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Ret plans - design


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World's Major Economies to Come up $400 Trillion Short on Retirement Savings
"Longer life spans and disappointing investment returns will help create a $400 trillion retirement-savings shortfall in about three decades, a figure more than five times the size of the global economy ... That includes a $224 trillion gap among six large pension-savings systems: the U.S., U.K., Japan, Netherlands, Canada and Australia ... China and India account for the rest." (Bloomberg)
ESOP Trends in the Marketplace (PDF)
17 presentation slides. "[1] Sophisticated pre-transaction structure analysis. [2] Investigation of an ESOP transaction in connection with other events. [3] Allowing a 'market' process to include an ESOP transaction alternative. [4] Exploration of tax planning opportunities. [5] Development of sophisticated economic transactions. [6] Post transaction planning. [7] ESOP-owned S corporations beginning acquisition strategy (typically 'mature' ESOP situation). [8] ESOP-owned companies increasing attractiveness to strategic buyers (end of ESOP lifecycle)." (McDermott Will & Emery)
Are You Being Too Frugal During Retirement? The Actuarial Budget Benchmark Can Help You Decide
"Now researchers are telling us that many retirees are being 'overly cautious' with their investment and spending strategies. [A] recent analysis ... shows, among other things, 'adults become less optimistic about future economic growth and financial health as they age and 'perhaps as a reaction to declining financial optimism, the average adult 60 years or older will trim their spending by about 2.5 percent every year, or by about 20 percent over a 10-year period.' " (Ken Steiner, FSA Retired)
Safe Savings Rates with Real-World Income Growth
"[O]nce we account for more realistic 'earnings curves' of workers, it becomes clear that the decline in real earnings over the last 10-20 years of one's career may actually reduce the retirement need -- at least if we assume individuals prefer a smooth transition from pre-retirement to post-retirement spending. As a result, conventional assumptions may actually overstate the required savings rates for all but the top 20% of income earners, while understating the need for top earners (who advisors are most likely to be working with!)." (Nerd's Eye View)
How NC Public School Teachers Choose to Participate When 401(k), 403(b), and 457 Plans Are Offered Simultaneously
"This study examines the decisions [North Carolina public school] employees make and the implications for retirement saving in a multiplan environment. Key Insights: [1] A third of North Carolina public school employees contribute to a retirement plan. [2] Only a tenth of plan participants contribute to two or more plans. [3] Highly compensated employees show no tendency to use secondary plans to exceed annual contribution limits." (TIAA Institute)
Economic Loss: The Hidden Cost of Prevailing Public Pension Plan Reforms (PDF)
28 pages. "76% of the money coming into public pensions comes from investment earnings. The same figure in 1940 was only 22%. The 2015 Census data show that state pensions are funded at a level of 76.3%... Using models and parameters developed through our 2015 analysis of empirical data, we estimate that if dismantling of pensions continues, the economy will suffer $3.3 trillion in damage in 2025.... Our analysis shows that in 2025 the economy is likely to grow at 4.00%, the same rate predicted by the Congressional Budget Office. 6 This rate, we project, will be dragged down to 3.29% if the dismantling of public pensions continues." (National Conference on Public Employee Retirement Systems [NCPERS])
[Opinion] Trump Leads Attack on Retirement Security
"Trump's 2018 budget would make federal employees pay more for their pensions, while simultaneously cutting their retirement benefits. His proposal: [1] Increases employee contributions to FERS by 1 percent per year for 5 or 6 years. [2] Calculates pension benefits based on the highest five years of salary rather than the highest three years. [3] Eliminates cost of living adjustments (COLA) for current and future FERS employees." (National Public Pension Coalition)
[Guidance Overview] Changes to Puerto Rico's Tax Code and Trust Act Could Impact HCEs
