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Ret plans - admin

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[Guidance Overview] Changing Cybersecurity Baselines?
"On March 5, 2019 the [FTC commissioners] voted 3-2 to issue a proposed amendment to its Standards for Safeguarding Customer Information Rule ... The Proposal ... if finalized, could raise the baseline for plan fiduciaries when developing prudent cybersecurity programs.... [W]hile the steps outlined in the FTC's proposal do not apply to many financial institutions, the Proposal provides insight into changes that the other regulators could make and what plans and participants may expect." (Groom Law Group)
Courts Continue to Address Retirement Plan Mandatory Arbitration Provisions
"Mandatory arbitration provisions are not a simple matter and should be adopted only after careful consideration.... [1] What is the effectiveness to thwart class actions versus the risk of numerous participant arbitrations regarding the same subject matter and inconsistent arbitration awards? [2] Will the arbitration involve arbitrators with sufficient ERISA background and experience? ... [3] What are the potential time and cost savings derived from arbitration as an alternative to litigation? ... [4] What will be the effect on fiduciary indemnification and insurance coverage? ... [5] What is the risk of an adverse arbitration award that is generally non-appealable?" (Holland & Knight)
Principal Financial May Acquire Wells Fargo Retirement Business
"Principal Financial Group Inc is [reported to be] in advanced talks to acquire Wells Fargo & Co's retirement plan services business, in a deal that could exceed $1 billion ... The bank's retirement plan services unit, which includes Wells' 401(k) savings accounts business, would expand a similar business of Principal Financial. If the negotiations are concluded successfully, a deal could be announced later this month[.]" (Reuters)
ERISA Section 404(a)(5) Participant Fee Disclosures: Rules and Requirements
"The plan sponsor has the duty to distribute the fee disclosure to all participants and account holders with control of their accounts (this includes other beneficiaries with direct management of the funds). [A chart outlines] different participant fee disclosures, what's required, and when." (ForUsAll)
IRS Correction Program Now More Efficient
"The IRS introduced the most recent EPCRS transformation in September 2018, through Revenue Procedure 2018-52, which becomes effective next month, on April 1, 2019. The biggest change is to the VCP submission procedures. The IRS will no longer accept VCP submissions through the mail-in hard-copy form; instead, Plan Sponsors must use the website for VCP submissions." (Jackson Lewis P.C.)
Payment of DB Plan Benefits After Normal Retirement Age: Optional Designs
"A defined benefit plan must generally increase a normal retirement benefit actuarially where payment begins after a participant's normal retirement age. The Internal Revenue Code and underlying regulations, however, allow a plan to pay instead the normal retirement benefit amount plus make-up payments in some instances. In light of the DOL's scrutiny in this area, it may be wise for plan sponsors to review pertinent plan provisions and operation to make sure they comply with applicable rules." (Morgan Lewis)
Summary Plan Descriptions: You Gotta Provide Them, So Make the Most of Them
"If your participants don't understand the information contained in their SPDs, they may make unsound, and potentially costly, benefits decisions. To determine whether your SPDs have readability issues, you should re-read the SPDs from a participant's viewpoint ... Providing updated SPDs every five or 10 years to former retirement plan participants with vested benefits, retirees receiving benefits, and beneficiaries receiving benefits may seem like an unnecessary cost, given that those individuals won't be affected by most plan changes. To lessen the burden on plan administrators, the ERISA rules include an alternative distribution method for such situations." (Foley & Lardner LLP)
It's All Fun and Games Until a Loan Defaults
"If a loan was taken and payments were never made, this may be considered a prohibited transaction and opens up a whole can of worms, as it may not be considered a bona fide loan. Plan loans that are prohibited transactions trigger excise taxes and threaten the qualified status of the plan.... [I]gnoring loan failures can end up costing the plan sponsor far more than the fees for properly filing through VCP. Tempting though self-correction can be, it's better to handle these problems correctly -- either through acknowledging the deemed distribution, or through a VCP filing -- to avoid even worse results." (Ferenczy Benefits Law Center)
