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Ret plans - admin


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[Guidance Overview] What's the Impact of 2018 IRS Retirement Plan Limits?
"Highly-paid participants will now have more of their compensation 'counted' towards qualified plan benefits and less towards non-qualified plans. This could also help plans' nondiscrimination testing if the ratio of benefits to compensation decreases.... This is the fourth year in a row that the HCE compensation limit has been stuck at $120,000.... [E]mployers may find that more of their employees become classified as HCEs.... Plans may see marginally worse nondiscrimination testing results (including ADP results) if more employees with large deferrals or benefits become HCEs. It could make a big difference for plans that were previously close to failing the tests.... [I]ndividuals who have very large DB benefits (say, shareholders in a professional firm cash balance plan) could see a deduction increase if their benefits were previously constrained by the 415 dollar limit." (Van Iwaarden Associates)
ERISA Preempts State Law Revoking Beneficiary Designation Upon Divorce
"The court determined that the state law at issue here 'related to' an ERISA plan in that it required the plan administrator to look to state law to determine the recipient of plan payments, rather than to the plan itself. The court concluded that the state law implicates an area of core ERISA concern by abrogating ERISA's requirements that a plan must specify the basis on which payments are to be made, and that plan fiduciaries must make payments to beneficiaries designated by participants or by the terms of the plan." [Jackson v. Parks, No. 17-14 (D. Mont. Sept. 14, 2017)] (Thomson Reuters / EBIA)
IRS Work Plan Provides Focus for Examination of Multiemployer Plans
"The work plan states that for multiemployer plans the IRS will 'continue to examine plans that failed to properly calculate retirement benefits affecting service crediting and/or allocation/accruals, failed to make required minimum distributions, and/or failed to adjust benefits when retirement is delayed beyond the Normal Retirement Age' ... Late retirements pose several complex issues, the resolution of which depends on the plan's provisions and the age at which a participant retires." (Cheiron)
DOL Proposes 90-Day Delay of Disability Claims Procedures Rules
"Some retirement plans may consider making amendments to avoid having to comply with the special rules for disability claims procedures altogether. Where a plan provides a benefit conditioned on an independent disability finding made by a party other than the plan, such as the Social Security Administration or the employer's long-term disability plan, the claim is not treated as a disability claim. As such, the plan would not have to comply with special disability claims procedure rules." (Michael Best)
Employee Benefits Cases in the Supreme Court Since ERISA's Enactment
32 pages. "[In] the Court's last 42 terms [since ERISA's 1975 effective date] ... the Court has issued merits opinions in 125 argued cases and one unargued case directly involving employee benefit arrangements including IRAs, and two additional argued cases substantially implicating these arrangements ... for an astonishing total of 128 decisions.... [T]he Court has been concerned with who can bring claims involving employee benefits, what kind of claims can they bring, what kind of remedies can they seek ... and whether State laws implicating employee benefits will be enforced, as frequently as it has considered substantive issues affecting employee benefits." (Eversheds Sutherland)
The IRS Employee Plans Work Plan for 2018: A 'Compliance Checklist' for Plan Sponsors
"With the knowledge the Work Plan provides, plan sponsors and their service providers can work to ward off potential problems likely to draw the attention of the IRS.... These are means the IRS will be using to find problems and to ultimately pursue correction and impose taxes and penalties for noncompliance.... These are the ways the IRS has found to work smarter in 2018: Continuing IRS effort to make plan sponsors smarter & reduce non-compliance.... Making the Voluntary Compliance Program (VCP) more efficient.... Data driven approaches to plan examinations are being refined.... Reliance on referrals continues." (Fiduciary Plan Governance, LLC)
[Official Guidance] Text of IRS Notice 2017-64: 2018 Limitations, Adjusted as Provided in Section 415(d), etc. (PDF)