"The Act sets the threshold for HCEs to $150,000 (currently $120,000 in the U.S., and previously the threshold under P.R. law). This HCE threshold is fixed, while the U.S. threshold is subject to cost-of-living adjustments.... Limits on per-participant contributions to defined contribution plans are currently the same under both the P.R. and U.S. tax codes: the lesser of 100% of compensation or $54,000. The Act limits contributions to the lesser of 25% of 'net income' or $75,000." (Willis Towers Watson)
Americans Approaching Retirement Share Their Vision of Success for Their Post-Career Lives
"Among individuals who are 55 to 68 years old and planning to retire in the next five years, 96 percent say the flexibility to do what they want, when they want is an important consideration to their definition of a successful retirement. Spending time with family and friends (93 percent), relaxing (92 percent) and having the time to travel (80 percent) also are important to near-retirees." (TIAA)
Facts About Women's Retirement Outlook (PDF)
26 presentation slides. "Only 10 percent of women are 'very confident' in their ability to fully retire with a comfortable lifestyle, compared to 19 percent of men.... Many expect to retire after age 65 or not at all ... Half plan to work in retirement ... A majority of women are taking proactive steps to help ensure they can continue working past age 65.... Most lack a plan B if forced into retirement sooner than planned ... Seven in 10 women are saving for retirement." (Transamerica Center for Retirement Studies)
Vermont Poised to Become Latest State to Set Up Retirement Program for Small Businesses
"The Vermont legislature passed an economic-development bill, S.135, establishing the Green Mountain Secure Retirement Plan, a multiple employer plan available on a voluntary basis to employers with 50 employees or fewer. Vermont intends to implement the program starting in January 2019[.]" (InvestmentNews)
Solving for Data Transparency in the Retirement World
"The migration to super omnibus accounts and the increasingly complex and interdependent retirement marketplace has led to a demand for more transparency, because robust reporting can help the firms involved provide services more effectively.... [ICI's Retirement Plan Reporting(RPR)] solution ... is based on the records of service providers (such as a plan recordkeepers or administrators). RPR contains two main plan-level data sets: plan information and plan investments." (Investment Company Institute [ICI])
Trump's 2018 Budget Reportedly Targets Federal Retirement Programs
"According to [one report], Trump's spending plan ... will require federal workers to contribute an additional percentage point to the Federal Employee Retirement System each year until they match the federal contribution, likely within five to six years. The total increase in cost to employees would be around 6 percent at the end of the phase-in period.... The plan also eliminates cost of living adjustments for current and future FERS employees, and it would cut Civil Service Retirement System COLA adjustments by 0.5 percent." (Government Executive)
[Guidance Overview] Recent Legislation Impacts Puerto Rico Tax-Qualified Retirement Plans
"[S]ome of the main changes adopted by the Act include ... New maximum on contributions ... New definition of Highly Compensated Employee (HCE) ... New safe harbor for Cash or Deferred Arrangement (CODA) Plans ... Although the Act was effective immediately and, technically speaking, requires Puerto Rico qualified plans to adopt amendments incorporating its provisions ... PR Treasury officials informally instructed [practitioners] ... to wait before adopting and implementing the Act until PR Treasury examines the scope of the new qualification requirements and issues guidance regarding their implementation." (McConnell Valdes)
Trump Signs Measure Ending Safe Harbor for State-Run Private-Sector Plans
"Legislation removing safe harbors for states to implement private-sector retirement programs was signed [May 17] by President Donald Trump, who signed a similar measure against cities and large political subdivisions on April 13. Rep. Tim Walberg, R-Mich., chairman of the Education and the Workforce Subcommittee on Health, Employment, Labor, and Pensions, in a statement called the safe harbors 'a misguided regulatory loophole that would discourage small businesses from providing retirement benefits and put the hard-earned savings of workers at risk.' " (Pensions & Investments)
Why Most Teachers Get a Bad Deal on Pensions
