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Ret plans - design

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Fees Remain the Focus for DC Plan Sponsors
"More than 75% of sponsors calculated their DC plan fees within the past 12 months in 2018, although that is down from a high of 93% in 2013. Participants paid all investment management fees in more than three-quarters of plans, and nearly always paid a share of them. But the survey revealed a significant drop in the percentage of plans in which participants paid all administrative fees, from 63% in 2017 to 33% in 2018. Finally, slightly more than half of plan sponsors are likely or very likely to conduct a fee study in 2019." (Callan)
More Pay? Nah. Employees Prefer Benefits
"By a four-to-one margin (80 percent to 20 percent), workers would choose a job with benefits over an identical job that offered 30% more salary with no benefits ... Employed adults estimated that their benefits represented 40% of their total compensation package ... The Bureau of Labor Statistics, though, states that benefits average 31.7 percent of a compensation package." (Voya)
Proposed Legislation Would Promote Student Loan Repayment Retirement Benefits
"[T]he Student Loan Act would open the door for student loan repayments to be treated as elective deferrals under an employer's plan and to qualify for corresponding matching contributions (rather than the special non-elective contributions described in [PLR 201833012]). In addition, the Student Loan Act would clarify nondiscrimination testing requirements for student loan repayment benefits and address how student loan repayment benefits may be provided under not only traditional 401(k) plans, but also under safe harbor 401(k) plans, 403(b) plans and SIMPLE plans." (McDermott Will & Emery)
How Retirement Readiness Varies by Gender and Family Status: A Retirement Savings Shortfall Assessment of Gen Xers
"When households for which no shortfall is projected are excluded from the analysis, the average size of the shortfall is $76,896 for widows vs. $82,937 for widowers.... [F]uture eligibility in DC plans can dramatically reduce serious potential financial complications in retirement.... For those with 21-30 years of future DC eligibility, auto portability reduces average RSS by 21 percent for single females to as much as 38 percent for widowers." (Employee Benefit Research Institute [EBRI])
Expand Your Spending Categories in 2019 for Better Personal Retirement Budgeting and Planning
"[W]hen determining whether you are spending too much or too little, ... you should be looking at the proposed total spending budget for the current year divided by the present value of your total assets ... and not the proposed amount to be withdrawn from your accumulated savings divided by your accumulated savings." (Ken Steiner, FSA Retired)
Delayed Employee Retirement Presents Challenges to Business Planning
"When your employees are unable to retire on time, the impact can expand beyond just the employees and their families.... Employees who stay on the job past the traditional retirement age can create higher costs for the business through increased payroll and benefit costs.... [An] aging workforce may negatively influence the buyer's perception about business' sale price[.]" (MassMutual)
Retirement Industry Associations in Alignment on 401(k) Auto Portability
"Representing a broad cross-section of stakeholders in America's retirement system, many of these organizations offered strong, unequivocal support for auto portability, including some important suggestions for improvements.... As an exception, the joint comments supplied by the Consumer Federation of America and the National Employment Law Project were more-skeptical, suggesting that the DOL consider more restrictions and 'guardrails.' " (401K Specialist)
Not All 457(b) Plans Are the Same
"The differences between a tax-exempt 457(b) plan and a governmental 457(b) plan include: [1] Eligible employees ... [2] Automatic enrollment ... [3] Roth contributions ... [4] Catch-up contributions ... [5] Correction of excess deferrals ... [6] Loans ... [7] Contributions to a trust ... [8] Rollovers ... [9] Taxation ... [10] Statutory period for correction of plan failures ... [11] Correction programs." (Findley)
Second Circuit Affirms Lower Court Ruling in Challenge to Xerox Pension Plan Calculations (PDF)
19 pages. "The District Court's selection of the new hire remedy falls within the 'range of permissible decisions available under an abuse of discretion standard.'... [We] affirm the District Court's decision to use the new hire approach as an equitable remedy to redress the Plan Administrator's notice violations.... We affirm the District Court's decision to use the prime rate for [the award of prejudgment interest]." [Frommert v. Conkright, Nos. 17-114, 17-738 (2d Cir. Jan. 14, 2019)] (U.S. Court of Appeals for the Second Circuit)
[Opinion] SPARK Comment Letter to IRS on Proposed Hardship Distribution Regs (PDF)
11 pages. "By its terms, the Substantiation Memo only refers to the existing safe-harbor events. The IRS should expressly clarify that the substantiation guidelines described in the Substantiation Memo will cover the new safe-harbor event for expenses incurred as a result of federally-declared disasters and ensure that the Internal Revenue Manual is updated accordingly. This update should set forth what information and notifications the IRS would expect a plan administrator to collect and provide to substantiate the new seventh safe-harbor hardship event for expenses related to federally-declared disasters." (The SPARK Institute)
