William Byrnes' Tax, Wealth, and Risk Intelligence

William Byrnes (Texas A&M) tax & compliance articles

TaxFacts Intelligence February 3, 2022

Posted by William Byrnes on February 3, 2022

Robert and I have an exciting announcement for Tax Facts subscribers. In February, we will be launching Tax Facts Premium, a new add-on product that provides valuable tools and content, including:

  • calculators (tax, retirement income, investment, personal finance, business, and more)
  • practice aids (buy sell agreements, as well as documents related to business life insurance, estate planning, retirement planning, and employee benefits)
  • soft skills (practical guidance on how to build and maintain clients)
  • archives (archived content including featured articles and the intelligence weekly).

As we get closer to launch, we’ll provide you with more information on pricing and how to subscribe.

By the way subscribers, the Texas A&M graduate program for tax, wealth, and risk management is accepting applications for spring. Maximum enrollment for a course section is 30 so that each student receives meaningful feedback throughout the course from the full-time academic faculty and renowned professional case study leaders, and each other. Learn more about it here: https://law.tamu.edu/distance-education

Prof. William H. Byrnes         Robert Bloink, J.D., LL.M.

Supreme Court: ERISA Fiduciaries Must Monitor All Plan Investments Even if Some Investment Options Are Adequate

The U.S. Supreme Court (USSC) recently held that an ERISA fiduciary has a duty to monitor each plan investment option—and can be held liable for a failure to monitor even if some plan investment options are adequate. Hughes v. Northwestern University has garnered significant attention in recent months. Finally, the USSC issued a unanimous opinion holding that ERISA fiduciaries have an ongoing duty to monitor investments and improve imprudent investments. The opinion reversed the 7th Circuit’s holding that this responsibility was satisfied if the plan offered an adequate array of investment choices. Instead, fiduciaries can be held liable if they fail to monitor all investments and remove any imprudent investments from the plan’s menu of investment choices. In other words, identifying well-designed options doesn’t relieve the plan sponsor of liability with respect to poor options and the ERISA fiduciary has a duty to protect participant-employees from making poor investment choices. For more information on issues pertaining to fiduciary liability, visit Tax Facts Online. Read More

Have Your Clients Checked Their Beneficiary Designations Lately?

Updating a plan’s beneficiary designations might seem like a simple process–and it often is. However, it’s a process that’s often overlooked. Clients who participate in ERISA plans should be reminded that they’re required to complete their beneficiary designations in writing, using the procedures and forms established by the specific plan, in order for those designations to become effective. Often, survivors can be surprised by the beneficiary designated by the plan—and may even try to argue that the decedent’s will should govern who receives the account funds. Clients should remember that wills and state intestate laws do not govern who receives plan funds. The only consideration will be who the account owner has designated under plan procedures. It’s important to carefully evaluate the plan’s policies, however—because some plans have exceptions in place to, for example, automatically revoke a beneficiary designation upon divorce. For more information on the importance of checking beneficiary designations and updating on major life events, visit Tax Facts Online. Read More

IRS Modifies Interest Rates for Use in Determining Substantially Equal Periodic Payments

Substantially equal periodic payments (SEPPs) are exempt from the 10% early distribution penalty that applies to traditional retirement account distributions prior to age 59½. However, a SEPP must remain in place for the longer of (1) five years or (2) the date the recipient reaches age 59½. If the SEPP is ended or modified prior to that time, the 10% penalty applies (plus interest). The SEPP payment is calculated based on one of three different options. Two of those options are calculated using an interest rate that’s typically based on the federal mid-term rate in effect for the months prior to the start of the SEPP schedule (the rate cannot typically exceed 120% of the federal mid-term rate). In recent years, that rate has been extremely low. Now, the IRS has released guidance providing that payment schedules beginning in 2022 and thereafter are permitted to use an interest rate that is as high as 5%. This change provides an opportunity for plan participants to use the SEPP option and receive a higher payment (clients with existing SEPPs are not permitted to modify their interest rate). Further, clients with existing SEPPs who use the RMD distribution method (which doesn’t rely on an interest rate) can switch to the new IRS life expectancy tables without “modifying” the SEPP (in fact, they are required to switch beginning in 2023). For more information on SEPPs, visit Tax Facts Online. Read More

Look in your Tax Facts Online app for our continuing analysis of 2021 legislative and regulatory updates, and the impact on 2022 client planning, as well as other weekly intelligence.

Wealth & Risk Management Degree for Industry Professionals – learn about the graduate degree here: https://law.tamu.edu/distance-education

Texas A&M, operating budget of $9.6 billion (FY2022) and capital budget of $1.9 billion, is the largest U.S. public university, one of only 60 accredited U.S. universities of the American Association of Universities (R1: Doctoral Universities – Highest Research Activity) and one of only 17 U.S. universities that hold the triple U.S. federal grant of Land, Sea, and Space! The law school has the #1 bar passage in Texas, and #1 for employment in Texas (and top 10 in U.S.)

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