Compliance June 10, 2010

EBSA Issues Final Rule on DROs

June 10, 2010 (PLANSPONSOR.com) – The Department of Labor’s Employee Benefit Security Administration has issued a final rule clarifying certain issues relating to the timing and order of domestic relations orders (DROs).
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Under ERISA, plan administrators are given an 18-month period to determine whether a DRO meets the requirements of a qualified domestic relations order (QDRO).  After that time, a QDRO is carried out prospectively.  

However, in the Pension Protection Act of 2006, Congress instructed the Secretary of Labor to issue regulations to clarify that a domestic relations order otherwise meeting the requirements to be a QDRO shall not fail to be treated as a QDRO solely because the order is issued after, or revises, another domestic relations order or QDRO; or because of the time at which it is issued.  

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EBSA notes that in the case of a DRO that is issued after or revises another DRO or QDRO, the DRO fails to be a QDRO if it assigns benefits already assigned to another alternate payee under another QDRO.   

The EBSA gave examples in its interim regulations that a plan administrator cannot disqualify a DRO because it is issued after a participant’s death or annuity starting date In the case of a DRO issued after a participant’s annuity starting date, the plan is merely required to pay a portion of the benefit otherwise due to the participant to another person, EBSA said. Any domestic relations order received by a plan after the original annuity starting date of the participant that would require reannuitization with a new annuity starting date would fail to be a QDRO, unless the plan specifically provides for such an option.  

The rule provides guidance to plan administrators, service providers, participants, and alternate payees on the QDRO requirements under ERISA, and is effective on August 9, 2010.  

In response to comments the EBSA said it will update its educational handbook ‘‘QDROs—TheDivision of Pensions Through Qualified Domestic Relations Orders’’ available at http://www.dol.gov/EBSA/publications.   

The full text of the final rule is here.

Benefits June 10, 2010

A Big Regret: Not Saving, Investing More

June 10, 2010 (PLANSPONSOR.com) – Fifty percent of those participating in a recent personal finance poll said they have significant regrets about how they’ve handled their financial situation.
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A news release about the latest American Express Spending & Saving Tracker said of the 50%, 32% would save and invest more money if they had it to do over again, while 27% would spend more responsibly and 17% would discuss financial goals/expectation with their partner earlier.

Fifty-six percent of couples feel they have made a financial mistake in their relationship, ranging from spending too much on their wedding to buying a house at the top of the market.

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Meanwhile, according to the poll results, more young professionals (43%) say they keep some or all of their debt separate from their spouse or significant other, compared with 20% of the general population and 22% of affluents.

Among couples, the majority of the general population (55%) and affluents (63%) claim that both members carry an equal amount of debt. That number drops to 39% among young professionals, with 31% claiming they have more debt than their partner. Notably, 31% of the general population and 20% of affluent couples indicate they do not know how much debt they carry as a couple, compared to 5% of young professionals.

Some 30% say finances cause the most stress in their relationship with their significant other, followed distantly by intimacy (11%), their children (9%), and their in-laws (4%).

Overall, 91% of Americans surveyed find reasons to avoid money talks with their partner, with couples indicating they are more likely to know their partner’s weight than their salary.

Most couples pay their monthly bills jointly and maintain joint ownership of various household accounts. Two-thirds (66%) of those surveyed share all monthly expenses, while the remaining 34% divide their bills each month, with methods ranging from paying certain bills individually to splitting household expenses based on income ratio.

The American Express Spending & Saving Tracker research was completed online among a random sample of consumers aged 18+. The research sample of 2,008 adults surveyed the general U.S. population, as well as two sub-groups – the affluent (household income $100k+) and young professionals (under 30, college educated, household income $50k+).

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