"Effective January 1, 2018, the limitation on the annual benefit under a [DB] plan ... is increased from $215,000 to $220,000.... The limitation for [DC] plans ... is increased in 2018 from $54,000 to $55,000.... The limitation ... on the exclusion for elective deferrals described in Section 402(g)(3) is increased from $18,000 to $18,500. The annual compensation limit ... is increased from $270,000 to $275,000. The dollar limitation ... concerning the definition of 'key employee' in a top- heavy plan remains unchanged at $175,000... The limitation used in the definition of 'highly compensated employee' ... remains unchanged at $120,000.... The limitation on deferrals under Section 457(e)(15) concerning deferred compensation plans of state and local governments and tax-exempt organizations is increased from $18,000 to $18,500." (Internal Revenue Service [IRS])
New IRS Mortality Tables for 2018 Bring Host of Concerns for DB Plan Sponsors
"Plans with primarily white-collar populations with longer average longevity may understate their liabilities ... while medium and small plans that have generally lower life expectancy among participants may be locked in to rates that, on average, overstate their plan liabilities.... In order to delay use of the new tables for 1 year, a plan sponsor must conclude that for 2018 use of the new tables would be administratively impracticable or would result in an adverse business impact that is 'greater than de minimis,' and it must notify the plan's actuary of its intent to use the prior mortality tables." (HR Daily Advisor)
Financial Literacy among U.S. Hispanics (PDF)
20 pages. "Financial literacy programs that separately address U.S.-born and foreign-born Hispanics are likely to experience better results for both groups. As growth in the U.S. Hispanic population is increasingly driven by births, the gap in Hispanic financial literacy relative to the general population will likely decrease.... [E]qualization at a higher overall level of financial literacy for all should be the objective." (TIAA Institute)
Top Technology Takeaways for Benefit Pros
"Tools to help employees answer the question 'What benefits does someone like me need?' are becoming increasingly crucial to making sure employees aren't exposed to more risk than they can handle.... [Y]ou have an opportunity to use new technologies to take a more strategic approach to benefits.... [D]ata visualization and smart reporting tools are so important, because you can't spend your entire day poring over spreadsheets trying to figure out what's going on. You need clear, immediate answers." (Benefitfocus)
[Opinion] Pension Rights Center Comments to IRS on 2017 Instructions for Form 8955-SSA (PDF)
"[T]he requirement that plans furnish a single statement to vested participants leaving employment that includes all of the information required by IRC Section 6057(a) is a vitally important protection that helps ensure that participants receive the benefits they have earned. For this reason the Pension Rights Center recommends that Question 21 of the Form 8955-SSA FAQs be withdrawn and that the instructions to the Form 8955-SSA be modified to inform plan administrators about this change." (Pension Rights Center)
[Official Guidance] Text of PBGC Premium Rates for 2018
"The per-participant flat premium rate for plan years beginning in 2018 is $74 for single-employer plans (up from a 2017 rate of $69) and $28 for multiemployer plans (no change from 2017). The increase in the single-employer rate was provided in The Bipartisan Budget Act of 2015.... For plan years beginning in 2018, the variable-rate premium (VRP) for single-employer plans is $38 per $1,000 of unfunded vested benefits (UVBs), up from a 2017 rate of $34. This $4 increase was provided in The Bipartisan Budget Act of 2015 (BBA 2015). Although the VRP rate is subject to indexing in addition to the BBA 2015 increase, indexing had no effect for 2018. For 2018, the VRP is capped at $523 times the number of participants (up from a 2017 cap of $517). Plans sponsored by small employers (generally fewer than 25 employees) may be subject to a lower cap." (Pension Benefit Guaranty Corporation [PBGC])
Interesting Angles on the DOL's Fiduciary Rule, Part 66
"Because of the change in the definition of fiduciary advice (which applied on June 9, 2017), all advisors to retirement plans need to review their prior 408(b)(2) disclosures to see if changes are necessary.... [Would] the following types of disclosures [be] narrow enough to provide information that allows the plan fiduciaries to make those determinations? [1] For mutual funds, the broker-dealer may receive between 0% to 10% front-end commissions. [2] As ongoing trailing commissions, the compensation may range from 0% to 2% per year. [3] The compensation for managed accounts will not exceed 2.5% per year." (FredReish.com)
[Guidance Overview] 2017 Hurricane Disaster Relief Guidance for Employers with Retirement Plans
"Individuals whose principal residence is within a presidentially declared disaster area affected by Hurricane Harvey, Irma, or Maria -- and who have sustained an economic loss as a result -- are eligible to request 'qualified hurricane distributions' from their IRA or employer-sponsored retirement plan (plan permitting).... Broader relief applies to individuals who live in, or have a business within, a presidentially declared disaster area.... certain features of permissible loan programs have been relaxed.... [and] they may be eligible for extensions on deadlines" (Ascensus)
