An Idea Whose Time Has Come: A National “Lost and Found” for Retirement Accounts

An Idea Whose Time Has Come: A National “Lost and Found” for Retirement Accounts

As explained in my prior Post, each year millions of Americans lose thousands of dollars in retirement savings in the process of changing jobs. The problem largely results from employers shifting from defined benefit plans that pay an annuity for life to defined contribution plans, like 401(k) plans, that pay a lump sum upon separation from employment or at a later date when the participant elects to take his/her lump sum. If a separated participant chooses to leave the lump…

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Commit a Crime? Risk Having Your Retirement Account Garnished

Commit a Crime? Risk Having Your Retirement Account Garnished

If you are in a private-sector pension plan covered by the Employee Retirement Income Security Act (ERISA), you may have been told that your pension benefits cannot be “alienated.” That is, creditors cannot touch your employer-provided pension or retirement funds while those funds are in the plan. However, ERISA’s anti-alienation rule only goes so far, as one criminal recently learned. United States v. Frank, No. 1:17-cr-114 (E.D. Va. May 6, 2020). In 2017, Lawrence Frank pled guilty to one count…

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Oh Where Oh Where Is My Pension?

Oh Where Oh Where Is My Pension?

It just might be in a state “unclaimed” property fund. A recent research paper issued by the Center for Financial Security of the University of Wisconsin-Madison puts a spotlight on these funds and the many unclaimed retirement accounts in them: “Frictions in Saving and Claiming: An Analysis of Unclaimed Retirement Accounts” by Corina Mommaerts and Anita Mukherjee. In the paper, the authors use data collected from state unclaimed property databases to estimate that nationally in 2016 there were 70,000 unclaimed…

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Did You Know? Crimes Committed By Your Spouse May Be Detrimental to Your Pension

Did You Know? Crimes Committed By Your Spouse May Be Detrimental to Your Pension

Our intuition suggests this cannot be the case. After all, YOU did not commit the crime. However, at least in Texas (and possibly some other states) our intuition would be wrong if the retirement savings were jointly possessed during the marriage. A recent Fifth Circuit Court of Appeals decision makes this point abundantly clear. United States v. Berry, No. 19-20050, 2020 U.S. App. LEXIS 6260 (Feb. 28, 2020) In the Berry case, Gwendolyn Berry was convicted of wire fraud, mail…

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Out of a Job Due to Covid-19? You May Be Eligible for a Fully Vested Pension

Out of a Job Due to Covid-19? You May Be Eligible for a Fully Vested Pension

Most of us would be hard pressed to find anything positive to say about the Covid-19 pandemic. But, if you lost your job on account of the pandemic and were a participant in a pension plan where you had not yet vested in your pension, there may be a wee bit of good news. Under the Internal Revenue Code, participants automatically become vested in their accrued pension benefits upon the termination or partial termination of the pension plan. In the…

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It’s High Time to Do-Away With the “Arbitrary and Capricious” Standard of Review for Employee Benefit Claims

It’s High Time to Do-Away With the “Arbitrary and Capricious” Standard of Review for Employee Benefit Claims

The Employee Retirement Security Act (ERISA) has long-required that employee benefit plans (e.g., pension and welfare plans) provide “a full and fair review” of any decision denying a participant’s claim for benefits. ERISA §503, 29 U.S.C. §1133. Accordingly, most employee benefit plans provide procedures for submitting a claim for benefits to the plan administrator and for requesting a review of any denial of the claim. Often, the merits of a participant’s claim will turn on the interpretation of disputed plan…

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Financial Impacts of Coronavirus Could Significantly Reduce the Social Security Benefits of Persons Who Turn Age 60 This Year

Financial Impacts of Coronavirus Could Significantly Reduce the Social Security Benefits of Persons Who Turn Age 60 This Year

An intriguing working paper authored by Andrew Biggs issued by the American Enterprise Institute posits that the financial impacts of the Coronavirus could significantly reduce the Social Security benefits of persons who turn 60 this year; that is, of persons born in 1960. See “American Enterprise Institute: How the Coronavirus Could Permanently Cut Near-Retirees’ Social Security Benefits.” Biggs explains that, in calculating a worker’s Social Security benefit, Social Security initially indexes the worker’s earnings each year to economywide earnings as…

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Growing Trend: Employers Are “De-Risking” Their Pension Plans Through the Purchase of Group Annuity Contracts

Growing Trend: Employers Are “De-Risking” Their Pension Plans Through the Purchase of Group Annuity Contracts

The past five years have seen a growing trend among sponsors of single-employer defined-benefit plans: They are “de-risking” their pension plans by transferring all or a portion of their pension obligations to a life insurance company through the purchase of a group annuity contract. Thereafter, the life insurance company is responsible for paying retirees’ pension benefits. The arrangement is appealing to plan sponsors because it enables them to reduce the risks of funding their pension obligations in a volatile asset…

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Decreasing Fertility and Increasing Life Expectancy Threaten the Solvency of Our Nation’s Social Security Retirement Program

Decreasing Fertility and Increasing Life Expectancy Threaten the Solvency of Our Nation’s Social Security Retirement Program

On November 4, 2019, the Social Security Administration issued a report addressing the funded status of the Social Security retirement program. “Social Security: Demographic Trends and the Funding Shortfall” (Report). The Report’s findings and conclusions should be of great concern to anyone who is, or may be, dependent on Social Security benefits for a comfortable retirement. The Social Security program pays benefits to retired or disabled workers and their families and to family members of deceased workers. It was set…

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Pension Plans May Count Service Different Ways for Different Things

Pension Plans May Count Service Different Ways for Different Things

I frequently receive calls from pension plan participants who are confused about their plan’s rules for counting service for vesting, participation, and determining the amount of the pension. I explain that plans may legally count service differently for each of these things, and that most plans do. A recent case illustrates the point and participants’ confusion. Miller v. Ret. Program Plan, No. 18-6314 (Aug. 22, 2019). Consolidated Nuclear Security LLC (CNS) sponsored a retirement plan for its employees (the Plan)….

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