"States and school districts spend more than $50 billion each year on teacher pensions.... Despite the widely held belief that pensions entice teachers to stay on the job ... states base the financial health of their plans on the opposite assumption. State projections, based on historical data of teacher behavior, assume that pension eligibility does not encourage early-career teachers to stay on the job, and that pension rules push most veterans to leave as soon as they reach retirement age." (EducationNext)
Fiduciary Rule Debate Impacts State-Run Plans for Private Sector
"A new bill introduced by Senate minority Democrats, seeking to protect ERISA exemptions for state- and city-run retirement plans for the private sector, would likely be made redundant with the removal of the Obama-era fiduciary rules." (planadviser)
Lessons for Private Sector Retirement Security from Australia, Canada, and the Netherlands (PDF)
"This paper ... [outlines] social security and universal, quasi-universal, and voluntary employer-provided retirement plans in Australia, Canada, and the Netherlands.... [W]hile the level of risk borne by employees varies across the three countries' retirement income systems, risks are pooled among workers or offset by employers and government to a greater extent than in the U.S." (National Institute on Retirement Security [NIRS])
2016 State-By-State Information on PBGC Payments to Retirees
"[This] state-by-state map shows how much PBGC pays in benefits to our participants, listing the dollars and number of people paid in each state. Some of the interesting information you can glean from the 2016 data is that Ohio ranks as the state with the most benefits paid, $557,021,996 to 78,929 retirees; next, in Pennsylvania, 79,687 retirees were paid $464,996,076 in benefits; while 57,874 retirees in Florida received $414,878,111 in benefits." (Pension Benefit Guaranty Corporation [PBGC])
Testimony on the Costs of Federal Civilian Personnel: A Comparison With Private-Sector Employees (PDF)
"Average benefits were 52 percent higher for federal employees whose highest level of education was a bachelor's degree than for similar private-sector employees ... Average benefits were 93 percent higher for federal employees with no more than a high school education than for their private-sector counterparts. Among employees with a doctorate or professional degree, by contrast, average benefits were about the same in the two sectors. On average for workers at all levels of education, the cost of benefits was 47 percent higher for federal civilian employees than for private-sector employees with certain similar observable characteristics, CBO estimates." (Congressional Budget Office [CBO])
ERISA Advisory Council to Meet June 6-8
"[T]the 186th open meeting of the Advisory Council on Employee Welfare and Pension Benefit Plans (also known as the ERISA Advisory Council) will be held on June 6-8, 2017.... The Advisory Council will study the following topics: [1] Reducing the burden and increasing the effectiveness of mandated disclosures with respect to employment-based health benefit plans in the private sector, and [2] Mandated disclosure for retirement plans -- enhancing effectiveness for participants and sponsors." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])
Perspective on Annuities for Accumulation in Defined Contribution Plans
12 pages. "The case for using annuities as savings vehicles in defined contribution plans in the accumulation phase rests on assumptions that they will provide income streams after retirement, yet few participants actually convert them into income streams.... Because it is challenging to predict whether or how much annuity income will be needed, it may be best to delay decisions about annuitizing wealth until closer to retirement." (Vanguard)
Importance of DC Plans, IRAs and Home Equity in Family Total Wealth (PDF)
16 pages. "This study first looks at the percentage of families with a working family head that have low levels of assets, and then examines the percentage of these families that have [individual account retirement plans (employment-based DC plans and IRAs)].... The study concentrates on families with working family heads ages 25 to 64 to show how workers are accumulating assets at different ages up to retirement age.... The percentage of families with a working head ages 25-64 that have one of these types of plans range from 50.4 percent for families with a head ages 25-34 to 71.4 percent for those families with a head ages 55-64." (Employee Benefit Research Institute [EBRI])
[Opinion] Five Ways to Fix the Saver's Credit