The Do's and Don'ts of Your 401(k) Fund Lineup
"Develop a standalone menu of funds, which allows you to give participants the opportunity to develop a properly diversified portfolio on their own.... Remember that too many options can be confusing for participants and actually cause them to make poor decisions or no decision at all.... When designing the menu, make sure that decisions are made for the group collectively, not just the Committee members.... Be sure to review your fund lineup regularly. It doesn't make sense to make changes for the sake of making changes." (Conrad Siegel Actuaries)
[Guidance Overview] Puerto Rico Tax Reform Changes Employee Benefit Provisions
"Act No. 257 of December 10, 2018 amended the Puerto Rico Internal Revenue Code of 2011 ... to simplify our tax system, stimulate economic growth, and promote voluntary compliance with tax laws. Although the Financial Oversight and Management Board for Puerto Rico has expressed reservations with respect to certain portions of the Act, in general, it became effective on December 10, 2018.... This Alert provides a general description of the most important aspects of the Act in the Employee Benefits Area[.]" (McConnell Valdes)
Retirement Choices by State and Local Public Sector Employees: The Role of Eligibility and Financial Incentives
"[This study models] the probability of retirement as a function of pension wealth at early and normal retirement eligibility and Social Security coverage in the public sector job.... [B]ecoming eligible for early retirement, or receiving an early-out offer, significantly increases the probability of retiring.... These findings suggest that state legislative action to affect retirement decisions and reduce future pension costs may be most effective operating through plan eligibility rules and early-out incentives." (National Bureau of Economic Research [NBER]; purchase required for full document)
[Opinion] Public Pension Fund Crisis Has a Start Date
"A simple extrapolation of the lines suggests a crisis around 2023, when pension fund assets are wiped out. That's an extrapolation, not a prediction. Market returns and political actions could move the date a few years in either direction. Moreover, action will be forced before assets go to zero. We don't know when or how or what will happen, but it won't depend on average investment returns over the next few decades." (Bloomberg)
Longterm Disability, 'Un-Retirement' and Pension Plans
"It can take time to resolve an employee's claim for long-term disability benefits, especially in complicated cases.... An eligible employee may take an early pension without regard to disability.... [But] the employee can be substantially penalized for taking an early pension to pay bills when there's a delay in processing a long-term disability claim.... One possible solution is for the employee to try to 'un-retire' -- to retroactively cancel the pension." (Bob Blum Mediation, via Los Angeles & San Francisco Daily Journal)
2019 Hot Topics in Retirement and Financial Wellbeing
32 pages. "[1] Financial wellbeing programs will continue to expand.... [2] Employers are focused on having participants keep their money in the defined contribution plan.... [3] Most employers are vigilantly trying to locate missing participants." (alight)
[Opinion] American Benefits Council Comment Letter to IRS on Proposed Regs for Hardship Distributions
"The most critical issue raised by the proposed regulation that we ask the IRS to address as soon as possible is the need for confirmation that taxpayers may rely on the proposed regulation until a final regulation is published, and that any changes made in the final regulations that are more restrictive than the proposal will be applied prospectively only." (American Benefits Council)
[Opinion] Pension Rights Center Comment Letter to EBSA on Proposed Exemption Involving Retirement Clearinghouse, LLC (PDF)
"To better inform and protect participants we recommend that the conditions of the proposed exemption be more specific in several areas.... [A]ccount holders should be fully informed of their rights to place their accounts with another IRA provider or to cash out on demand ... [C]onsider imposing limits on some of the fees, particularly the monthly administration fee and the transfer and communication fees to be assessed after RCH identifies a new employer.... [I]nclude a statement that participant records must be maintained until the accounts are distributed ... [R]equire an appeals procedure for mistakes or disputes." (Pension Rights Center)
The State of Employee Benefits: Findings From the 2018 Health and Workplace Benefits Survey
"Despite a tight labor market, fewer employees report that their employers are offering benefits: Health insurance remains the most frequently offered at 78 percent, followed by dental insurance at 68 percent and retirement savings plans at 67 percent.... [F]ewer workers received benefits from their employers in 2018 compared to 2017.... The percentage of employees accessing voluntary benefits is only 12 percent. Of that, 61 percent say they do so because it is less expensive to buy it through their employer than on their own -- more than the 51 percent who cited this reason in 2017." (Employee Benefit Research Institute [EBRI])
