The ERISA Outline Book - Current Developments
On this page we reference significant current developments, organized by chapter, that affect the 2012 Edition of the ERISA Outline Book. In some of the entries below, you will find a link to the source material. If you link to that page, you will need to click the "back" button on your browser to return to this page. For a list of current developments that is not referenced to The ERISA Outline Book, click here.
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Chapter 1A
- Governmental plan definition
Inclusion of private sector employers in State government’s group health plan would result in loss of status as a governmental plan [Citation: Advisory Opinion 2012-01A (April 27, 2012), http://www.dol.gov/ebsa/regs/aos/ao2012-01a.html]
- Normal retirement age definition
IRS will delay normal retirement age (NRA) regulations for governmental pension plans to a date no earlier than January 1, 2015; considering modifications to the regulations that would allow plan not to have an NRA if it doesn't permit in-service distributions before age 62, and allow the special age 50 NRA rule to be used by a plan that covers employees other than public safety employees if the age 50 NRA applies only to a group substantially consisting of public safety employees [Citation: Notice 2012-29, 2012-18 I.R.B. (April 30, 2012), http://www.irs.gov/irb/2012-18_IRB/ar12.html]
Chapter 1B
- Puerto Rico Plan definition, Part C.
Puerto Rico Treasury Department issues guidance on new rules relating to determination letters, retroactive qualification procedures [Citation: Circular Letter No. 11-10, Puerto Rico Treasury Dept]
Chapter 2
- None reported at this time.
Definition of "readily tradable" employer securities prescribed by IRC §401(a)(35) regulations applicable to other specified tax code sections [Citation: Notice 2011-19, I.R.B. 2011-11 (March 14, 2011)]
Chapter 3A
- None reported at this time.
Chapter 3B
- Section V, Part B.2.
IRS clarifies how the vesting rules and IRC §415 limits apply to the annuitization of a direct rollover from a defined contribution plan to a defined benefit plan maintained by the same employer [Citation: Rev. Rul. 2012-4, 2012-8 I.R.B. (February 21, 2012)]
- Section X, Part C.
Amendment to modify social security offset calculation was not a reduction of accrued benefits in violation of ERISA §204(g) [Citation: Cinotto v. Delta Airlines, Inc., 674 F.3d 1285 (11th Cir. March 23, 2012)]
- Section XI, Part C.
Estate may attempt to enforce surviving spouse’s waiver of interest in retirement benefits after benefits have been distributed from the plan [Citation: Estate of Kensinger v. URL Pharma, Inc., 674 F.3d 131 (3rd Cir. March 20, 2012)]. This case supports the view that the anit-assignment rule does not protect benefits after they have been distributed from the plan.
- Appendix C, Part II, ¶5.
Sovereign immunity does not apply to USERRA cases brought against a State; money damages awarded to servicemember for improper failure to rehire [Citation: U.S. v. Alabama Department of Mental Health and Mental Retardation, 2012 WL 877222, ___ F.3d. ___ (11th Cir. March 16, 2012)]
Chapter 4
- Section IX, Part B.2.
IRS clarifies how the vesting rules apply to the annuitization of a direct rollover from a defined contribution plan to a defined benefit plan maintained by the same employer [Citation: Rev. Rul. 2012-4, 2012-8 I.R.B. (February 21, 2012)]
Chapter 5
- Section III, Part A.1.
IRS clarifies how the IRC §415 limits apply to the annuitization of a direct rollover from a defined contribution plan to a defined benefit plan maintained by the same employer [Citation: Rev. Rul. 2012-4, 2012-8 I.R.B. (February 21, 2012)]
Chapter 6
- Section III, Part B.
IRS makes it easier for a defined contribution plan to offer deferred annuity options without immediately triggering the QJSA spousal consent rules [Citation: Rev. Rul. 2012-3, 2012-8 I.R.B. (February 21, 2012)]
- Section III, Part C.
IRS clarifies how the vesting rules and IRC §415 limits apply to the annuitization of a direct rollover from a defined contribution plan to a defined benefit plan maintained by the same employer [Citation: Rev. Rul. 2012-4, 2012-8 I.R.B. (February 21, 2012)].