"[1] Update the messaging and positioning.... [2] Implement an ongoing educational campaign to promote the Saver's Credit and how to claim it.... [3] Encourage employers to promote the Saver's Credit among their employees.... [4] Add the ability to claim the credit on Form 1040EZ ... [5] Facilitate the depositing of the amount that a tax filer receives from the Saver's Credit into a retirement account." (National Association of Plan Advisors [NAPA])
The Power of Defined Contribution Plan 'Wellness' (PDF)
"This paper explores the relationship between plan wellness and retirement readiness and provides a framework for sponsors and their advisors to evaluate their plan wellness with a focus on balancing participant outcomes and cost efficiency." (Prudential)
Widening Gap in U.S. Life Expectancy Based on Geographic Location
"[R]ecent gains in longevity aren't being enjoyed equally in all corners of the United States. In fact, depending on where you live in this great country, life expectancy can vary more than 20 years -- a surprisingly wide gap that has widened significantly in recent decades. Researchers attribute this disturbing gap to a variety of social and economic influences, as well as differences in modifiable behavioral and lifestyle factors, such as obesity, inactivity, and tobacco use." (National Institutes of Health)
Default Deferral Rates for DC Plans Get a Nudge Upward
"Defined contribution plans that offer auto enrollment are moving away from the traditional initial deferral of 3% of annual salary to higher amounts -- sometimes to 6% or more -- nudging participants to expand their contributions." (Pensions & Investments)
How 401(k) Plan Design Can Increase Retirement Savings
"[1] More is not better. Have a limited number of high-quality investment choices.... [2] Have a good default investment for participants who don't choose their own.... [3] Monitor fees.... [4] Add managed accounts as a choice.... [5] Implement auto-enrollment and auto-escalation.... [6] Offer lifetime income options.... [7] Limit in-service withdrawals and loans.... [8] Seek professional advice." (PenChecks)
Income Illiteracy May Favor Simple Annuities
"Asset allocation, the 4 Percent Rule retirement portfolio withdrawal mantra, return on asset classes, tax implications, Social Security strategies -- many of these concepts in retirement finance are lost on millions of retirees. But talking to retirees about investing all or a portion of their $200,000 nest egg into an income annuity generating $700 a month for the rest of their lives? It doesn't get much easier than that[.]" (InsuranceNewsNet.com)
Could a Switch to Roth Be Good for Retirement Security?
"[T]he break-even point in terms of where the tax advantages of Roth at the back end in retirement largely equal out the advantages of deferral at the front end lies at a 9.1% reduction in contributions. Beyond that point, the Roth option (and the assumed reduction in retirement savings) worsens the retirement savings shortfall -- though even assuming a 25% reduction, the shortfall deepens by a mere 2.6%." (American Society of Pension Professionals & Actuaries [ASPPA])
Employees of Small Businesses Want Improvements to Benefits
"Although small businesses are fostering happy workplaces, 72% of respondents indicate that an improvement in their benefits offerings would make them even happier. The report also generated 22% of respondents that say their benefits offerings is one thing they like least about working for a small business." (HRDailyAdvisor)
Retirement Planning: Coping with Higher Health Care Costs (PDF)
"Longer lives -- not disease -- are driving current and projected increases in health care costs that well exceed general inflation, placing the budgets of many retirees, now and in the future, under tremendous pressure.... [D]emographics as well as generational, gender, and geographic differences all play a role in the equation.... [F]inancial advisors will need to rethink their advice on how to accrue retirement income. Growth investment strategies can help retirees, while leaving properly funded legacies." (Prudential, Via Journal of Financial Service Professionals)
Your Retirement Plan: Set It, But Don't Forget It
"When it comes to planning for retirement, there are three commonly automated arrangements that warrant a one-off, stop-and-think review from time to time: beneficiary designations, plan participation and investment allocation." (Certified Financial Planner [CFP] Board of Standards, Inc.)