[Guidance Overview] IRS Publishes New Mortality Tables, Affecting DB Plan Benefits
"The new mortality table will increase the amount of lump-sum distributions payable by a private sector plan ... by 3% to 5%, depending on the age of the participant, when compared to the lump sum using the table for 2017.... For a retirement age of 65 and a 5.5% interest rate, the lump-sum equivalent of the maximum dollar limit of $215,000 will increase by approximately 3.5% (about a $90,000 increase)." (Cheiron)
Church Retirement Plans and Retired Ministers May Be Impacted by District Court's Housing Allowance Ruling
"On Oct. 6, 2017, ... Judge Barbara Crabb of the Western District of Wisconsin held that Section 107(2) of the Internal Revenue Code violates the Establishment Clause of the First Amendment. Code Section 107(2) provides that a minister can exclude from gross income a cash housing allowance provided to the minister as pay for services in the exercise of ministry. The ruling, if upheld, would have a significant impact on ministers who have a portion of their salaries designated as housing allowance, as well as their employing churches. Moreover, it would have a significant impact on church retirement plans and retired ministers who designate a portion of their retirement income as housing allowance excludible from taxable income."[Gaylor v. Mnuchin, No. 16-215 (W.D. Wis. Oct. 6, 2017)] (Ice Miller LLP)
[Guidance Overview] New PBGC/Plan Sponsor Pilot Mediation Project for Early Warning Program and Termination Liability Cases
"The Pilot Mediation Project is voluntary and the PBGC will only offer it in certain cases. The PBGC stated that a case will generally not be eligible for the Pilot Mediation Project if [1] the plan sponsor has a minimal ability to pay, [2] there is a pending court proceeding, or [3] there is limited time to act and the plan sponsor has declined to sign a standstill or tolling agreement." (Proskauer's ERISA Practice Center)
[Opinion] The Fallacy of 401(k) Loans
"[E]ven though the stated 401(k) loan interest rate might be 5%, the borrower pays the 5% to themselves, for a net cost of zero. That doesn't mean a 401(k) loan should be considered part of an investment strategy. Indeed, the opportunity cost of not investing the money that would otherwise go into the 401(k), combined with sacrificed tax-deductibility and employer matching, makes it an exceptionally poor investment vehicle. So why do people borrow against their 401(k) plans in the first place?" (Michael Kitces, via Financial Planning)
Digital Nudges: Next Step in Improving Participant Retirement Savings
"Showing participants the tax incentive of saving in their defined contribution (DC) plan resulted in only an ROI of $1.24 in savings per $1 spent.... Showing participants the matching contributions they will receive had a better ROI of $5.59 in savings, and financial education generated an ROI of $14.58 in savings. However, a simple email nudge showing what amount a participant would accumulate over time or the amount they would get if they took action resulted in an ROI of $1,600." (PLANSPONSOR)
[Guidance Overview] Text of PBGC Release 17-7: Pilot Mediation Project Launched to Resolve Certain Termination Liability Collection and Early Warning Program Cases
"PBGC chose Termination Liability Collections cases and Early Warning Program matters for the pilot project as potentially reaping the greatest benefit from mediation.... After one year, PBGC will evaluate the Mediation Pilot's success on multiple metrics, including: Percent of eligible cases opting for mediation, Resolution rate and time to resolution, and Cost savings." (Pension Benefit Guaranty Corporation [PBGC])
IRS Issues Model Amendments for Bifurcated Distribution Options (PDF)
"Plan sponsors may limit the extent that bifurcation is available with respect to a participant's accrued benefit. Other limitations may include the number of forms of distribution among which an accrued benefit may be bifurcated or the combinations of forms of distribution that are made available. The model amendments include language that allow for these limitations." (Prudential)
Consolidation Hitting Third Party Administrators
"The relatively quiet domain of third party administrators is seeing increased consolidation as owners hit retirement age and plan sponsors demand more robust services.... [As] plan sponsors become savvy about the fees they are paying and their own fiduciary responsibilities, they want additional offerings and more choices. Many smaller TPA firms don't have the resources to compete in the marketplace and still make money, which has fueled a major wave of buy-outs." (Employee Benefit News)
