Retirement Plan/401k/Pension

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New case illustrates risk of ESOP mismanagement: Dallas employee benefits lawyer

I am a skeptic of Employee Stock Ownership Plans because they create unique financial risks to employees. The ESOP industry, unsurprisingly, takes issue with my position; but it's hard to take their position seriously in light of cases like today's appellate decision from the Seventh Circuit. Certainly I would agree that some ESOP plans are well-managed and financially benefit employees; but the risk of mismanagement is substantial. If you believe you have a claim for ESOP mismanagement then you should talk to a Dallas, Texas employment lawyer right away. Today's case Fish v. GreatBanc Trust Co., from the Seventh Circuit, illustrates just how...

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How a defined benefit QDRO works: Dallas QDRO lawyer

I have written frequently about QDROs on my blog this year because, in my experience working with 401k and pension plans, there are a lot of misconceptions about QDROs in a Texas divorce under our community property rules. (You can read more about QDROs on the main QDRO page, and several posts including this one, this one, this one, this one, this one, and don't forget this one.) 401k QDROs are easy because the assets are more easily tracked and divided. Typically a QDRO on a 401k plan will divide the marital portion in two halves or carve out a amount. In a...

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Do I need a QDRO in my divorce? Fort Worth QDRO lawyer explains

I have been receiving an abnormally large number of questions recently about splitting retirement assets in a divorce. Many of these questions involve spouses dividing 401k plans by taking a distribution, rather than the QDRO process. Following the wrong process in your Texas divorce can result in substantial tax implications for the 401k account holder. So it is important that you understand why you should use a QDRO to divide your 401k plan. QDRO in a Dallas and Fort Worth divorce The questions I receive at my Bedford, Texas law office go something like this. Husband owns a 401k account and the spouses have...

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Age Discrimination and Early Retirement Incentives in Texas

Employers who want to thin the herd of highly paid, older employees often offer early retirement incentive packages that trade off an increased pension benefit or severance package in exchange for an employee agreeing to voluntarily retire early. Early retirement is typically offered to a large number of employees before the company decides to engage in a layoff or reduction in force (RIF). Early retirement offers often target older employees. They are most likely to have the most generous pension benefits and highest compensation. Early retirement offers are easy ways to thin out the highest compensated employees in multiple departments without...

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7 Ways You Are Mishandling Retirement Plans in Your Tarrant County Divorce: Bedford divorce lawyer

, next to perhaps the home. Regardless of the value in these retirement plans, 401k plans and pension plans, many couples mishandle these accounts in divorces. The result can be a substantial financial loss for one spouse, sometimes even for both. Today's post will detail some of the most common ways people in Texas divorces mishandle their retirement plans. The best way to protect your retirement assets is with the help of a divorce lawyer who understands retirement plans. 1. Ignoring retirement assets in a divorce in Fort Worth, Texas I hear often people about to divorce decided not to bother with dividing the...

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Pension overpayments / pension recovery: Dallas pension lawyers

You worked for decades at an employer, retired and began receiving your defined benefit pension from your employer. You have planned your finances around your pension payments, social security and other sources of retirement savings. Then a letter shows up from the pension administrator. No, it isn't your monthly check. It isn't a spare check, either. It's a letter stating that the plan miscalculated your benefits, they should have paid you less. They need you to pay it back or they will reduce your monthly payments to recover the pension overpayment. This scenario is unfortunately a growing trend in Texas and around...

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What happens to my beneficiary designations after a divorce in Texas?

During a divorce one of the biggest issues in dividing the marital property is dividing the financial assets. Most married people will designate their spouse as the beneficiary on the account or policy. The Employee Retirement Income Security Act (ERISA) governs most employee benefits. It requires married employees to designate their spouse as the primary beneficiary unless the spouse provides a waiver. The Texas Family Code voids ex-spouses as beneficiaries on financial assets when the final order dissolving the marriage issues. Because those two laws conflict, you can inadvertently end up leaving assets to your ex-spouse. ERISA and beneficiary designations If you...

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Dallas employment attorney: Can my employer stop contributing to my 401k?

Generally yes. Employers are not required to offer retirement benefits; nor are they required to make matching contributions, profit sharing, or any other contribution. (With the exception of certain safe harbor plan designs that require safe harbor contributions.) If your employer has a 401k, ESOP, or other defined contribution plan and makes contributions for you, in most cases they can stop contributing at their discretion. Exceptions when an employer cannot stop contributions to your 401k There are some exceptions. Employers cannot stop contributing to some employees and not others over unrelated issues. For example, an employer could not stop contributing to your...

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Should I invest in company stock in my 401k? Dallas 401k lawyer

In an article I authored back in 2010 published in the National Law Review I discussed the risks involved for both companies and employees in allowing employees to invest in company stock within their 401k plans. The company stock becomes available through an ESOP (Employee Stock Ownership Plan) within the 401k known as a KSOP. Companies can obtain tax benefits through the ESOP as well as buoy its stock. Although ESOPs are numerically most often in small, private companies, it is the larger companies that get press when the ESOP becomes a problem. When it comes to finances, everybody’s investment goals, strategies and...

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Should I contribute Roth, after-tax, or pre-tax in my 401k? Dallas employment attorney

It depends. Each option gives you a different benefit and the respective benefits will have a maximum positive impact depending on your current financial situation, retirement needs/goals and your expectations for future tax rates. Pretax 401k contributions Pre-tax contributions provide an immediate tax benefit because you do not pay taxes on income contributed to your 401k. You also get the benefit of tax-free growth in your 401k. The downside is that all of the pre-tax money in your 401k is taxable upon distribution. 401k Roth contributions Roth contributions, on the other hand, do not provide an immediate tax benefit. You pay taxes on your...

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