[Guidance Overview] IRS Proposed Regs Relax Requirements for Hardship Distributions
"The proposed regulations generally clarify or supplement recent statutory changes, including those made by the Bipartisan Budget Act of 2018. Except where noted, the rules and changes summarized herein also apply to plans of tax-exempt organizations under Section 403(b).... Except for the required elimination of the six-month contribution suspension as of January 1, 2020, plan sponsors generally will have flexibility with implementing the above changes after the proposed regulations are finalized." (McCarter & English)
4 in 10 Small Businesses Currently Offer Retirement Benefits
"40 percent of small business employers (2-99 employees) feel retirement benefits are more important now than three years ago with 57 percent say it is equally as important.... While only 37 percent of companies with less than 10 employees say they are more important now than three years ago, that number goes up to 64 percent for companies with 50-99 employees." (LIMRA)
Pensionomics 2018: Measuring the Economic Impact of Defined Benefit Pension Expenditures
"Each dollar paid out in pension benefits supported $2.13 in total economic output nationally. Each taxpayer dollar contributed to state and local pensions supported $8.48 in total output nationally. This represents the leverage afforded by robust long-term investment returns and shared funding responsibility by employers and employees. The largest employment impacts occurred in the real estate, food services, health care and retail trade sectors." (National Institute on Retirement Security [NIRS])
[Guidance Overview] Puerto Rico Treasury Department Issues Guidance on Retirement Plan Limits for 2019
"For plans qualified only in Puerto Rico, the limits on elective deferrals, catch-up and after-tax contributions, all remain unchanged for 2019, while the limits on annual benefits, annual contributions, and plan compensation, and the highly-compensated employee threshold, all increased for 2019. For plans qualified both in Puerto Rico and the U.S. ... the limits on catch-up and after-tax contributions, all remain unchanged for 2019, while the limits on elective deferrals, annual benefits, annual contributions, and plan compensation, and the highly-compensated employee threshold, all increased for 2019." (Groom Law Group)
Assessing Economic Resources in Retirement: The Role of Irregular Withdrawals from Tax-Advantaged Retirement Accounts
"Compared to total household income, irregular IRA and pension withdrawals amount to about 5 percent of income for singles and 10 percent of income for married households. The irregular withdrawals are concentrated among those in the highest wealth quartile and those in the highest education group, reflecting the higher prevalence of pensions in high-paying jobs that are predominantly held by those with high education. Thus, they have little impact on poverty rates." (Michigan Retirement and Disability Research Center, Univ. of Michigan)
Finding Your Tax Equilibrium Rate When Liquidating Retirement Accounts
"[W]ith some relatively simple and straightforward assumptions about future Social Security and pension payments, RMD calculations, and anticipated interest, dividends, and capital gains, it really is feasible to make a reasonable approximation of an individual's future tax rates to determine where the ideal equilibrium will be. And then engage in strategies from accelerated retirement account liquidations, to partial Roth conversions, and capital gains harvesting, as necessary to ensure that any currently-lower tax brackets are filled up to reach the equilibrium point." (Nerd's Eye View)
Retirement Savings: Priorities, Strategies, and Barriers
"Fewer than half (47%) of working Americans in their 40s and 50s with household incomes from $40,000 to $99,999 said retirement was one of their top three savings priorities for 2019 ... Just 21 percent said saving for retirement is their top priority for the new year." (AARP)
Risk Sharing in Public Retirement Plans (PDF)
64 pages. "Shared risk plans are intended to increase the predictability of financial outcomes resulting from both positive and negative events affecting plans, sponsors and beneficiaries.... A primary consideration for any retirement plan sponsor is which types of risk, and in what proportion, are most appropriately borne by individuals, and which risks are best borne collectively, by institutions." (National Association of State Retirement Administrators [NASRA])
[Opinion] People Who Saved for Retirement Are Being Punished by Social Security Taxes
"When Congress made Social Security benefits taxable in 1983, lawmakers didn't index the tax thresholds to inflation. They 'forgot' inflation again when adding a second layer of taxation in 1993. That means the proportion of recipients who have to pay federal income taxes on their benefits keeps increasing. Initially, only 1 in 10 Social Security recipients had to pay any federal tax. Now, it's over half." (MarketWatch)
Will 401(k) Plan Sponsors Fall for These Over-Hyped Topics?