Eleventh Circuit Opinion: ERISA's Six-Year Statute of Limitations is Subject to Express Waiver (PDF)
"In particular, this interlocutory appeal requires us to determine whether a defendant is capable of expressly waiving the six-year statute of repose contained in ERISA Section 413(1) -- or whether instead, the protection provided by [that section] is so essential, so fundamental, that it (seemingly almost alone among personal rights) is inherently indefeasible and unwaivable. We won't bury the lede. In response to the district court's certified question, we answer yes -- [that section's] statute of repose is subject to express waiver." [Sec'y, U.S. Dept of Labor v. Preston, No. 17-10833 (11th Cir. Oct. 12, 2017)] (U.S. Court of Appeals for the Eleventh Circuit)
[Official Guidance] Text of IRS Instructions for Form W-12: Paid Preparer Tax Identification Number (PTIN) Application and Renewal (PDF)
Rev. Oct. 2017. "What's New: ... You will be prompted to submit supporting documentation online. Once you have uploaded your identity proofing documentation, IRS will review it and make a determination.... The address for submitting your application by mail has changed." [Also available: Form W-12, rev. Oct. 2017] (Internal Revenue Service [IRS])
[Official Guidance] Text of PBGC Disaster Relief Announcement 17-17 in Response to Wildfires in California
"[PBGC] is waiving certain penalties and extending certain deadlines in response to wildfires that began on October 8, 2017, in California.... The disaster area consists of Butte, Lake, Mendocino, Napa, Nevada, Sonoma and Yuba Counties." (Pension Benefit Guaranty Corporation [PBGC])
[Official Guidance] Text of IRS Notice 2017-63: Weighted Average Interest Rates, Yield Curves, and Segment Rates Applicable for October 2017 (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])
Cybersecurity Threats: What Retirement Plan Sponsors and Fiduciaries Need to Know -- and Do (PDF)
"Identify and document who has what responsibilities for strategy implementation within the plan sponsor organization, the fiduciary body, and at third-party service providers ... Entities involved in benefit plan cybersecurity should agree to the frequency and type of testing procedures to be conducted and by whom ... Include ongoing training of staff involved with benefit plans and with direct or indirect access to benefit plan data.... Evaluate service provider controls and security programs ... Determine the level and type of insurance coverage the service provider maintain[.]" (Poyner Spruill LLP, via Journal of Pension Benefits)
[Official Guidance] Text of IRS IR 2017-172: Disaster Relief for Victims of California Wildfires (PDF)
"Currently, the IRS is providing relief to seven California counties: Butte, Lake, Mendocino, Napa, Nevada, Sonoma and Yuba. Individuals and businesses in these localities, as well as firefighters and relief workers who live elsewhere, qualify for the extension. The agency will continue to closely monitor this disaster and may provide other relief to these and other affected localities." (Internal Revenue Service [IRS])
Loose Language Makes Second-Level Appeal a Right, Not an Obligation
"The plan administrator asserted that the lawsuit was premature because the claimant had not completed the plan's required second-level appeal to the appeals committee and thus had not exhausted her administrative remedies ... The claimant's appeal was made to -- and denied by -- a contracted claims administrator, not the committee. The court concluded that the claimant's suit was permitted because nothing in the plan's communications expressly required second-level appeals or an appeal to the committee. The court's analysis focused on the summary plan description (SPD) and the letter denying the claimant's appeal." [Laura B. v. United Health Group Co., No. 16-1639 (N.D. Cal. Aug. 25, 2017)] (Thomson Reuters / EBIA)
[Guidance Overview] Hurricane Relief Legislation for Retirement Plans
"[W]ith the Disaster Tax Relief and Airport and Airway Extension Act, Congress has provided both for hardship distribution tax relief and more generous participant loan rules for participants whose principal abodes were in one of the declared disaster areas for Hurricane Harvey, Hurricane Irma or Hurricane Maria at the time that the respective hurricane hit." (Kilpatrick Townsend)
[Guidance Overview] DOL Publishes Proposed Rule to Delay Implementation of New ERISA Disability Claims Regs
"[Some of the information] the DOL wants to consider ... [1] the number of disability claims that are filed and denial rates for such claims ... [2] how often plans rely on new or additional evidence or rationales during the claims review process ... [3] loss ratios and the breakdown of expenses (claims, sales, claims processing, etc.); [4] aggregate, average, and median benefits paid and ages of claimants; [5] the projected litigation costs associated with the new procedural requirements for disability claims provided in the Final Rule; [6] the number of new claims that will be granted that, but for the provisions in the Final Rule, would have been denied, and the value of those benefits[.]" (Lane Powell PC)
