Administrators of employee benefit plans, as well as qualified
retirement plans should determine if they meet the definition of fiduciary.
Caveat: Although individuals may be eligible to withdraw money from their
retirement plans as a result of Hurricane Katrina, their plans may not permit early withdrawals.
Employers may contribute to each plan, but they should understand that discrimination rules may impact the operation of the programs, resulting in unintended consequences if the HSA cannibalizes the qualified
retirement plan.
To that end, the anti-alienation provisions of the Employee Retirement Income Security Act (ERISA) section 206(d) and IRC section 401 (a)(13) have protected tax-qualified
retirement plans from the claims of creditors of plan participants and their beneficiaries, with three major exceptions.
Simplification, however, will encourage employers to keep
retirement plans, according to the AICPA.
If you advise companies that sponsor qualified
retirement plans, be prepared to deal with this rising trend of top-heavy based claims.
Even though qualified
retirement plans are subject to numerous pension law protections (namely, the Employee Retirement Income Security Act of 1974, more commonly known as ERISA), individuals often prefer not to leave their retirement funds under the control of an organization where they no longer work.
Company's who offer their employees a 401(k) plan face increased pressure and fiduciary responsibilities to disclose more information to their participants in the
retirement plan.
Although most practitioners have personal retirement accounts, believe it or not, a surprisingly large number don't have formal
retirement plans for their businesses.
The Wall Street Journal article, "Value of Unused Vacation Days Can Now Be Added to 401 (k)s" (12/10/96), based on Letter Ruling (TAM) 9635002, has generated a great deal of interest on the concept of converting vacation days into qualified
retirement plan contributions.
Retirement plan participants are encouraged to contribute more to qualified
retirement plans now that higher contribution limits have been made permanent through the Act.
However, the 15% excise tax on excess retirement accumulations will not be avoided and if the participant is married, the spouse must consent in writing to waive her rights to benefits under the
retirement plans.