IRS Requires Electronic VCR Applications Beginning April 1
"Beginning April 1, 2019, applicants seeking to resolve employee benefit tax qualification issues via the Voluntary Compliance Resolution (VCR) program must submit applications electronically through Any paper VCP submissions sent to the IRS with a postmark after March 31, 2019, will be returned to the applicant." (Solutions Law Press)
[Guidance Overview] IRS Notice on Lump-Sum Windows for Retirees Creates More De-Risking Opportunities
"Plan sponsors should carefully consider [1] the possibility of further guidance from the IRS on retiree lump-sum windows ... [2] numerous other administrative complexities such as QDROs, how retiree medical premiums are being paid, etc.... [3] the PBGC and [DOL] implications of adding a retiree lump-sum window.... [S]ponsors should ensure that all participant communications are as clear and comprehensive as possible[.]" (Groom Law Group)
[Guidance Overview] IRS Allows Retiree Cashouts Again -- Consider the Benefits and Risks
"Notwithstanding the IRS about-faces, If you read it carefully, Notice 2019-18 does not clearly state that cashing out retirees is permissible. It is possible that retirees who squander their payments could come back to sue sponsors, particularly if the communications they received were poor. Although retirees may not be likely to win such suits, defending ERISA litigation takes time and money. Plan sponsors who want to offer these cashouts should be aware of litigation risk." (Cohen & Buckmann, P.C.)
[Official Guidance] Text of IRS Notice 2019-21: Weighted Average Interest Rates, Yield Curves, and Segment Rates Applicable for March 2019 (PDF)
"This notice provides guidance on the corporate bond monthly yield curve, the corresponding spot segment rates used under Section 417(e)(3), and the 24-month average segment rates under Section 430(h)(2) ... In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under Section 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008 and the 30-year Treasury weighted average rate under Section 431(c)(6)(E)(ii)(I)." (Internal Revenue Service [IRS])
The Retirement Plan Raiders are Back: Advisors Push for Withdrawals
"Why should retirement plan sponsors care about having their retirement plans raided by IRA salespeople? One important reason is that other retirement plan participants will pay a lot more if the individuals with the largest account balances leave their plans, since average account balances, as well as cash flow, are important drivers in recordkeeper pricing. And thus, an increasing number of plan sponsors have made conscious efforts to retain retirement plan assets." (Cammack Retirement Group)
[Official Guidance] Text of PBGC Interest Rate Update for Benefits Payable in Terminated Single-Employer Plans, April and Second Quarter 2019
"The April 2019 lump sum interest assumptions will be 1.25 percent for the period during which a benefit is (or is assumed to be) in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. In comparison with the interest assumptions in effect for March 2019, these assumptions represent no change in the immediate rate and are otherwise unchanged.... The second quarter 2019 interest assumptions will be 3.07 percent for the first 20 years following the valuation date and 3.05 percent thereafter. In comparison with the interest assumptions in effect for the first quarter of 2019, these interest assumptions represent no change in the select period ... a decrease of 0.02 percent in the select rate, and an increase of 0.21 percent in the ultimate rate (the final rate)." (Pension Benefit Guaranty Corporation [PBGC])
[Guidance Overview] JCT Overview of Deduction for Qualified Business Income: Section 199A
32 presentation slides. "An individual taxpayer, estate, or trust generally may deduct 20% of qualified business income, and 20% of qualified REIT dividends and qualified PTP income The deduction is limited above a threshold amount of taxable income ($157,500, or $315,000 for joint returns, indexed).... Taxable income means without regard to the section 199A deduction, for this purpose ... Effective for taxable years beginning after 2017 and before 2026." (Joint Committee on Taxation [JCT], U.S. Congress)
Distributions from DC Plans: How Are Recipients Handling Them?
