The Setting Every Community Up for Retirement Enhancement Act of 2019 (the SECURE Act) made sweeping changes affecting sponsors of defined contribution and defined benefit plans, retirement plan service providers, and providers of individual retirement accounts and annuities (IRAs). While many believed the SECURE Act went a long way toward expanding retirement savings opportunities and promoting retirement income security, some believed it could have gone further. There are currently several proposed retirement acts pending reconciliation in Congress.
ML BeneBits
EXAMINING A RANGE OF EMPLOYEE BENEFITS
AND EXECUTIVE COMPENSATION ISSUES
AND EXECUTIVE COMPENSATION ISSUES
This is the fourth and final post in a series aimed at getting the HR, benefits, and executive compensation functions of your organization ready for a potential sale or similar corporate transaction. This post addresses considerations for your organization’s health and welfare plans in a potential sale.
This is the third in a series of blog posts aimed at getting the human resources, benefits, and executive compensation functions of your organization ready for a potential sale or similar corporate transaction. Part I provided general guidelines and suggestions on how to get organized. Part II addressed change of control documents that may be affected by a potential sale, as well as the treatment of outstanding equity compensation. This post addresses the impact of a sale on your organization’s retirement plans.
As the US Department of Labor (DOL) continues to contemplate the role of environmental, social, and governance (ESG) considerations in ERISA plan investing, ESG issues surrounding retirement plans are cropping up in another way: as a target for proxy vote proposals that seek to require companies to evaluate their ESG commitments in retirement plans.
Many traditional defined benefit plans, such as final average pay plans, offer a lump sum distribution as an optional form of benefit. The amount of the lump sum distribution is sensitive to the applicable interest rate (calculated under Internal Revenue Code Section 417(e)) and varies inversely with the rate level. Higher interest rates result in smaller lump sums, and lower rates result in larger lump sums. Plans must update the applicable interest rate on a monthly, quarterly, or annual basis. With interest rates increasing rapidly, upcoming changes to the applicable interest rate may cause lump sum payments to decrease. In some cases, the decrease may be significant.
The US Securities and Exchange Commission (SEC) recently approved a proposed environmental, social, and governance (ESG) rulemaking for investment advisers and funds. This proposed rule and form amendments will impact SEC-regulated asset managers, but may also be of interest to investors, including ERISA plans, that consider ESG factors and/or invest in ESG funds.
Cryptocurrency investing has experienced a tidal wave of popularity since the fabled genesis of Bitcoin in 2009. This growth has been fueled by “extreme” investment returns (despite “extreme” volatility) and innovative means of investing in cryptocurrency. As the wave of interest in cryptocurrency investing reaches the shores of 401(k) plans, including interest in cryptocurrency as a plan investment option or through plan brokerage windows, the US Department of Labor (DOL) warns 401(k) plan fiduciaries to exercise “extreme care” before providing plan participants with the opportunity to expose their retirement savings to cryptocurrency.
The Internal Revenue Service (IRS) is temporarily suspending the IRS Prototype Opinion Letter Program for individual retirement accounts and individual retirement annuities (IRAs) effective March 14, 2022. As noted in Announcement 2022-6, the IRS will not be accepting applications for opinion letters on prototype traditional, Roth, and SIMPLE IRAs or SEP (including SARSEP) and SIMPLE IRA plans until further notice.
The US Department of Labor (DOL) recently announced that it is seeking comment on the impact of climate change on retirement security and what actions, if any, the agency should take to protect retirement savings from such risks.
Join Morgan Lewis this month for the following programs on employee benefits and executive compensation.