[Guidance Overview] Final Rule on Mortality Tables for Defined Benefit Plans Issued (PDF)
"The final rule generally is applicable for plan years beginning on or after Jan. 1, 2018, but also provides a limited one-year transition period (to Jan. 1, 2019), in certain circumstances.... Also released was Revenue Procedure 2017-55, providing instructions to obtain IRS approval of plan-specific mortality tables. Although the final rule is aimed at single-employer DB plans, its mortality assumptions are also used to determine 'current liability' for multiemployer pension plans and cooperative and small employer charity (CSEC) plans." (Milliman)
Employee Benefit Plans: Mistakes and Summary of Available Correction Programs
"Employee benefit and retirement plans are required to comply with a number of complex laws and regulations, and failure to do so can result in significant penalties and/or disqualification of a plan.... Despite best intentions different plan errors can occur. The good news is that there are correction program options available for plan sponsors without sacrificing the qualified status of a plan." (WithumSmith+Brown, PC)
IRS Warns Taxpayers, Tax Pros of New E-Services Scam
"The scam email claims to be from 'e-Services Registration' and uses 'Important Update about Your e-Services Account' in the subject line. It states, in part, 'We are rolling out a new user agreement and all registered users must accept its revised terms to have access to e-Services and its products.' It asks the individual to review and accept the agreement but takes them to a fake site instead." (Internal Revenue Service [IRS])
Fake Insurance Tax Form Scam Aims at Stealing Data from Tax Pros, Clients
"There may be variations but here's how one scam works: The cybercriminal, impersonating a legitimate cloud-based storage provider, entices a tax professional with a phishing email. The tax professional, thinking they are interacting with the legitimate cloud-based storage provider, provides their email credentials including username and password. With access to the tax professional's account, the cybercriminal steals client email addresses. The cybercriminal then impersonates the tax professional and sends emails to their clients, attaching a fake IRS insurance form and requesting that the form be completed and returned." (Internal Revenue Service [IRS])
[Guidance Overview] What to Do -- or Not Do -- with the Disability Claims Rules?
"At this point, it is unclear what, if any, modifications might be considered to the final rules. Because ERISA-governed plans are already required to include adequate claims procedures, following existing procedures should be sufficient during this interim review." (Holland & Hart LLP)
[Official Guidance] Text of PBGC Interest Rate Update for Benefits Payable in Terminated Single-Employer Plans, November 2017
"The November 2017 interest assumptions under the benefit payments regulation will be 0.75 percent for the period during which a benefit is in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. In comparison with the interest assumption s in effect for October 2017, these assumptions are unchanged." (Pension Benefit Guaranty Corporation [PBGC])
DOL Is Stepping Up 'Missing Participant' Pension Plan Audits
"Following the success of the Philadelphia pilot program, the initiative is now going national. DOL auditors will monitor plan sponsors' failures to locate and contact missing participants and will treat the failure to do so as a breach of fiduciary duty under [ERISA], which can trigger substantial penalties." (Society for Human Resource Management [SHRM])
[Guidance Overview] Spending Quality Time with Your Pension Plan Actuary
"Employers sponsoring single employer pension plans will see the new mortality tables go into effect first for the 2018 valuation which will probably increase the annual contribution due to be paid to the plan in 2019.... Many plans have been drafted to incorporate by reference the statutorily dictated mortality tables and may not require an amendment to adopt these new mortality tables, but any defined benefit pension plan should be reviewed to determine whether it may require updating in one of the various areas impacted by these new mortality tables." (Winstead PC)
Getting Through the 5500 Season Without Xanax
"Always start to fill out your questionnaires early.... Check every line of your vendor's draft.... Cooperate with your auditor to get the audit finished on time.... Still having problems? Consider a new auditor." (Cohen & Buckmann, P.C.)
