Products July 14, 2016

Jefferson National Partners with Cetera on Investing Solution

Jefferson National is teaming up with Cetera Financial Group to supply a new tax-advantaged annuity investing solution.
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Jefferson National has partnered with Cetera Financial Group to supply its tax-advantaged annuity investing solution to the financial advisers and financial institutions across the country supported by Cetera’s member firms.

With the partnership, advisers and institutions served by Cetera will have a new choice for tax-efficient  investing to optimize clients’ portfolios. The service is built around Jefferson National’s Monument Advisor, a flat-fee investment-only variable annuity platform with nearly 380 investment options, including more than 70 alternatives.

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Mitchell Caplan, CEO of Jefferson National, explains both firms “have been longstanding partners to many advisers and institutions who seek to provide top quality advice through a fee-based model. Now, with the Department of Labor (DOL) fiduciary rule at the forefront of our industry, we will continue to serve a growing number of financial advisers and their clients with an innovative tax-advantaged investing solution that is built to fit the way fee-based advisers work.”

According to the firms, the tax-advantaged investing solution can “potentially enhance the performance of many tax-inefficient assets and strategies that generate ordinary income and short term capital gains, such as fixed income, REITs, actively managed funds and many high-turnover liquid alternatives … In addition, with Monument Advisor now available on the Cetera platform, the fee-based advisers of Cetera Financial Group can provide more holistic financial advice by managing tax-deferred assets alongside taxable vehicles.”

More information is at www.jeffnat.com. 

Compliance July 14, 2016

DB Determination Letters Must Include Risk Transfer Info

The IRS is asking DB plan sponsors to identify whether their plan has lump-sum risk transfer language.
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The Internal Revenue Service (IRS) has said applicants requesting determination letters for their defined benefit (DB) plans should identify whether the plan has lump-sum risk transfer language in either the cover letter to their application or an attachment.

For plans that do, they must also identify the appropriate plan section and whether the plan satisfies one of the conditions in Notice 2015-49. In Notice 2015-49, the IRS announced its intent “to amend the required minimum distribution regulations under § 401(a)(9) of the Internal Revenue Code to address the use of lump-sum payments to replace annuity payments being paid by a qualified defined benefit pension plan.” Effective July 9, 2015, DB plan sponsors may no longer offer a lump-sum window to participants who have begun receiving installments.

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On its website, the IRS says if the plan sponsor advises that the plan has risk transfer language and satisfies one of the four conditions in Notice 2015-49, the agency will review the plan document to verify that it satisfies the qualification requirements of the Code. The plan’s determination letter will contain a favorable caveat providing reliance on the risk transfer language.

Plans with risk transfer language that do not meet one of the conditions in Notice 2015-49 won’t receive a determination letter unless the risk transfer language is removed.

For all other DB plans, the determination letter will contain a caveat that the plan has no reliance that any risk transfer language satisfies the requirements of the Code. This approach will be used if the plan sponsor:

  • Doesn’t include the information on a cover letter or attachment;
  • Doesn’t respond to the request; or
  • Responds that the plan doesn’t have risk transfer provisions.

For DB plan determination letter applications the IRS has already received, it will request the plan sponsor provide this information.

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