- Section III, Part C.2.
Proposed regulations would make it simpler for a defined benefit plan to offer a payment option consisting of a partial annuity with lump sum remainder [Citation: Prop. Treas. Reg. §1.417(e)-1(d)(7), 77 F.R. 5454 (February 3, 2012)]. This new development would modify the approach for determining present value when a participant's benefit is only partially annuitized.
- Section IV, Part C.1.b.
IRS will delay normal retirement age (NRA) regulations for governmental pension plans to a date no earlier than January 1, 2015; considering modifications to the regulations that would allow plan not to have an NRA if it doesn't permit in-service distributions before age 62, and allow the special age 50 NRA rule to be used by a plan that covers employees other than public safety employees if the age 50 NRA applies only to a group substantially consisting of public safety employees [Citation: Notice 2012-29, 2012-18 I.R.B. (April 30, 2012), http://www.irs.gov/irb/2012-18_IRB/ar12.html]
- Section IV, Part D.3.b.
“First” wife entitled to survivor annuity rather than “second” wife if first marriage was never dissolved [Citation: IBEW Pacific Coast Pension Fund v. Lee, 52 EBC 2378 (6th Cir. February 13, 2012)]
- Section V, Part B.3.d.1)c)i)
Estate may attempt to enforce surviving spouse’s waiver of interest in retirement benefits after benefits have been distributed from the plan [Citation: Estate of Kensinger v. URL Pharma, Inc., 674 F.3d 131 (3rd Cir. March 20, 2012)]. This case addresses an issue that had been raised in the Supreme Court's Kennedy case that is discussed in this section of the book.
- Section VII, Part D.
Proposed regulations would amend minimum distribution regulations to allow for deferred longevity annuities starting no later than age 85 payable from up to 25% of account balance [Citation: Prop. Treas. Reg. §§1.401(a)(9)-5, Q&A-3(d) and (e), 1.401(a)(9)-6, Q&A-17, 1.403(b)-6(e)(9), 1.408-8, Q&A-12, 1.408A-6, Q&A-14(d), and 1.6047-2, 77 F.R. 5443 (February 3, 2012)]
Chapter 7
- Section XVIII, Part B.9.a.
IRC §4980 excise tax does not apply to a tax-exempt organization, even if the organization was subject to UBTI during certain years [Citation: Research Corp. v. Commissioner, 138 T.C. No. 7 (February 29, 2012), http://www.ustaxcourt.gov/InOpHistoric/research.TC.WPD.pdf]. This holding in this case contradicts the IRS' position discussed in this paragraph of the book. It also would contradict the IRS' position with respect to the excise tax under IRC section 4972, as discussed in Section XVI, Part L.5.a.1), of this chapter.
Chapter 8
- None reported at this time.
Chapter 9
- None reported at this time.
Chapter 10
- None reported at this time.
Chapter 11
- None reported at this time.
Chapter 12
- None reported at this time.
Chapter 13A
Chapter 13B
- Section II, Part C.3.d.5)
Fiduciaries breached duties to 401(k) plan by failing to monitor recordkeeping costs, failing to negotiate rebates on revenue sharing, selecting investments with higher expense ratios, allowing plan to pay excessive fees to subsidize corporate services, and failing to transfer float income to plan [Citation: Tussey v. ABB, Inc., ___ F.3d ___ (52 EBC 2826) (W.D.Mo. March 31, 2012)]
- Section II, Part C.5.b.2)
Moench presumption not applicable during motion to dismiss stage; 404(c) not defense to duty to select prudent investment menu [Citation: Pfeil v. State Street Bank and Trust Company, 671 F.3d 585 (52 EBC 1641) (6th Cir. February 22, 2012)] In another case, the Moench presumption was held to apply during thepleading stage; this case also held that fiduciaries were under no obligation to provide plan participants non-public information that could pertain to the employer securities investment option in the plan; false or misleading statements in SEC filings do not constitute ERISA breaches [Citation: Fisher v. JP Morgan Chase & Co., 2012 WestLaw 1592208 (2nd Cir. May 8, 2012) (not selected for publication in the Federal Reporter)] In a third case, the Eleventh Circuit adopts the Moench presumption with respect to fiduciary’s decision to invest in Home Depot stock; fiduciaries not required to disclose non-public information to plan participants [Citation: Lanfear v. Home Depot, Inc., ___ F.3d ___ (2012 WL 1580614) (11th Cir. May 8, 2012)]
- Section II, Part D.9.d.