20 pages. "Data from this report can help employers benchmark their plan's data and answer the following questions ... [1] What do people do with their balances when they terminate employment? [2] What percentage of eligible assets leaves the plan? [3] How do distribution decisions differ by demographics? [4] Where do rollovers go?" (Alight Solutions)
Principal 2019 Retirement Plan Deadlines
"This article is intended to alert plan sponsors about applicable major qualified retirement plan deadlines that fall in the first half of 2019." (Ogletree Deakins)
[Official Guidance] Text of IRS Rev. Rul. 2019-06: Covered Compensation Tables for 2019 (PDF)
"Section 1.401(l)-1(c)(7)(ii) provides that, for pur poses of determining the amount of an employee's covered compensation under Section 1.401(l)-1(c)(7)(i), a plan may use tables, provided by the Commissioner, that are developed by rounding the actual amounts of covered compensation for different years of birth. For purposes of determining covered compensation for the 2019 year, the taxable wage base is $132,900. The following tables provide covered compensation for 2019." (Internal Revenue Service [IRS])
Overseeing Retirement Plans in the Digital Age
"Enhancing the design of the enrollment website increased the number of workers who personalized their enrollment by 15 percent, and led to an overall increase in employee contributions of roughly 10 percent. There is an opportunity for employers to double and triple the most commonly suggested default savings rate (3 percent) without reducing enrollment.... Diversification can be driven by the number of blank lines on a retirement plan website; as more lines lead participants to invest in more funds." (Voya)
Building Toward a Better Retirement: Choice Architecture and Plan Participants
"Whether a participant logs in once and makes a single choice or is making a lifetime of choices, there are many ways employers can use choice architecture to assist all types of decision-makers when they do engage. Understanding your employees and tailoring the approach can help them make the best decision-ultimately improving retirement readiness." (Findley)
[Guidance Overview] IRS Opens the Door for Cashing-Out Retirees in Pay Status (PDF)
"[S]ponsors of ongoing defined benefit pension plans may want to consult their actuaries as to whether retiree lump sum windows make sense for their plans. It may not be the best option; commercial annuity rates are rising, which could make an annuity purchase less expensive than paying lump sums. In addition, retiree lump sum windows can lead to adverse selection. Retirees in poor health are likely to choose lump sums while those in good health remain in the plan, increasing the cost of maintaining the plan or terminating it." (Korn Ferry)
When a Retirement Plan Has the Beneficiary Blues
"Where it is unclear on the face of all the plan documentation who the proper beneficiary is, you ... can take into account whether there is employer information outside of plan records, such as a life insurance beneficiary form, that provides you with confidence that your interpretation of a fuzzy beneficiary designation form is appropriate. You may also want to consider whether the relative size of the benefit means that imposing your interpretation of an unclear form is a low risk proposition and the costs of obtaining a declaratory judgment are disproportionately high, or vice versa." (Findley)
[Guidance Overview] IRS Breathes New Life into Retiree Lump Sum Windows
"Notice 2019-18 represents a significant change to the de-risking landscape. Although a retiree lump sum window program may not be appropriate for all plans, it should again become part of the discussion for plan sponsors seeking additional opportunities to de-risk their pension plans." (Morgan Lewis)
The Definition of Compensation: When Operation Does Not Match the Plan Document (PDF)
"Because this type of failure is a frequent problem for plans, and it can go on for many years before discovery, it is a good idea to include an annual audit of your payroll system and the plan's definition of compensation in the plan's administrative procedures to determine that they are consistent.... [C]orrective steps to prevent continued failures, such as updating the payroll system or amending the plan document, should be carried out as soon as possible to limit the liability for the failure." (Boutwell Fay LLP)
[Guidance Overview] IRS Announces Retiree Lump-Sum Windows Are Back on the Table