Average Retirement Balance Hits Record on 401(k) 'Autopilot'
"The average balance in a 401(k) defined-contribution account at Fidelity Investments hit a record $95,500 in the first quarter, up more than 9 percent from a year earlier ... 27 percent of workers in a Fidelity plan increased their contributions, as a percentage of their salaries, over the past 12 months.... In the first quarter, 68 percent of the rise in savings rates of workers under age 30 was due to automated increases[.]" (Newsmax)
Choosing the Savings Strategy That's Right for You (PDF)
"Depending on a person's current health, family history, and lifestyle, he or she may be more or less inclined to maximize savings for medical expenses. Depending on a person's charitable giving strategy or the size of her or his family, she or he may be more or less likely to buy life insurance. Income and age make a difference, as well. That said, there is a general savings hierarchy that some experts suggest as a way to start thinking about a strategy." (Lockton)
An Overview of Current Retirement Policy Legislation
"[T]his article [reviews] several bipartisan retirement policy initiatives being considered by Congress.... [1] [T]hree bills introduced in 2017, in the 115th Congress, addressing the issues of lifetime income disclosure, leakage and plans with closed groups.... [2] [P]roposals from the 114th Congress that may come up again in the 115th Congress -- legislation addressing the issue of 'lost' benefits and Senator Hatch's (R-UT) Retirement Enhancement and Savings Act of 2016." (October Three Consulting)
[Guidance Overview] Mid-Year Changes to Your Safe Harbor Plan
"Examples of permissible mid-year changes, given they meet the notice requirement, include: [1] Changes to the plan's default investment fund. [2] Changes to the plan's rules for dispute arbitration. [3] Increase in future safe harbor non-elective contributions from 3% to 4% for all employees. [4] Mid-year changes as required by law." (Butterfield Schechter LLP)
California Officials Move Forward with New Private-Sector Retirement Plan
"California leaders say they will push ahead with their plan for a state-run retirement program -- a move that sets the stage for a legal battle with businesses, trade groups and possibly federal regulators.... One of the key points of contention could be over whether employees who enroll in the California Secure Choice program and similar plans are doing so on a 'completely voluntary' basis." (Los Angeles Times)
What We Know for Sure About In-Retirement Withdrawal Rates
"[1] Most retirees don't want huge swings in their portfolio paychecks (and standards of living) determined by outside forces.... [2] But in reality, spending changes throughout retirement.... [3] Over many retirement periods, the 4% guideline has been too conservative.... [4] But many people would rather be safe than sorry.... [5] Lower expected returns put the 4% guideline at risk, especially for bond-heavy portfolios.... [6] New and soon-to-be retirees should be prepared to rein in spending.... [7] Income-centric strategies aren't a shield." (Morningstar)
Planning for a Safe Withdrawal Rate: Introducing the Actuarial Budget Benchmark (ABB)
"Your Actuarial Budget Benchmark is a relatively transparent annual calculation of your recurring spending budget in retirement based on your spending goals and your data, but based on a specific set of assumptions about the future, that may change each year. The calculation is designed to approximate the market value of your future spending liabilities.... The ABB can also help [to balance] a retiree's desires to avoid unnecessary fluctuations in spending and mitigate sequence of return risk." (Ken Steiner, FSA Retired)
What Is Your Strategic Vision for Your ESOP?
"After the ESOP loan is repaid and all the shares have been allocated new issues arise.... [T]he first questions that need to be answered are: What are your long-term plans for your ESOP? Is it short-term ownership strategies to help with ownership transition on a tax-favored basis? ... If employee ownership using your ESOP is your long-term ownership strategy, there are several strategies available to make shares available for allocation after your ESOP loan is paid off." (Principal Financial Group)
Why Your 401(k) Is Vulnerable as Tax Reform Plays Out in Washington
"[A]lthough getting rid of retirement saving deductions could instantly give the government a huge new revenue source, there could be costly consequences for taxpayers. Already the nation is facing a looming retirement crisis because millions of workers aren't saving enough to cover basic needs like food and housing when they can no longer work. Ultimately, if these people need welfare, Medicaid or other aid, taxpayers could be asked to pick up the burden." (Chicago Tribune; subscription may be required)
Potential Impact of Trump Tax Reform Plan on Retirement Plans: What's Old Could Be New Again
"While the Trump Administration has stated that the current version of its 2017 Tax Proposal does not reduce pre-tax contributions to 401(k) plans, speculation continues that a later draft may include curtailment of these contributions or other changes with a similar impact.... [T]he 2014 Tax Proposal provides some insight into the types of provisions that ultimately could be included." (Epstein Becker Green, via National Law Review)
[Opinion] State IRA Plans Are Deeply Flawed
"There's no sense in addressing a national issue with state-by-state solutions.... State IRAs also carry unavoidable design defects.... State IRAs are inferior to 401(k)s.... Writing 50 rulebooks to do one book's work makes little sense. Also, the U.S. retirement system needs less fragmentation and more portability, not the reverse. But ignoring the problem simply won't do." (John Rekenthaler, in Morningstar Advisor)
[Opinion] Could Small Plan Formation Be a First Casualty of Tax Reform?
