Public Agencies May Need Help “Managing” Their Managed Account Offerings

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By Jeff Chang

Although financial industry reports reveal that more and more plan sponsors are offering managed account options, it is not clear that public agency 457(b) and 401(a) plan fiduciaries understand their responsibilities to select and monitor these investment options. Here, we mention a few issues that plan fiduciaries should think about if they are considering this investment option.

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Posted in 401(a), 457(b) Plans, Fiduciary Responsibilities, Plan Administration, record-keeping | Tagged , , | Leave a comment

Public Agencies May Want to Take Advantage of an Anonymous VCP Opportunity Before it Disappears at End of 2021

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By Jeff Chang

Recently announced changes in the IRS-sponsored Voluntary Compliance Program (VCP) may encourage public agencies with known plan compliance problems or defects to apply this calendar year under Anonymous VCP, before that option is replaced in 2022.

As part of its periodic update to the Employee Plans Compliance Resolution System (EPCRS), reflected in Revenue Procedure 2021-30, the IRS will eliminate the anonymous VCP feature and will replace it with an anonymous presubmission conference feature, beginning in 2022.

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Posted in 401(a), 457(b) Plans, Governmental Benefits, Plan Administration, Plan Compliance, Plan Qualification | Tagged , , , | Leave a comment

Does Your Agency’s Plan Have Dormant Accounts That Should Be Paid Out?

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By Jeff Chang

Quite often, a review of the participant status within an agency’s 401(a) and 457(b) plans will reveal that the plans have a large number of dormant accounts – accounts relating to previously terminated, deceased, or divorced employees (who have divided their accounts with a former spouse). This usually occurs for a number of reasons. The plan sponsor may think (correctly or incorrectly) that it is best to keep as many assets in the plan as possible. It may be less expensive for the former employee, beneficiary, or alternate payee to leave the money in the current plan rather than “roll” it out to an individually-managed IRA. If the account balance is relatively small, which often is the case, it also may be too much trouble for the account holder to arrange for a tax-free rollover.

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Posted in 401(a), 457(b) Plans, Plan Administration, Plan Qualification, record-keeping | Tagged , , , | Leave a comment

Take a Closer Look at Your 401(a) and 457(b) Plans When You Change Providers

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By Jeff Chang

Previously, we have discussed a number of the do’s and don’ts of switching plan providers, such as investment advisors and recordkeepers. This post focuses on why plan sponsors, plan administrators and plan recordkeepers all should take greater care in reviewing plan documents as part of the process of switching from one recordkeeper to another.

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Posted in 401(a), 457(b) Plans, Plan Administration, Plan Qualification, record-keeping | Tagged , , , | Leave a comment

Managing Your Agency’s CalPERS Pension Liabilities

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By Jeff Chang

Municipal and special district employers, particularly their elected council and board members, continue to express concerns over the size of their agencies’ CalPERS “liabilities” and what can be done to mitigate them. Although there are several strategies to address pension liabilities, the proper approach or strategy may depend on whether you are more concerned with overall unfunded accrued liability (UAL) or whether your agency can afford its increasing, minimum required employer contribution (Required Contribution). Continue reading

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Posted in Pension | Tagged , , , , , | Leave a comment