"[1] Student loans in 401(k) plans ... [2] Annuities in 401(k) plans ... [3] All-passive 401(k) plans ... [4] Financial wellness ... [5] On-line education." (Fiduciary News)
An Annuity Is Not a Holiday Sweater: A Look at Lifetime Income in TDFs
"[An] 'auto-annuitize' feature in a TDF does not serve the best interest of defaulted DC plan participants.... [T]ools that largely exist today and are achievable within our current regulatory framework ... include: [1] Removing age restrictions and mandatory cash-outs. [2] Granting greater withdrawal flexibility for retired participants. [3] Allowing for incoming rollovers. [4] Offering investment options oriented to current retirees. [5] Providing enhanced advice and education that may inform participants of annuitization as an option." (Vanguard)
[Guidance Overview] IRS Provides Relief for Improper Exclusion of Part-Time Employees from 403(b) Plan Participation
"According to [Notice 2018-95], a 403(b) plan with a provision to exclude employees working less than 20 hours per week will not be considered noncompliant if it did not consider such employees eligible to participate in the 403(b) plan on an ongoing basis once those employees first completed 1,000 hours of service. The Notice includes a 'Relief Period' and a 'Fresh Start.' " (Voya)
Multiple Employer Plans: Their Potential Impact on the Retirement Plan Landscape
"Recordkeepers, financial advisors, asset managers, banks, third-party administrators and other firms might form strategic alliances to provide the necessary services.... Technology companies might see this new type of arrangement as an opportunity to disrupt the marketplace by developing creative solutions that would be difficult for entrenched providers with legacy systems to emulate. Employers with existing defined contribution plans might find a MEP's reduced fiduciary responsibility and potentially lower costs attractive and drop their separate plans in favor of joining a MEP." (J.P. Morgan Asset Management)
DB Pensions vs. 401(k)s: A Study of Teacher Retirement Programs in Six States
"Eight out of ten educators serving in the six states studied can expect to collect pension benefits that are greater in value than what they could receive under an idealized 401(k)-type plan. The study also finds that the typical teacher in these states that offer pensions will serve 25 years in the same state, while two out of three educators will teach for at least 20 years." (National Institute on Retirement Security [NIRS])
California's New State-Run Retirement Program for Private Sector Employees Gets Under Way
"A taxpayers' rights group is challenging the program, claiming that it violates the U.S. Constitution.... Beginning in July, all eligible employers in the state will be able to enroll their workers. Eventually, most California employers that lack a retirement savings plan will be required to do one of two things: either enroll their workers in CalSavers or provide a retirement plan through the private market." (Society for Human Resource Management [SHRM])
[Guidance Overview] Puerto Rico Treasury Announces Retirement Plan Limits for 2019
"The limitation on the annual benefit under a defined benefit plan ... is $225,000. The limitation on annual additions to a participant's account under a defined contribution plan ... is $56,000. The annual compensation limit ... is $280,000.... The elective deferral (contribution) limit ... for an employee who participates in a dual-qualified retirement plan ... as well as for an employee who participates in a retirement plan sponsored by the federal government is $19,000." (McConnell Valdes)
2018 Variable Annuity Pricing Survey Summary
"[W]hile model sophistication has generally advanced in recent years in areas such as the projection of hedging strategies, stochastic reserves and capital, and the use of predictive analytics for policyholder behavior -- considerable variation in practices still exists among different organizations. The importance of these variations becomes apparent when they lead to drastically different design and guarantee level decisions, and also have a broader long-term effect on downstream sales, profitability and volatility of financial results." (Willis Towers Watson)
Blackrock Enters Annuity Business with Microsoft to Create 21st Century DB Pension System
