GAO Recommends IRS Reconsider Rollover Rules for Retirement Accounts Claimed From States
The GAO notes that the IRS has not taken action to ensure that individuals who claim retirement savings from a state can roll over these savings to other tax-deferred retirement accounts after the IRS’s 60-day deadline, and is concerned that, "Account owners who are unable to roll over their reclaimed savings forgo the opportunity to continue investing the funds on a tax-deferred basis.”
A Government Accountability Office (GAO) report explains that the IRS and the Department of Labor (DOL) have issued guidance on transferring defined contribution (DC) retirement savings for missing participants to states; however, the IRS has not clarified certain responsibilities or ensured that the retirement savings that owners claim from states can be rolled over into other tax-deferred retirement accounts.
For example, the IRS has not specified whether retirement plan providers should report state transfers to the IRS as distributions and withhold federal income taxes. IRS officials told the GAO that the agency has not issued guidance to clarify this issue because of competing priorities. As a result, GAO says, retirement plan provider practices vary—some providers withhold taxes when transferring savings to states while others do not.
In addition, the IRS has not taken action to ensure that individuals who claim retirement savings from a state can roll over these savings to other tax-deferred retirement accounts after the IRS’s 60-day deadline. IRS allows individuals to roll over savings after 60 days for several reasons, none of which include claiming savings from a state. The GAO report says, “Federal law seeks to protect the interests of participants in retirement plans. Account owners who are unable to roll over their reclaimed savings forgo the opportunity to continue investing the funds on a tax-deferred basis.”
The GAO has recommended that the IRS consider clarifying whether transfers from employer-based plans to states constitute reportable and taxable distributions and consider modifying its list of permitted reasons for rolling over savings after the 60-day rollover deadline. The IRS agreed with its recommendations and noted that the agency will work with the Department of the Treasury to address them.
In its research, the GAO found that of the 22 states responding to its survey, 17 states provided data indicating that $35 million in unclaimed retirement savings was transferred to them from employer plans and individual retirement accounts (IRAs) in 2016. Assets and uncashed checks from employer plans were the most common form of retirement savings transferred to states. After funds are transferred, owners can claim their savings from the state. According to the 15 states providing data on this, owners claimed about $25 million in retirement savings in 2016: $601, on average, from 401(k) plan checks, and $5,817, on average, from traditional lRAs. States reported using a range of strategies to maintain the value of retirement savings while holding these funds, such as applying interest.
The ESOP Association (TEA) announced that James Bonham will assume the role of president and chief executive officer (CEO) on March 1.
Bonham will also serve as president of the Employee Ownership Foundation, an affiliated non-profit with a mission to encourage, educate, and catalyze new research in support of employee ownership nationwide.
“Jim has a long and successful track record of high-level, transformational leadership advising some of the most widely recognized companies and leaders in the nation. When combined with his deep familiarity with employee ownership rooted in his family’s history, he was the perfect choice to lead TEA into the future,” says David Fitz-Gerald, chair of the TEA Board. “Jim is well-versed in the legislative and regulatory priorities of ESOPs and our members and we’re thrilled to welcome him aboard.”
Bonham brings experience in executive leadership, including strategic planning, public policy and advocacy, plus government and community relations. Previously, he served nearly eight years as the chairman of Public Policy and Government Relations at Manatt, Phelps, & Phillips, LLP, a law and business consulting firm where he chaired the firm’s bipartisan public policy and advocacy division in Washington. Bonham has also served in senior staff positions in both the U.S. House of Representatives and the Senate and is a former executive director of the Democratic Congressional Campaign Committee (DCCC).
Bonham will be replacing Michael Keeling, who is retiring after serving aspresident of TEA since 1991.
Cetera CEO Steps Down Due to Health Concerns
Cetera revealed that Robert Mooreis stepping down as itschief executive officer, effective March 31, due to health reasons, but will continue to serve as an adviser to the Board and the executive management team. Ben Brigeman, chairman of the Board, will expand his role to include Interim CEO while a formal search for a permanent CEO is conducted. Brigeman will be supported by the office of the president, which includes Adam Antoniades, president; Jeff Buchheister, chief financial officer; and Jeannie Finkel, chief human resources officer.