"Wednesday's announcement signals a complete 180 from the IRS and Treasury Department from its position nearly four years ago. Notice 2019-18 indicates that the Treasury Department and the IRS will keep a close eye on retiree lump-sum windows, and it hinted that further guidance may be issued sometime in the future. In the meantime, it appears that plan sponsors can again consider whether a retiree lump-sum window is an appropriate feature, without fear of retribution from the IRS-at least for the time being." (Poyner Spruill LLP)
Departing Employees Who Stay in a Defined Contribution Plan for at Least a Year Are Not Likely to Leave
"The percentage of participants taking a distribution -- either a cashout or a rollover -- within the first year of leaving their employer ranged from 55% to 60%.... [F]or each year [from 2008 through 2016], the percentage of people taking a distribution from their plans between one year and two years after leaving employment ranged from 14% to 16%[.]" (Pensions & Investments)
[Guidance Overview] Plans Cannot Prevent Participant from Appointing an Authorized Representative
"[The DOL] has reiterated that an ERISA-covered plan cannot prevent a plan participant from appointing an authorized representative for initial claims and for claims appeals.... The DOL letter only refers to the appointment of an authorized representative and does not discuss the assignment of benefits.... An assignment transfers ownership of a claim to a third party, giving it standing to assert those rights and to sue on its own behalf. The appointment of an authorized representative, on the other hand, does not transfer an ownership interest in the claim." (The Wagner Law Group)
[Official Guidance] Text of IRS Disaster Relief Notice AL-2019-01, for Alabama Victims of Severe Storms, Tornadoes and Straight-Line Winds
"Victims of the severe storms, tornadoes, and straight-line winds that took place on March 3, 2019 in Alabama may qualify for tax relief ... [A]ffected taxpayers in certain areas will receive tax relief. Individuals who reside or have a business in Lee County may qualify for tax relief.... [C]ertain deadlines falling on or after March 3, 2019 and before July 31, 2019, are granted additional time to file through July 31, 2019" (Internal Revenue Service [IRS])
IRS Notice 2019-18 Allows for Lump Sum Risk Transferring Programs for Participants in Pay Status
"Notice 2019-18 includes a retraction of intent by the Treasury Department and the IRS regarding proposed regulations under Code Section 401(a)(9) that would have limited accelerated forms of distribution to participants in pay status but allowed them for participants who had not yet begun to receive their benefit payments. Under Notice 2019-18, these proposed regulations will not be issued, which means that lump-sum windows may still be available for defined benefit plan sponsors." (Thomson Reuters Practical Law)
Conducting an Operational Compliance Review of Your Retirement Plan
"No one likes finding out that they are being audited by the [IRS] or [DOL].... Prudent plan sponsors are proactive, have up-to-date procedures and guidelines, and periodically conduct an operational compliance review, or self-audit. Taking the initiative to do a self-review can help you avoid added costs and liabilities down the road." (Findley)
Senate Tax Extenders Bill Has Disaster Provisions Impacting Retirement Plans
"The primary aim of the legislation is to extend a number of expired or expiring tax provisions ... This legislative vehicle is also being used to provide tax-related relief to victims of several 2018 natural disaster events. These include presidentially-declared disasters that occurred between January 1, 2018, and March 1, 2019 (this bill's relief does not include victims of California wildfires, for whom similar relief was provided by Public Law 115-123)." (Ascensus)
Blockchain and Retirement Plan Administration
"Much of the change this new technology will make in, e.g., custody and 401(k) recordkeeping will be driven by the deployment of blockchain in securities transactions (broadly defined). Because retirement savings assets make up a large percentage of the securities market, ... plans are likely to have significant impact on this process. One 'cluster' of retirement plan issues may ... see the development of blockchain solutions sooner rather than later: lost participants, small balances, moving money at job change, and the rollover process." (October Three Consulting)
PBGC Proposes Simplified Methods for Withdrawal Liability Calculations