"Microsoft is more than aware of what crosstown rival Amazon might be thinking. BlackRock can now look across the East River to Queens at an Amazon campus, too, and wonder what'll happen if the bookseller gets its hooks into investors. So here we have a big stick and a big carrot ... in a joint-venture that could have implications for RIAs in a bigger sense than anything the robos have done thus far." (RIABiz)
Deferred Income Annuity Purchases: Optimal Levels for Retirement Income Adequacy
"[At] current annuity rates, purchases of a DIA at age 65 deferring 20 years with no death benefits result in an overall improvement in RRR (for all ages of death combined) for DIA purchases equal to 5, 10, 15, and 20 percent of the 401(k) balance. However, there is an overall decrease in RRR for DIA purchases equal to 25 and 30 percent -- due in part to the interaction with long-term care costs." (Employee Benefit Research Institute [EBRI])
Comparing Seven Defined Contribution Plan Designs: A Case Study
"There were 10 people eligible for the retirement plan, including one owner.... The owner was willing to spend on staff an amount equal to 5.0% of their total combined payroll.... The results show the differences that can be obtained from various plan designs. The best design for any given situation will vary depending on employee ages and salaries, as well as company objectives." (Retirement Management Services, LLC)
[Opinion] American Benefits Council Letter to IRS Requesting Guidance on Retirement Plan Issues Related to Student Loan Repayments
"There has been some uncertainty about whether the conclusions reached in [PLR 201833012] were based in any way on the particular facts presented, such as the particular matching formula or the structure and timing of the true-up matching contribution.... For many [companies] the approach will create nondiscrimination and coverage testing problems, because the 'matching' contributions are technically nonelective contributions that must be tested separately for coverage and nondiscrimination. We believe that it is within the authority of Treasury and the IRS to address certain of these issues in guidance of general applicability." (American Benefits Council)
Watch These ERISA Cases in 2019
"A number of vexing issues facing ERISA practitioners came to a head in 2018 and are primed to be resolved in the coming year. This article will examine the cases raising these issues, and the impact their resolution in the coming year will have on retirees and the retirement industry." (Cohen Milstein)
Developing a 2019 Retiree Spending and Withdrawal Budget
"[If] you invested significantly in equities in 2018, it is likely that you experienced some investment losses last year. In order to avoid undesirable fluctuations in recurring spending, you may wish to consider some or all of the following actions: [1] Dipping into the Rainy-Day Fund that you previously established with investment gains enjoyed in previous years; [2] Reducing 2019 non-essential non-recurring expenses, or [3] Using the Smoothed Actuarial Budget Benchmark[.]" (Ken Steiner, FSA Retired)
[Official Guidance] Text of 2018 IRS Publication 571: Tax-Sheltered Annuity Plans (403(b) Plans) for Employees of Public Schools and Certain Tax-Exempt Organizations (PDF)
22 pages; rev. Jan. 2019. "Beginning in 2018, as part of a provision contained in the Tax Cuts and Jobs Act of 2017, a retirement savings contribution credit may be claimed for the amount of contributions you make before January 1, 2026, to an ABLE account for which you are the designated beneficiary as defined by section 529A." (Internal Revenue Service [IRS])
Significant Reforms to State Retirement Systems (PDF)
98 pages. "Since 2009, nearly every state passed meaningful reform to one, or more, of its pension plans. Although the global market crash and recession affected all plans, differing plan designs, budgets, and legal frameworks across the country defied a single solution; instead, each state met its challenges with tailored changes specific to its unique circumstances." (National Association of State Retirement Administrators [NASRA])
Closing the Retirement Savings Coverage Gap: Multiple Employer Plans (PDF)
12 pages. "This paper outlines the legislative and regulatory actions that would be needed to broaden access to MEPs for small employers. It also describes the features that a model MEP might incorporate, including: [1] Automatic enrollment of employees and automatic escalation of employee contributions. [2] Automatic deferral of employee contributions into an investment option designed to preserve principal.... [3] A lifetime income solution among the plan's investment and/or distribution options. [4] Streamlined administration through standardized plan design. [5] Clear delineation of fiduciary and administrative responsibilities[.]" (Prudential)
