Deals & People November 23, 2010

New York Life Restructures Boutique Management

New York Life Investments announced changes in its organizational structure in order to focus on the expansion of its third party institutional businesses initiatives.
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With the multi-boutique model continuing to serve as the firm’s preferred institutional asset management structure, New York Life Investments is dividing oversight of the boutiques between traditional and alternative investments. Drew Lawton has been named to the new role of CEO of Traditional Investments and Yie-Hsin Hung joins New York Life Investments as CEO of Alternative Investments.  

In addition to his continuing leadership of Retirement Plan Services, as head of Traditional Investments, Lawton will assume oversight of all the traditional investment boutiques effectively immediately. Those boutiques include: MacKay Shields, Institutional Capital (ICAP), Madison Square Investors (MSI) and McMorgan & Company. Hung will be focused on growing the firm’s alternative investment capabilities, including New York Life Capital Partners (NYLCAP). She will also oversee product development and marketing across the enterprise.  

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According to the announcement, Lawton joined the company in February 2010 from Fridson Investment Advisors (FIA) where he was president. Prior to FIA, he spent eleven years with Fidelity as president and CEO of Fidelity Management Trust Company, where he was instrumental in the formation of Pyramis Global Advisors, Fidelity’s institutional asset management firm. Lawton last served as president and CEO of Pyramis Global Advisors Trust Company. Prior to his tenure at Fidelity, he spent sixteen years with Aetna.   

Lawton received a BA from Yale University and his MBA in Finance from the University of North Texas.  

Hung joins New York Life Investments with over twenty years of experience at Bridgewater Associates and Morgan Stanley, where she was most recently global head of Strategic Acquisitions and Alliances for Morgan Stanley Investment Management. She began her career in investment banking with a focus on the real estate sector. Hung received a BS from Northwestern University and her MBA from Harvard Business School.  

In addition, the company announced that John Grady, who is currently responsible for Mergers & Acquisitions and the Treasury Department at New York Life, has been named chief financial officer of New York Life Investments. In addition to Finance, Grady will have oversight of Information Technology, Risk Management and M&A.  

Prior to joining New York Life in 2009, Grady worked at Old Mutual, most recently as executive vice president, global strategy and corporate development. He has held various financial positions at CDC IXIS Asset Management, Fleet Financial Group and The Boston Company. Grady holds a BS degree in Business Administration from Providence College and an MBA from Boston University.
Compliance November 23, 2010

IRS: No Mandatory Withholding for In-plan Roth Rollovers

Plan sponsors who are allowing direct Roth rollovers from 401(k) and 403(b) plans don’t have to worry about mandatory withholding for those “distributions.”
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According to a notice posted by the Internal Revenue Service on its website, mandatory 20% withholding does not apply to in-plan Roth direct rollovers.

On September 27, President Obama signed the “Small Business Jobs and Credit Act of 2010,” which allows the taxable transfer of a participant’s contributed pre-tax money to an in-plan Roth option. Previously, a participant who wanted to convert to a Roth had to do it outside a plan, to a Roth IRA (see Inside “Out”?).

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More specifically, the IRS noted that Section 2112 of the Small Business Jobs Act (Public Law 111-240), allows participants to make rollovers from their 401(k) and 403(b) plans to their designated Roth accounts (an “in-plan Roth rollover”) after September 27, 2010.  The taxable amount rolled over is includible in income equally in 2011 and 2012, unless the taxpayer elects to include it in 2010.  The additional tax under section 72(t) does not apply to these rollovers. 

The IRS says that the amount rolled over should be reported in box 1 (Gross distribution), the taxable amount in box 2a, and any basis in the rollover in box 5 (Employee contributions). Further, Code G in Box 7 on Form 1099-R should be used.

The notice goes on to say that distributions made to plan participants in 2010 from designated Roth accounts must be reported on a separate Form 1099-R, and that the portion of a distribution from a designated Roth account that is allocable to an in-plan Roth rollover must be reported on a Form 1099-R.  “Report the distribution as you would any other distribution from a designated Roth account; however, in the blank box to the left of box 10, enter the amount of the distribution allocable to the in-plan Roth rollover”.

The IRS notice is online at http://www.irs.gov/formspubs/article/0,,id=109875,00.html

The “Changes to Current Tax Forms, Instructions, and Publications” also contains information relevant to:

  • Change to Form W-11, HIRE Act Employee Affidavit
  • Changes to 2010 Forms W-2 series, W-3 series, and Instructions, due to Hiring Incentives to Restore Employment (HIRE) Act
  • Correction to 2010 Instructions for Forms W-2 and W-3
  • Changes to Publication 15 (Circular E), Employer’s Tax Guide (for use in 2010)
  • Correction to Publication 15, (Circular E), Employer’s Tax Guide, for use in 2010. 

More information about the Roth in-plan rollover option is available at http://www.plansponsor.com/MagazineArticle.aspx?id=6442475310&magazine=6442475347 

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