Union’s agreement to indemnify employer for Title IV withdrawal liability is enforceable [Citation: Shelter Distribution, Inc. v. General Drivers, Warehousemen & Helpers Local Union No. 89, 674 F.3d 608 (6th Cir. March 16, 2012). The cited section of the book deals with indemnification agreements.
- Section II, Part E.1.a.
DOL provides supplemental guidance on fee disclosures [Citation: Field Assistance Bulletin (FAB) 2012-02, http://www.dol.gov/ebsa/pdf/fab2012-2.pdf (May 7, 2012)]. This section of the book discusses the participant-level fee disclosure requirements under DOL Reg. §2550.404a-5. The Q&As in FAB 2012-02 provide clarifications and supplemental guidance on these requirements, with a focus on the content delivery to participants, the treatment of designed investment managers and model portfolios, and website requirement.
- Section II, Part E.1.a.4)
Application of NASD Rules 2210 and 2211 to participant-level fee disclosure information provided pursuant to DOL Reg. §2550.404a-5 [Citation: FINRA Regulatory Notice 12-02, http://www.finra.org/web/groups/industry/@ip/@reg/@notice/documents/notices/p125393.pdf]
- Section III, Part A.4.a.1)
Plaintiffs failed to meet post-Amara standard for equitable relief to avoid summary judgment [Citation: Skinner v. Northrop Grumman Retirement Plan, 673 F.3d 1162 (9th Cir. March 16, 2012)]
- Section III, Part A.5.b.8)
Spinoff did not violate ERISA §510 because it was not motivated by desire to interfere with ERISA benefits [Citation: Nauman v. Abbott Laboratories, 669 F.3d 854 (7th Cir. February 3, 2012)]
- Section III, Part A.13
Individualized monetary damages for affected plans precludes certification under Rule 23(b)(2) [Citation: Nationwide Life Insurance Company v. Haddock, 52 EBC 1161 (2nd Cir. February 6, 2012)]
Chapter 14
- Section II, Part B.
Purchase by IRA of note and deed of trust from bank constitutes extension of credit between IRA and IRA owner [Citation: Advisory Opinion 2011-04A (February 3, 2011), text available at http://www.dol.gov/ebsa/regs/aos/ao2011-04a.html].
- Section II, Part C.2.b.3) and Part C.2.b.4)
DOL provides supplemental guidance on fee disclosures [Citation: Field Assistance Bulletin (FAB) 2012-02, http://www.dol.gov/ebsa/pdf/fab2012-2.pdf (May 7, 2012)]. This section of the book discusses the service provider fee disclosure requirements under DOL Reg. §2550.408b-2. The Q&As in FAB 2012-02 provide clarifications and supplemental guidance primary on the participant-level fee disclosures under DOL Reg. §2550.404a-5. However, that information is also relevant to the investment-related fee disclosures that are required of certain covered service providers under those regulations
Chapter 15
- Section I, Part N.
2013 HSA limits have been announced: (1) annual contribution limit - $3,250 (self-only), $6,450 (family); (2) minimum deductible for HDHP - $1,250 (self-only), $2,500 (family), (3) maximu out-of-pociet expenses for HDHP - $6,250 (self-only), $12,500 (family)
- Section II, Part C.
For the latest rates for the tables published in this section of the book, see Rate Tables
- Section VII, Part B.
The EPCRS procedures for correcting qualification failures is discussed in Part B of Section VI. The IRS has posted links for resolving nonamenders of pre-approved plans that missed the April 30, 2010, or April 30, 2012, deadline. See http://www.irs.gov/retirement/article/0,,id=257274,00.html. On that page, you will find separate links to VCP Submission Kits for defined contribution plans (April 30, 2010 deadline) and defined benefit plans (April 30, 2012 deadline).
Chapter 16
- None reported at this time.
Index Volume
- None reported at this time.
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