[Opinion] ACLI Comment Letter to EBSA on Proposed Definition of 'Employer' Under Section 3(5) of ERISA (PDF)
"The proposal falls short of the President's Executive Order.... Neither ERISA nor the Internal Revenue Code include a 'nexus' or 'commonality of interest' requirement ... The Department's various positions and interpretations are inconsistent with law.... There is no legal basis for the proposal's limitations on employers.... Financial service providers should be able to sponsor an ARP." (American Council of Life Insurers [ACLI])
Evolving the Benefit Mindset: Aligning Employee Benefits with Organizational Purpose
"[1] Assess your current benefit strategies to determine whether they incorporate choice [and] personalization ... [2] Go beyond programs alone by aligning with the objectives of a purpose-driven organization including healthy company culture, integrated wellbeing and inclusion and diversity ... [3] [L]ook for opportunities to connect to and/or further enhance ESG commitments.... [4] Ensure that your overall benefit strategy and programs put the employee at the center of the experience[.]" (Willis Towers Watson)
[Opinion] SPARK Comment Letter to EBSA on Definition of 'Employer' Under Section 3(5) of ERISA (PDF)
"[We] urge the Department to consider eliminating or loosening requirements ... A financial institution should be able to sponsor an [Association Retirement Plan (ARP)].... The Department should eliminate or loosen the 'commonality' requirement.... The Department should eliminate the 'substantial business purpose' requirement.... The Department should not mandate new disclosures." (The SPARK Institute)
The Impact of Employee Financial Health at Work
"[E]mployees who are financially struggling: Lose 41% more work time to absence than peers without financial worries; Have lower engagement levels than peers without financial worries (51% vs 29%); Are less productive compared with peers without financial worries (32% vs. 5%).... Within a given employee population, wants and needs vary according to life stage and other individual characteristics." (Willis Towers Watson)
23 Questions to Ask When Choosing a Financial Education Vendor
"Cost isn't the only factor to consider when choosing a financial education vendor. You'll want to take into account whether the content will be objective (not a sales presentation), the vendor's track record in providing personal finance education, how relevant the content is to your unique workforce, the delivery methods that will be used to reach your plan participants and so much more!" (International Foundation of Employee Benefit Plans [IFEBP])
[Opinion] The DOL's Own Reasoning Supports MEPs Being 'Open'
"The Department wants the MEP sponsor to perform a 'substantial employment function' to preserve ERISA's fundamental employment based purpose, and does not see how that exists in commercial practice.... [T]his concern is really alleviated in the retirement plan market ... Unlike the AHP sponsor, the MEP sponsor itself is, after all, still a retirement plan Sponsor, and is subject to the MEP service crediting rules for participation, vesting and benefit accrual ... [M]aintaining the plan is, in itself, a 'substantial employment function' ... [T]he real concern should be ... whether the pecuniary interest of the fiduciary overwhelms (and becomes primary over) the interests of the plan and the participants in its dealings with the plan. However, the operation of the prohibited transaction rules prevent this from being so." (Business of Benefits)
[Opinion] 'Phased Retirement' Requirement Would Be Lump of Coal for Plan Sponsors
"The newest proposed federal mandate comes from individuals who have never served as a plan sponsor or worked in human resources.... The authors recommend workers be given a legal right to phased retirement. To qualify, it seems that an employee would only need to be working for an employer with 20 or more workers -- no minimum age, no minimum completed service, no performance/productivity requirements, no other requirement." (Plan Sponsor Council of America [PSCA])
Some Unions Turning to Variable Benefit Pension Plan Model
"[T]he $95 million New Orleans Carpenters Pension Plan, a plan close to 100% funded ... added a variable plan design for all benefits that have accrued since May. The basic premise ... is that benefits are adjusted up or down based on investment returns. The assumed rate of return ... determines whether benefits for all participants, including retirees, rise or fall on a plan year basis." (Pensions & Investments)
