to love Schoolhouse Rock during the commercial breaks of Saturday morning cartoons. Even now, I have them all on DVD as well as a CD of covers by various rock musicians, and I still sing along with all of them word-for-word!
If you’ve spent any time working with retirement plans, you know how complicated they can be. It seems like every rule has an exception and an exception to that exception. It is no wonder that accidents occasionally happen - and correction is required - despite everyone’s best efforts to follow the rules.
It’s funny how the human brain (or maybe it’s just my brain) forms associations with words or phrases. Whenever I hear the word “revoked,” I immediately think of a scene from one of the Lethal Weapon movies. The bad guy had been using his diplomatic immunity to get away with all sorts of nefarious deeds. At the end of the movie as he lay clinging to life after being on the wrong end of a shoot-out, Danny Glover’s character says rather pithily, “Your diplomatic immunity has just been REVOKED.”
My good friend and benefits attorney Ilene Ferenczy sends out an e-newsletter from time-to-time. The Ferenczy Flash always includes timely, practical information for plan sponsors and service providers. The edition she sent earlier this week highlights a very important point that often gets lost in the 401(k) shuffle - while all of the fiduciary rules are important, it is failing to comply with the Tax Code that is more likely to land most plan sponsors in hot water.
I must confess that I have been very surprised by the vocal opposition to the new Preparer Tax Identification Number (PTIN) requirements.
Over the last several years, the answer has been a little of both. Beginning with the 2009 effective date of the IRS overhaul to the 403(b) regulations, it was establised that 403(b) plans could, indeed, be terminated. However, that legal fact has been somewhat of a practical fiction for plans funded by individual contracts. The reason being that sponsors of such arrangements had no authority to compel distribution of those individual contracts. Bob Toth has an excellent explanation of the conundrum here.
Over the last few weeks, I have spoken with at least four plan sponsors who just became aware that they missed the April 30, 2010 deadline to restate their plan documents for EGTRRA. For those in certain federally declared disaster areas, the deadline was extended to July 30, 2010.
As the EGTRRA restatement window closes for pre-approved DC plans and begins to open for pre-approved DB plans, I thought I would pontificate on the importance of the plan document. Qualified plans are required to be maintained pursuant to a written plan document. Operating the plan inconsistent with terms in that document is an operational failure that can threaten a plan’s qualified status.