"[U]nder President Trump's draft proposal, these small business owners -- partnerships, S Corporations, REITs, RICs and small business limited liability corporations -- would only be subject to a 15% maximum tax on pass-through income. On the other hand, if they invest that money in a retirement plan, when withdrawn it would be taxed at the maximum ordinary income rate, which could be in the neighborhood of 35%." (Nevin Adams, for National Association of Plan Advisors [NAPA])
How Freelancers in America Are Keeping Up With Their Retirement Preparation
"Around 38% of the respondents do not save for retirement because of their inability to generate enough income.... As many as 12% freelancers said that retirement plans are too expensive ... [F]reelancers are in favor of a portable retirement plan, which allows them to make contributions even when working with different employers. Further, they require a plan that supports intermittent contributions." (Dmitriy Fomichenko, Sense Financial, via 401kHelpCenter.com)
[Opinion] Oregon Treasurer Says State Will Move Forward with Retirement Savings Plan Despite Impending DOL Safe Harbor Repeal
"The status quo is not working and we must be part of the solution.... OregonSaves will continue to move forward with our pilot program that is launching on July 1 this year. The need to address the oncoming retirement crisis is too great. This action will not halt our commitment to working Oregonians." (Oregon State Treasury)
401(k) Regaining Importance as Future Income Source
"Half of nonretirees expect 401(k) to be a major income source in retirement. This is up from a low of 42% in April 2009, but still below earlier highs. Planned reliance on Social Security is near 17-year high." (Gallup)
[Guidance Overview] Oregon Board Adopts Final Rules to Implement Retirement Savings Program
"Oregon employers play a limited role under OregonSaves, consisting of: [1] collecting contributions and remitting those amounts to the Program Administrator; [2] providing information to the Program Administrator; [3] retaining notice of any employee elections or election changes for no less than three years; [4] recording participating employees' elections in their payroll system in a manner enabling accurate deductions from employee's paychecks; and [5] making clear that the employer's involvement in the program is limited to collecting contributions and remitting them to the Program Administrator." (Littler)
Senate Halts Rule on State-Run IRAs
"The blocked rule allowed states and their subdivisions to design and operate retirement savings programs that would be exempt from certain [ERISA] provisions -- granting them a safe harbor from ERISA reporting and disclosure requirements that employers, as retirement plan fiduciaries, must abide by." (Society for Human Resource Management [SHRM])
[Official Guidance] Text of EBSA Information Request Submitted to OMB: 'On the Road to Retirement Surveys'
"[DOL] is submitting the [EBSA] sponsored information collection request (ICR) proposal titled, On the Road to Retirement Surveys, to [OMB] for review and approval ... Public comments on the ICR are invited.... The Department is planning to undertake a long-term research study to develop a panel that will track U.S. households over several years in order to collect data and answer important research questions on how retirement planning strategies and decisions evolve over time." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])
Senate Repeals Safe Harbors for State-Run IRA Programs
"The Senate narrowly approved a resolution Wednesday to rescind federal safe harbors for states to set up private-sector retirement programs for small businesses.... It mirrors a resolution passed by the House on Feb. 15. A similar resolution that rescinded safe harbors for cities and other large political subdivisions was passed by both chambers and signed on April 13 by President Donald Trump, who is expected to sign the state version shortly." (Pensions & Investments)
[Opinion] ERIC Letter to DOL Supporting Protection of Employer-Sponsored Retirement Plans from State-Mandated Programs
"If states continue implementing their own mandatory auto-IRA programs, ERIC requests that the [DOL] use any and all enforcement actions at its disposal to protect plan sponsors -- that already provide an ERISA-qualified retirement plan to employees -- from burdensome compliance activities that states may impose.... We urge the [DOL] to support the preemption clauses of ERISA and ensure that states do not infringe on employers already providing a quality retirement plan to their employees." (The ERISA Industry Committee [ERIC])