[Opinion] Investment Company Institute Comment Letter to DOL on Proposed Regs Defining 'Employer' Under Section 3(5) of ERISA (PDF)
10 pages. "[ICI urges] the Department to interpret the definition of employer more broadly, specifically by expanding the category of persons able to act indirectly in the interest of employers ... Any concerns the Department may have with respect to permitting MEP sponsorship by financial services firms can be mitigated by using established methods for ensuring both the legitimacy and qualifications of the MEP sponsor and protection from conflicts of interest. Failure to expand the interpretation as recommended likely will result in market distortions and inefficiencies, to the detriment of retirement savers." (Investment Company Institute [ICI])
Evolving the Benefit Mindset: Responding to the Pace of Change
"The challenge for employers is three-fold: [1] Assess the existing portfolio with a fresh perspective to determine whether longstanding legacy program designs still meet employee needs; [2] Evaluate how investments are applied via the subsidy strategy; [3] Evaluate how benefits are delivered and the employee experience it creates.... 96% of employers are making the employee experience with benefits a top priority over the next three years." (Willis Towers Watson)
Trust in Financial Institutions Can Affect Retirement Plan Participation
"The results suggest an association between distrust in financial institutions and the likelihood that workers will choose to stay in a retirement savings plan if enrolled automatically. That includes whether they would take part in a state-sponsored individual retirement account with automatic enrollment [auto IRA], or one sponsored by their employer." (The Pew Charitable Trusts)
Comprehensive Retirement Savings Enhancement Bill Introduced
"A news release issued by Sen. Portman's office acknowledged that this legislation is intended to establish 'a foundation for a broader bipartisan, bicameral retirement policy debate in the next Congress' (2019). The news release further notes that '[t]he senators will continue their efforts to improve this legislation.' It also identifies a wide spectrum of interest groups and retirement industry players whose support the senators claim to have." (Ascensus)
Navigating Retirement Risks
"DB plans are an attractive feature for prospective employees, particularly since the poor returns of the 2000s, and DB plans generally provide a strong incentive to remain with an employer.... A well-designed DB plan provides not only the means for employees to retire, but also offers signals and incentives for desired retirement timing.... Rates of poverty among older households without DB pension income were nine times higher than for households with DB pension income. Older Americans are filing for bankruptcy at rates 200% of what they were 25 years ago.... Only 6% of DC participants protect themselves against outliving their money by purchasing an annuity." (Milliman)
ERISA Attacks Move From Church Plans to Government Plans
"Having settled many of its attacks on pension plans sponsored by several large church-affiliated healthcare organizations, the plaintiff's bar appears to be shifting focus ... One of the same firms that previously challenged the application of ERISA's 'church plan' exclusion several years ago represents the plaintiffs ... Notably, the 'church plan' cases have thus far been limited to pension plans. [This] case opens up a new front in the larger war being waged by the plaintiffs' law firm by challenging the status of Atrium's health plan as well." (National Law Review)
One Year On: Oregon Debuts First State-Sponsored IRA Plan for Private Sector Employees, Individual Workers
"Although 1,800 employers have registered and nearly 22,000 employees are contributing, the plan's greatest challenge thus far involves implementing payroll deductions: only about a third of employers that have enrolled in the program have actually submitted employee contributions ... Still, OregonSaves saw a 95% retention rate in its inaugural year, with 93% of enrollees maintaining the default 5% contribution and 2% increasing their rate to an average of 10%. Only 5% of enrollees decreased their deferral rate." (Corporate Insight)
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