Impact of the Fiduciary Rule on Plan Sponsors
"Some of your service providers were not fiduciaries before June 9, but now they are. You need to understand what their new role is, how this changes their services, how it changes their compensation and what new conflicts of interest they may have.... Recommendations to participants about taking a distribution from the plan and rolling it over to an IRA are now fiduciary advice. This requires an advisor to engage in an analytical process before making a recommendation. And this may mean recommending that a terminating employee leave his account in the plan." (Drinker Biddle)
[Guidance Overview] New Law Provides Additional Relief for Hurricane Victims (PDF)
"[W]hile the Act increased the limit on nontaxable loans to $100,000 or 100% of the participant's vested account balance, it did not similarly increase the ERISA loan limit. As a result, a plan loan equal to 100% of a participant's vested account balance would not be considered a taxable distribution but could be a prohibited transaction, if the plan administrator does not obtain additional security for the loan outside the plan." (Prudential)
It Takes a Committee: The Best Ways to Govern DC Plans (PDF)
13 pages. "Plans with higher participant counts were more likely to have separate committees -- administrative and investment -- than smaller plans ... Across committee types, poor participation and clarity around roles corresponded with a higher-than-average number of committee members.... While most committees reported annual or at least periodic fiduciary training, nearly one in seven respondents from single committees noted no fiduciary training had been done." (Callan Associates)
[Guidance Overview] Mortality Table Updates Finalized for 2018 (PDF)
"Although a limited transition rule is available for funding purposes, the updated tables form the basis for the mandatory unisex tables used for minimum lump-sum values and maximum benefits under Code Section 415.... Updated rules for substitute, plan-specific mortality tables have been released and permit the use of tables reflecting partially credible experience for plans that are too small to have fully credible experience." (Conduent)
How to Reduce Your ERISA Risks, and the Role of Fiduciary Liability Insurance (PDF)
28 pages. "[This report provides] an overview of the most prevalent (and serious) types of ERISA claims currently being filed ... discusses a variety of plan-drafting and plan administration measures that plan sponsors and fiduciaries should consider to mitigate litigation exposure ... [and] considers why fiduciary liability insurance should be deemed an integral part of any employee benefits program[.]" (Groom Law Group, for Chubb)
A Tax-Advantaged Way to Distribute Employer Stock from Retirement Plans
"[T]he net unrealized appreciation distribution strategy ... allows for capital gains treatment of any embedded appreciation, rather than having it taxed as ordinary income.... A key requirement here is that the distribution must be considered a lump-sum distribution." (Morningstar Advisor)
DOL Proposes Delaying Implementation of Disability Claim Regs
"There will be a 15-day period for comments on the proposal to extend the applicability date. There will also be a 60-day period to submit 'comments providing data and otherwise germane to the examination of the merits of rescinding, modifying, or retaining the rule' ... Carriers insuring approximately 18 million LTD plan participants estimated that the Final Rule would cause average premium increases of 5% to 8% in 2018, which would be expected to result in an equivalent reduction in covered employees." (Robinson & Cole LLP)
[Official Guidance] Text of IRS Rev. Proc. 2017-57: Procedures for Requesting Approval for a Change in DB Plan Funding Method (PDF)
17 pages. "This revenue procedure sets forth the procedure for obtaining approval of the [IRS] for a change in the funding method used for a defined benefit plan ... This revenue procedure also sets forth the procedure for obtaining approval of the IRS to revoke an election relating to interest rates ... The request should generally be made no later than 2-1/2 months following the close of the plan year for which the change is to be effective. Requests made after 2-1/2 months following the close of the plan year generally will not be considered unless the request involves a plan merger.... The information specified in this section 4.03 must accompany the request[.]" (Internal Revenue Service [IRS])
[Official Guidance] Text of IRS Rev. Proc. 2017-56: Automatic Approval for Certain Funding Method Changes for Single-Employer DB Plans (PDF)
21 pages. "Section 3 of this revenue procedure provides automatic approval for three asset valuation method changes, automatic approval for two valuation date changes, and automatic approval for one type of change in the treatment of benefits funded through insurance contracts. Section 4 of this revenue procedure provides automatic approval for a change in funding method in special situations in which there is a change in the plan's actuary, actuarial software, or the data elements used in the actuarial valuation, and for fully funded terminating plans. Section 5 of this revenue procedure provides automatic approval for a change in funding method in connection with a plan merger." (Internal Revenue Service [IRS])
[Guidance Overview] IRS Finalizes New Mortality Table Rules for Pension Plans (PDF)