"The major technical difficulty in applying the simplified methods arises from the requirement that increases in contributions required to meet a funding improvement plan (FIP) or rehabilitation plan (RP) must be disregarded. This requires the plan administrator to adjust each employer's contribution history by removing only those contributions due to an increase required to meet a FIP or RP. Plan administrators should examine the proposed simplifications to determine whether they provide any substantial reduction in the administrative burden." (Cheiron)
[Official Guidance] Text of EBSA Information Letter: Application of the Authorized Representative Provisions of DOL Benefit Claims Regs (PDF)
"Although a plan may establish reasonable procedures for determining whether an individual has been authorized to act on be half of a claimant, the procedure cannot prevent claimants from choosing for themselves who will act as their representative or preclude them from designating an authorized representative for the initial claim, an appeal of an adverse benefit determination, or both. The plan must include any procedures for designating authorized representatives in the plan's claims procedures and in the plan's summary plan description (SPD) or a separate document that accompanies the SPD." [Feb. 27, 2019 letter to Jonathan Sistare.] (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])
Railroad Retirement Board: Retirement, Survivor, Disability, Unemployment, and Sickness Benefits
16 pages. "The Railroad Retirement Board (RRB) ... administers retirement, survivor, disability, unemployment, and sickness insurance for railroad workers and their families under the Railroad Retirement Act (RRA) and Railroad Unemployment Insurance Act (RUIA).... This report explains the programs under RRA and RUIA, including how each program is financed, the eligibility rules, and the types of benefits available to railroad workers and family members. It also discusses how railroad retirement relates to the Social Security system." [Report RS22350, March 1, 2019] (Congressional Research Service [CRS])
401(k) Safe Harbor Rules (PDF)
Detailed summary of safe harbor design and administration, presented in list and chart form. (Retirement Management Services, LLC)
DOL Is Rejecting Form 5500 Filings from Professional Employer Organizations
"DOL is rejecting filings from 2016 where [Professional Employer Organizations (PEOs)] have used a coding system to protect the names of their clients. Both retirement plan and health plan Form 5500s have been rejected by DOL." (NAPEO [National Association of Professional Employer Organizations])
2019 Compliance Checklist for Non-ERISA Plans (PDF)
"The Compliance Checklist incorporates requirements for governmental and nonelecting church plans, non-ERISA 403(b) plans, 457 plans and nonqualified executive benefit plans, and provides information on the materials that you will need to file, filing due dates and agencies to which the filings should be made." (Prudential)
2019 Compliance Checklist for Plans Subject to ERISA (PDF)
44 pages. "The Compliance Checklist incorporates defined benefit (DB), defined contribution (DC) and ERISA 403(b) requirements and provides information on the materials that you will need to file, filing due dates and agencies to which the filings should be made." (Prudential)
[Official Guidance] Text of IRS Publication 598: Tax on Unrelated Business Income of Exempt Organizations (PDF)
23 pages; Feb. 26, 2019. "This publication covers the rules for the tax on unrelated business income of exempt organiizations. It explains: [1] Which organizations are subject to the tax; [2] What the requirements are for filing a tax return; [3] What an unrelated trade or business is; and [4] How to figure unrelated business taxable income." (Internal Revenue Service [IRS])
[Official Guidance] Text of 2018 IRS Publication 575: Pension and Annuity Income (PDF)
49 pages; Feb. 26, 2019. "What's New: Extended rollover period for qualified plan loan offsets in 2018 or later. For distributions made in tax years beginning after December 31, 2017, you have until the due date (including extensions) for your tax return for the tax year in which the offset occurs to roll over a qualified plan loan offset amount." (Internal Revenue Service [IRS])
It's Audit Time: Do You Know What Your Recordkeeper is Doing?
"[1] Develop a procedures manual with your recordkeeper and in consultation with your ERISA counsel to make sure that plan terms are being followed.... [2] [D]evelop a controls policy for promptly identifying and correcting mistakes.... [3] Ask the recordkeeper to notify you right away if checks or notices are returned as undeliverable ... [4] Make sure the recordkeeper gets correct data for non-discrimination testing.... [5] Review your recordkeeper's cybersecurity procedures and insurance[.]" (Cohen & Buckmann, P.C.)