“It has been an incredible privilege to have had the opportunity to lead Cetera during this important period of transformation and resurgence,” states Moore. “Recently I have been dealing with a health issue that has continued to require treatment and, on advice of my physician, now warrants that I cut back on my current commitments which is essential to my overall recovery.
He continues. “I have full faith in Cetera’s management team, which I believe to be the best in the business, to continue to steer the company to a successful future.”
AXA Equitable Life Appoints President
AXA Equitable Life has appointed Nick Lane as president, with responsibilities for the company’s Retirement, Wealth Management and Protection Solutions businesses as well as its Marketing and Digital functions.
Lane reports to AXA Equitable Holdings, Inc. president and chief executive officer, Mark Pearson, and joins the firm’s Management Committee. Most recently, he served as CEO and president of AXA Japan, where he was responsible for a $5.4 billion annual revenuebusiness and led a team of 9,000 employees and distributors.
“I am pleased to have Nick join our management team and bring his unmatched energy and passion to AXA Equitable Life,” saysPearson.“His extensive background and deep industry experience will strengthen the team and accelerate our ability to deliver differentiated value for our customers, partners and shareholders.”
Lane first joined the company in 2005 and held a variety of leadership roles. Among his key accomplishments are enhancing the business through product diversification and expanding the firm’s distribution channels through alliances with property and casualty carriers. He also launched fee-based versions of the company’s flagship variable annuity products to meet evolving financial adviser and customer needs.
“It is an honor to rejoin my talented colleagues at AXA Equitable Life at an exciting time for the company and the customers we have the privilege to serve,” says Lane. “We have a tremendous opportunity to help even more Americans protect their families and prepare for a dignified retirement by continuing to deliver innovative products and trusted financial advice.”
Lane also led global strategy for AXA Group, oversaw its asset management business and served on the boards of AllianceBernstein, AXA Investment Managers, AXA Private Equity and AXA Real Estate Management.
Prior to joining the company, Lane was a leader in the sales and marketing practice of the global management consulting firm McKinsey & Co. He received an MBA from Harvard Business School and a bachelor’s degree from Princeton University. Lane also served as a Captain in the U.S. Marine Corps.
Wilshire Announces Series of Promotions and Hires
Wilshire Associates (Wilshire) have promoted several individuals to managing directors and senior vice presidents.
Appointments and promotions to managing directors are as follows: Benkai Bouey, Legal and Compliance; Bill Bracamontes, Private Markets; Stephen DiGirolamo, Consulting; Shawn Quinn, Private Markets; and Bjorn Waltmans, Private Markets.
Adding to the list of senior vice presidents are: Lisa Herbert, Analytics; Jeff So, Analytics; Jason Samansky, Consulting; Chris Tessman, Consulting; Kai Chen, Funds Management; Chad Wubbena, Funds Management; Mark Karchov, Private Markets; Mike Lavalle, Legal and Compliance; Sharon Lee, Legal and Compliance; Reza Pishva, Legal and Compliance; Doug Lee, Information Technology; and Tina Takeuchi, Human Resources.
“I am delighted to congratulate this talented group of colleagues whose exceptional leadership has been integral to the ongoing growth and success of the firm,” says John Hindman, president of Wilshire Associates. “I look forward to working closely with each of them as we continue to innovate and collaborate across business divisions to deliver meaningful solutions to our clients.”
DWS Group Adds Investment Solutions Head
DWS Group appointed Stefan James as managing director and Americas’ head of Corporate Coverage reporting to J.J. Wilczewski, head of Institutional Client Group for the Americas. Based in Chicago, James, along with his team, will lead efforts to deliver short and long-term investment solutions to corporate clients in the Americas region.
“The corporate segment has long been an area of strength and innovation for DWS and we are confident that with Stefan’s leadership we can further deepen our corporate client relationships and deliver on the complex needs of these institutions,” says Wilczewski. “As we continue to see growth in this segment, Stefan’s strong personal connections will undoubtedly help us to improve as a business.”
James joins DWS after spending five years at Deutsche Bank, where he led the firm’s corporate banking business in the Americas. Prior to this, James held leadership positions in corporate banking at J.P. Morgan and Bank of America Merrill Lynch in the U.S. and Asia.