"Some in the plan sponsor and actuarial community had argued that the required use of the tables should be delayed to allow plans and plan sponsors more time to adjust. To partially address this concern, the final regulations allow plan sponsors to delay the application of the new tables for one year, but only for funding purposes. This delay option is not available for purposes of calculating the value of lump sum or other distribution options subject to the minimum present value calculations of Code section 417(e) -- the new tables must begin to be used for these purposes in 2018." (Groom Law Group)
[Guidance Overview] Recent IRS Guidance on Curing Missed Loan Payments
"The IRS's conclusion that future payments may be applied to cure previously missed payments is consistent with most practitioners' existing interpretation of IRS regulations. The IRS's conclusion that missed loan repayments could be cured through refinancing was much less certain, since the missed payments are not actually made within the cure period." (Mazursky Constantine LLC)
[Guidance Overview] Bifurcated Distribution Options Made Easier
"[IRS Notice 2017-44] provides model language that plan sponsors may use to calculate a bifurcated distribution option in compliance with the final regulations. The Notice makes clear that plan sponsors are not required to use the model language, so existing plan provisions that appropriately describe bifurcated distributions need not be amended." (Spencer Fane)
Dangerous Fiduciary Assumptions
"[1] Assuming that not being required to have an investment policy statement means you don't need to have an investment policy.... [2] Assuming that all target-date funds are the same.... [3] Assuming that hiring a fiduciary keeps you from being a fiduciary.... [4] Assuming that all expenses associated with a plan can be charged to the plan.... [5] Assuming that the worst-case deadline for depositing participant contributions is the deadline.... [6] Assuming you have to figure it all out on your own." (National Association of Plan Advisors [NAPA])
What Issues Should Be Addressed in a Benefits Tech Policy? (PDF)
"The organization's parameters and vetting process for usage of technological tools handling sensitive employee data.... Standards for service providers and tech tools.... Standards for employees establishing and maintaining use of the benefits tech tools.... Cybersecurity insurance requirements.... Plan fiduciary responsibility." (Epstein Becker Green, via Confero)
Improved Mortality Assumptions to Affect Pension Funding Calculations from 2018
"As a result of the new mortality assumptions funding target liabilities are expected to increase by roughly 2-4% while liabilities for PBGC variable rate premium purposes are expected to increase by a slightly larger amount. Any increase in funding liability will increase minimum required contributions -- the Society of Actuaries estimates a cumulative increase of 11% on required contributions." (Russell Investments)
[Official Guidance] Text of DOL Proposed Delay of Effective Date for Claims Procedure Regs for Plans Providing Disability Benefits
"The [DOL] proposes to delay for ninety (90) days -- through April 1, 2018 -- the applicability of the Final Rule amending the claims procedure requirements applicable to ERISA-covered employee benefit plans that provide disability benefits.... The Final Rule currently is scheduled to apply to claims for disability benefits under ERISA-covered employee benefit plans that are filed on or after January 1, 2018.... The [DOL] accordingly seeks public comment on a proposed 90-day delay of the applicability of the Final Rule in order to solicit additional public input and examine regulatory alternatives. If this proposal is finalized, the amendments made on December 19, 2016, would become applicable to claims for disability benefits that are filed after April 1, 2018, rather than January 1, 2018." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])
Does Your Plan Need an Internal Controls Policy?
"An internal controls policy spells out the procedures plan administrators and recordkeepers will follow to keep the plan in compliance with the huge number of technical rules that must be followed. It isn't designed only to prevent overpayments or penalties but has a broader purpose of ensuring that the plan is run properly." (401kTV)
[Guidance Overview] Treasury Issues Final Rule: Mortality Tables for Defined Benefit Plans
"The Rule will generally result in [1] higher present values in defined benefit plan lump sum distribution calculations, and thus larger cash payouts, and [2] higher minimum funding obligations for employers maintaining single-employer defined benefit plans, as the new mortality tables reflect increased life expectancies for participants and beneficiaries." (Morgan Lewis)
Can a Court Invalidate the Social Security Offset Provision Because Benefits Were 'Wrongfully Denied'?
'[The district court said:] 'Allowing Unum the offset it seeks would still compensate Hart for Unum's wrongful termination of benefits through the age of 65 but not for the reduction of her social security retirement benefits thereafter.' ... The Court awarded prejudgment interest, which is an 'element of compensation, not a penalty.'... There is some authority allowing a court to exercise 'equitable power' to deny offsets, but those cases are distinguishable. " [Hart v. Unum Life Ins. Co. of America, No. 15-5392 (N.D. Cal. Oct. 4, 2017)] (Lane Powell PC)
IRS Reveals FY 2018 Compliance Priorities
"The IRS says planned topics include ... [1] qualification requirements for defined contribution church plans; [2] the application of new regulations regarding qualified nonelective and qualified matching contributions; [3] the availability of single-sum distribution options; [4] the use of all three segment rates to credit interest in a cash balance plan; and [5] the treatment of excess contributions in simplified employee pension (SEP) plans." (PLANSPONSOR)

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