The Pension Protection Act Blog

On Sept. 19, 2011, the IRS announced that it has selected Kinsail Corporation as the vendor to administer application and renewal services for Continuing Education Providers that serve Registered Tax Return Preparers, Enrolled Agents, and Enrolled Retirement Plan Agents. According to their website, Kinsail Corporation is located in the U.S. Virgin Islands.

The IRS says the Continuing Education vendor will be responsible for administrative processing of applications and renewals from education providers, maintaining a public listing of all approved providers, and collecting course completion information from providers by PTIN to provide to the IRS through a single source. The IRS will maintain full oversight of approving and reviewing providers.

The IRS has not clarified how this will impact the ERPA CPE requirement going forward, or when Kinsail Corporation will take over processing applications and renewals from firms providing ERPA CPE. On the Request For Proposal (RFP) notice issued by the IRS on June 30, 2011 announcing the position of Continuing Education vendor, the IRS said that it anticipates the Continuing Education vendor taking over effective Jan. 1, 2012.

It was just six weeks ago, on Aug. 1, 2011, that the IRS issued Notice 2011-61 requesting comments by Aug. 17, 2011 on the process for individuals and companies to be approved by the IRS as continuing education providers. A number of vendors providing seminars approved by the IRS for ERPA CPE credit submitted comments in response to Notice 2011-61, including ASPPA.

Note: My company is one of the vendors currently approved by the IRS to offer seminars for ERPA CPE credit. We look forward to working with Kinsail Corporation to maintain our ability to offer seminars approved by the IRS for ERPA CPE credit.

On May 16, 2011, the U.S. Supreme Court issued an opinion in Cigna Corp. v. Amara, No. 09-804. It involved a dispute between Cigna Corp., the plan sponsor, and approximately 25,000 participants in Cigna’s defined benefit plan over Cigna’s decision to convert the defined benefit plan into a cash balance plan in 1998. As part of converting the defined benefit plan into a cash balance plan, Cigna transferred participants’ defined benefit account balances into the cash balance plan to create an opening account balances in the cash balance plan for each participant. The issue framed before the U.S. Supreme Court was whether a showing of “likely harm” is sufficient to entitle plan participants to recover benefits based on faulty disclosures. For anyone involved with cash balance plans, this case is a must read.

It is also a must read for anyone who administers plans, even if they do not administer cash balance plans, because, as part of the opinion, the Court also discusses what makes a 204(h) notice defective, what the differences are between a summary plan description and a plan document, and what the differences are between a plan administrator and plan sponsor.

According to the Supreme Court, the differences between a plan sponsor and a plan administrator are:

“the plan’s sponsor (e.g. the employer), like a trust’s settlor,

1. creates the basic terms and conditions of the plan

2. executes a written instrument containing those terms and conditions, and

3. provides in that instrument ‘a procedure’ for making amendments.”

“The plan’s administrator, a trustee-like fiduciary,

1. manages the plan,

2. follows its terms in doing so, and

3. provides participants with the summary documents that describe the plan (and modifications) in readily understandable form.”

The Court says that, while the same entity can fulfill both roles, ERISA does not mix the responsibilities by giving the administrator the power to set plan terms indirectly by including them in the summary plan description.

With so much debate taking place lately over the roles of plan sponsors, fiduciaries, and service providers, it should be interesting to see how this opinion shapes that discussion.

I normally write a content blog (blog about guidance) and not an opinion blog. There are some excellent ERISA opinion blogs, including my favorite written by Ary Rosenbaum.

A few weeks ago, I had the duty and privilege of writing my semi-annual check for $350 to the Supreme Court of Ohio. Every active attorney admitted to practice in Ohio pays this fee to the Supreme Court of Ohio for the right and privilege of being allowed to practice law. I don’t know what the Ohio Supreme Court does with the money, but I’m sure it goes to good use.

There are now at least 454 ERPA permitted to practice before the IRS. I use the term “at least” because I don’t think the IRS has updated the ERPA list lately. I understand ERPAs’ writing a check for study materials to take the exam, writing a check to take the exam, writing a check to renew, writing a check to earn CPE every year, but I don’t think this is what the IRS envisioned when they created the ERPA designation.

ERPAs are required to earn 72 hours of continuing education credits during each 3-year enrollment cycle. Each year, ERPAs must earn at least 16 of those 72 hours, including 2 hours of ethics or professional conduct. There are a number of companies, including mine, which offer seminars providing ERPA CPE credit. Just today, ASPPA held a live web seminar on Safe Harbor Plans where an attending ERPA could earn 2 hours of CPE credit for $105 (ASPPA members) or $175 (non-members).

The price for ASPPA’s seminar is about average. And please don’t misunderstand me – I’m not criticizing what they charge because I know first-hand what it costs to host a seminar. I just feel that practicing before the IRS as an ERPA shouldn’t become an endless round of writing checks. There has to be a better way.

I have no ability to help ERPAs with the fees for taking the exam or renewing their registration. I do have the ability to help out with CPE costs. My company offers 16 hours of CPE for $495, including ethics and professional conduct each year, so ERPAs can meet their annual CPE requirement without breaking the bank. The $495 we charge is what is costs us to produce and present those seminars.

I want to push this envelope a little further and start a co-op for ERPA CPE. The idea is simple – speak at a seminar so your fellow ERPAns can earn CPE credit, and they will speak at a seminar where you can earn CPE credit. My company is willing to handle the paperwork with the IRS and we will do all the technical background work so all the speaker has to do is pick up a phone and log into a computer. Let me know what you think and let’s get this ball rolling. There is no reason why the first seminar can’t be in January of 2012.