Fiduciary Fallout Gets Personal for Human Resources VP
"HR managers are on the front lines. They are the parties responsible for ensuring that ERISA plans are operated according to a plan's provisions.... [T]ips for reducing your operational risk exposure [include:] [1] Study the plan document ... [2] Monitor all activities that support the plan's benefits to ensure compliance with the plan document ... [3] Be wary of payroll ... [4] Commission an operations risk assessment ... [5] Consider installing an automated operations control system." (Roland|Criss)
Things to Know If You Are New to 401(k) Benefits Administration
"[1] Identify the service providers, and understand what they will and will not do.... [2] Understand how the money flows.... [3] Monitor plan loans.... [4] Promptly pay out terminated employees with small balances.... [5] Recognize when a new employee is actually a rehire." (Dickinson Wright, via Lexology; free registration required)
Possible Changes on the Horizon for the Escheat and Taxation of 401(k) Funds
"The GAO found that during a sampled time period, the majority of retirement funds transferred to the states as unclaimed property included amounts from 401(k) plans. Digging deeper, however, the study revealed that most of the 401(k) funds reported as unclaimed property were from terminated 401(k) plans, because funds from terminated 401(k) plans can fall outside the scope of the DOL's preemption position." (ReedSmith, via Lexology; free registration required)
Move Carefully When Consolidating Your Retirement Accounts
"A typical employee who has worked for 30 years likely has switched jobs six or seven times and may have just as many former employer plans ... Consolidating can help you manage asset allocation, diversification and rebalancing, and may help reduce taxes and fees.... You might want to keep a 401(k) plan that has lower-cost institutional shares of mutual funds and access to commission-free trading, instead of rolling it into another account that doesn't include those features." (Fidelity)
2019 Expanded Reporting and Disclosure Requirements Calendar
"[This calendar] provides who, what, when and where reporting and disclosure information for single-employer pension plans under [ERISA]. Plan administrators can access concise instructions for filing reports with the [DOL], IRS and [PBGC], and for disclosing tax and benefit information to U.S. plan participants, beneficiaries and alternate payees." (Willis Towers Watson)
Who's Actually Performing Your 401(k) Audit?
"[I]ssues that can arise from having staff auditors perform these important tests can include: ... [1] While looking through the I-9s to prove the date of hire and date of birth for the employees being tested, there are no date of hires on a few of the I-9s ... Notifying the plan sponsor ... could spare them a large fee from ICE if an investigation ever took place.... [2] [Failure] to ask for the expense documentation for the hardship [withdrawal].... [3] Unnoticed by the staff auditor, bonuses and commissions are not eligible plan wages as separately noted on the plan documents." (Pooler CPA Group, LLC)
Practice Note: Valuing Benefits Payable as a Lump Sum: Current and Emerging Practices (PDF)
48 pages. "When a lump sum is offered in a traditional pension plan, the amount of the lump sum often varies based on market interest rates.... [The IRS] requires the use of an 'annuity substitution' approach for the purpose of valuing certain benefits expected to be paid in lump sum form. This practice note discusses the valuation of these benefits for financial accounting purposes." (Pension Committee, American Academy of Actuaries)
[Opinion] ERIC Letter to EBSA Requesting Guidance to Address Missing and Unresponsive Participant Challenges (PDF)
17 pages. "[P]lan administrators cannot always do 'whatever it takes' to find every last missing participant and nudge every unresponsive participant into payment due to the attendant costs and other challenges. And even though there is no directly applicable guidance, the Department is aggressively pursuing a Terminated Vested Participant Project (TVPP) enforcement initiative and subjecting plan fiduciaries to protracted investigations and, in some cases, findings of ERISA breach, in a manner that appears inconsistent with ERISA's fiduciary standards." (The ERISA Industry Committee [ERIC])
New Lawsuits Over Actuarial Assumptions Could Signal Next Wave of ERISA Litigation
"The plaintiffs in all four cases allege that the actuarial assumptions being used are 'unreasonable' and as a result, certain pension recipients have been underpaid.... To resolve these claims, the courts may need to address whether actuarial assumptions must be reasonable at all times. Currently, most lawyers and actuaries believe actuarial assumptions need to be reasonable when the pension benefit is initially accrued." (Faegre Baker Daniels)
