Lecture 28 Administration of Retirement Plans and Related Issues

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Lecture 28Administration of Retirement Plans and
Related Issues

• Plan Installation
• Plan Administration
• Investment Issues
• Plan Termination
• Pension Benefit Guaranty Corporation

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Plan Installation

• Adoption of the plan
• Plan year
• Advance determination letters
• Master, prototype and pattern plans
• Checklist for plan installation

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Plan Administration

• Plans exempt from ERISA requirements
• Governmental plans
• Church plans
• Plans limited to workers comp, unemployment
  insurance and disability insurance laws
• Other exceptions
• Plan administrator
• Claims procedure
• Tax withholding

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Plan Administration - (cont.)

• Reporting and disclosure
• Summary Plan Description (SPD)
• Annual Report (Form 5500 Series)
• Report on Termination, Merger or Other Changes
• Individual Benefit Statement
• Underfunded Plan Reports

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Investment Issues

• Fiduciary requirements
• Solely in the interest of participants
• Exclusive purpose of providing benefits
• Prudent person
• Diversify investments
• Prohibited transactions
• Party-in-interest
• Penalties
• Unrelated business income

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Investment Issues - (cont.)

• Investment policy
• Growth oriented strategies
• Risk
• Social effects
• Social investing

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Plan Termination

• When should a plan be terminated?
• Asset-reversion terminations
• Penalty of 50 of reversion unless
• Replacement plan
• Pro-rata benefit increases of 20 of reversion
• Bankruptcy of employer
• Consequences of termination
• Business necessity
• Treated as nonqualified plan
• Vesting of 100

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Pension Benefit Guaranty Corporation

• Plans covered
• Benefits insured
• Vested pension benefits
• Limited to 750/month (indexed - 2761.36 in
  1997)
• PBGC funding and premiums
• Plan termination procedures
• Reportable events
• Allocation of plan assets
• Voluntary plan termination
• Contingent liability of employer (30 of net
  worth)
• Multiemployer plans
• Withdrawal liability