Senate Slated to Vote on Rolling Back State-Run Auto-IRA Safe Harbor
"Senate Republicans feel they have the votes to undo the [DOL's] rules crafting a safe harbor that exempted states' auto-IRA programs from ERISA. The vote on H.J.Res. 66, a Congressional Review Act (CRA) resolution cancelling the Obama administration's regulation on state government-run retirement plans, is expected to occur today [May 3]. It would be the 14th CRA resolution of disapproval sent to the president's desk this year." (National Association of Plan Advisors [NAPA])
75% of State and Local Government Workers Were in DB Plans in 2016
"In March 2016, 75 percent of state and local government workers participated in defined benefit pension plans. Of these workers, 57 percent participated in frozen defined benefit plans, or plans that are not open to new employees. For 98 percent of workers who participated in defined benefit pension plans, employee benefits are based on a percentage of their earnings during a specified number of years, usually at the end of their careers. The other 2 percent of workers participated in cash balance plans, where employees are credited with a specified contribution and a rate of interest on the contribution; the benefits are provided as a lump sum and may be converted to an annuity." (U.S. Bureau of Labor Statistics [BLS])
[Guidance Overview] IRS Guidance on Cash Balance Benefit Formulas: Avoiding Employer Discretion
"IRS confirmed that a cash balance formula based on only a portion of a participant's annual compensation can nevertheless meet the 'definitely determinable' requirement so long as the formula is not subject to employer discretion under the plan terms. The EP staff is directed to apply this analysis when (i) reviewing a cash balance plan's determination letter request, or (ii) auditing a cash balance plan." (Drinker Biddle)
Trump's First 100 Days: A Retirement Policy Perspective (PDF)
"The sentiment in DC is that the proposed individual/corporate rate cuts and deductions will require new revenue to offset the loss. That requirement will likely lead Trump, the GOP, and the Freedom Caucus to the employee benefits exclusions in some way.... [T]he GOP tax plan would reduce the federal government's revenue intake by lowering corporate and individual tax rates.... The exclusion of employer contributions for medical insurance premiums and medical care results in $2.7 trillion in lost revenue from 2016 to 2025, and the combination of defined contribution/defined benefit plans is $1.5 trillion[.]" (Lockton)
Addressing the Risks of Related Employer Status for Benefit Plan Purposes (PDF)
"In determining related employer status, there is no 'conservative' approach.... If a group health plan covers the employees of two or more employers who are not in the same controlled group (but who might be in the same affiliated service group), the plan becomes a MEWA. MEWAs are subject to additional reporting requirements and may also be subject to state insurance laws in some situations. And, if a pension plan covers two or more unrelated employers, it requires special language in the plan document applicable to 'multiple employer plans' as well." (Boutwell Fay LLP)
Retirement Benefits and Executive Compensation Under the New Administration (PDF)
"At best, a reduction in individual tax rates could result in increased contributions to health savings accounts and 401(k) retirement savings plans.... The new fiduciary rule was one of the Trump Administration's first targets.... Because of its popularity with institutional investors, 'Say on Pay' may be phased out over time, but for now it is still firmly in place." (Bryan, Pendleton, Swats and McAllister, LLC)
Disability: The Underappreciated Risk
"Employers can help their employees by educating them ... and by offering and encouraging participation in group long-term disability insurance. Wellness programs that detect health risks before they become chronic conditions can reduce the risk of disability. And, thanks to regulations issued in 2014, it now may be easier for employers that sponsors DC plans to protect their workers from the short- and long-term financial ruin that often accompanies a disability." (Bryan, Pendleton, Swats and McAllister, LLC)

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