[Official Guidance] Text of IRS FAQs for Employers Adopting Pre-Approved Retirement Plans
"I have an individually designed plan and would like to adopt a pre-approved plan. How do I make the switch? ... Can an adopting employer request a separate determination letter on Form 5307? ... Can an adopting employer request a determination letter on Form 5300? ... What if a Master & Prototype plan adopting employer makes significant changes to the pre-approved basic plan document or adoption agreement? ... I am an adopter of a volume submitter plan who made changes to my pre-approved document. How do I let the IRS know what changes were made? ... If I apply for a determination letter on my pre-approved plan, what happens if I have not timely adopted interim amendments?" (Internal Revenue Service [IRS])
Sixth Circuit Finds Insurance Agents Properly Classified as Independent Contractors, Dealing Fatal Blow to ERISA Class Action
"[A] divided Sixth Circuit reversed a district court's finding that the agents were 'employees' in an ERISA class action suit brought on behalf of several thousand current and former insurance agents, instead finding that a proper weighing of the Supreme Court's Darden factors established that the insurance giant properly classified them as independent contractors. In particular, in the 'legal context' of ERISA eligibility, 'control and supervision is less important' than the financial structure of the parties' relationship." [Jammal v. American Family Ins. Co., No. 17-4125 (6th Cir. Jan. 29, 2019] (Wolters Kluwer; free registration required)
[Guidance Overview] Check Your Plan's Definition of 'Compensation' in Light of Tax Reform
"The TCJA makes all moving expenses 'nondeductible,' which means that all moving expenses should be included in compensation for plans that use the default Section 415 definition for testing purposes. Or does it? The moving expense deduction has been suspended, not eliminated, so it's not clear whether this change affects Section 415 compensation." (Morgan Lewis)
VP of HR Sued by Former Senior Director of Global Benefits Over 401(k) Operational Error
"[T]he troubling takeaway from this case is that Conagra's simple failure to follow the written terms of the plan [may be] sufficient for a court to find that it violated its fiduciary duty. The other concern is that operational errors relating to the definition of compensation are among the IRS 'top ten' failures corrected in the [VCP.]" [Karlson v. Conagra Brands, No. 18-8328 (N.D. Ill., complaint filed Dec. 19, 2018)] (E is for ERISA)
DC Plan Participants' Activities During First Three Quarters of 2018 (PDF)
14 pages. "In the first three quarters of 2018, 2.9 percent of DC plan participants took withdrawals, compared with 2.8 percent in the first three quarters of 2017.... Only 2.2 percent of DC plan participants stopped contributing in the first three quarters of 2018, compared with 2.4 percent in the first three quarters of 2017.... At the end of September 2018, 16.4 percent of DC plan participants had loans outstanding, compared with 16.7 percent at year-end 2017." (Investment Company Institute [ICI])
[Opinion] Beware of These Heavily-Marketed Products Touted by Recordkeepers
"[M]anaged accounts certainly have merits, but require significant participant effort can be expensive, and can be difficult to gauge whether the investment professional is adding value to the account.... annuities can be incredibly confusing as to the actual benefits provided.... An increasing number of recordkeepers are offering discounts on recordkeeper fees if you use their proprietary investment products, particularly stable value and target date funds." (Cammack Retirement Group)
[Guidance Overview] The Cost of Non-Compliance: DOL Announces Increased Penalties for 2019
"[T]hese rates are for penalties assessed after January 23, 2019 with respect to violations committed after November 2, 2015, when the inflation adjustment was approved. The cost-of-living adjustment is based on the Consumer Price Index for all Urban Consumers, which resulted in roughly a 2.5% increase." (Winston & Strawn LLP)
Claims Challenging Application of Phantom Account Offset to Reduce Retirement Benefits Time-Barred
"A retiree's challenge to a plan administrator's application of a phantom account offset as an impermissible reduction of benefits was time barred ... because the claim accrued 12 years before the suit was filed. In addition, the court stressed that the plan administrator did not breach his fiduciary duties under ERISA by continuing to apply the phantom account offset to plan participants who failed to bring timely denial of benefit claims." [Testa v. Becker, Nos. 17-1826, 17-1985 (2d Cir. Dec. 12, 2018)] (Wolters Kluwer; free registration required)
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