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Ret plans - policy

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Bipartisan Multiemployer Hybrid Plan Bill Introduced in House
"Reps. Phil Roe, R-Tenn., and Donald Norcross, D-N.J., introduced H.R. 4997, the Give Retirement Options to Workers (GROW) Act, that would allow sponsors to create the composite plans. The idea is part of an effort in Congress to address struggling multiemployer plans, including proposals to create a federal loan program. The legislation is based on a proposal developed with the National Coordinating Committee for Multiemployer Plans." (Pensions & Investments)
How People Plan for Retirement (PDF)
14 pages. "Managing retirement security in the United States has been increasingly challenging for all stakeholders.... This report focuses on how people plan. It offers highlights and key findings from the 20 years of committee research and related SOA work, together with guidance about where to find more information. This report focuses on planning and risk management and how individuals approach these tasks." (Society of Actuaries)
EBSA Private Pension Plan Bulletin: Abstract of 2015 Form 5500 Annual Reports (PDF)
68 pages; February 2018. "The total number of pension plans grew again in 2015 to approximately 694,000 plans, a 1.3 percent increase over 2014.... [T]he number of DB plans increased in 2015 by 1.8 percent.... The number of 401(k) type plans increased yet again in 2015 by 2.5 percent, from 534,000 to 547,000. There were 65.3 million active participants in 401(k) type plans.... [T]he total amount of assets held by pension plans decreased for the first time since 2008, by 1.8 percent from $8.3 trillion to $8.2 trillion." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])
2017 in Review: ERISA Guidance and Enforcement (PDF)
11 pages. "In 2017, the principal focus in the administration of [ERISA] by the [DOL] appropriately remained one of the extraordinary developments under DOL's new fiduciary definition and related exemptions (Fiduciary Rule). DOL's regular program of issuing advance guidance and enforcing the statute continued in a more conventional manner as well ... The regulatory guidance plans under ERISA and the Internal Revenue Code, as they relate to employee benefits and executive compensation, were also recently updated." (Eversheds Sutherland)
GAO Legal Decision on DOL Fiduciary Rule and Accompanying Prohibited Transaction Exemptions
"GAO found that [1] the final rule (a) extends the transition period under sections II and IX of the Best Interest Contract Exemption and section VII of the Class Exemption for Principal Transactions in Certain Assets between Investment Advice Fiduciaries and Employee Benefit Plans and IRAs for 18 months; and (b) delays the applicability of certain amendments to Prohibited Transaction Exemption 84-24 for the same period; and [2] Labor complied with applicable requirements in promulgating the rule." [B-329764, Feb. 9, 2018] (U.S. Government Accountability Office [GAO])
[Guidance Overview] DOL Grants Individual Exemptions to Allow Asset Managers to Use QPAM Exemption (PDF)
"The [DOL] recently issued a series of individual prohibited transaction exemptions that will allow asset managers affiliated with five financial institutions -- JPMorgan Chase & Co., Deutsche Bank AG, Citigroup, Barclays Capital Inc. and UBS AG -- to continue managing assets of ERISA plans and IRAs ... Because the financial institutions or affiliated entities had been convicted of certain crimes, the Affiliated QPAMs ... required individual relief in order to continue using the QPAM Exemption. The DOL provided the requested relief, but at a substantial cost." (Groom Law Group)
Congress Establishes Committee to Address Multiemployer Pension Plan Crisis
"The creation of the bipartisan, bicameral Committee provides a unique opportunity for companies to address the issues related to multiemployer pension plans, including withdrawal liability.... While it is too early to address the Committee's direction, several large plans are facing imminent insolvency. Thus, it is likely that some legislation, whether narrow or broad in scope, has a possibility for passage by the end of the year." (Akin Gump)
Tax Reform May Have Unintended Consequences for Broker-Dealers
"[F]or many registered representatives, their federal income tax position will be improved if they are independent contractors rather than employees of a broker-dealer firm. The 20% deduction of QBI means that a self-employed individual will be taxed at a lower rate than an employee performing substantially the same work with a broker-dealer firm." (The Wagner Law Group)
When Do CalPERS Rates Become 'Unsustainable'?
"The ability to absorb rising pension costs varies from city to city ... but one thing unsustainable for all is the erosion of basic services.... [U]ncertainty causes reluctance to fully staff police, fire departments, and public works maintenance. As discretionary services such as libraries, parks and recreation are threatened, long-term commitments are less likely. Though the economy is growing and unemployment is low, cities are forced to make tough budget decisions." (Calpensions)
Earnings Test, Non-Actuarial Adjustments and Flexible Retirement
"Earnings tests force workers to exit the labor market when claiming a pension. After abolishing the earnings test, workers can claim their benefits and can keep on working, potentially increasing labor supply. Our key result is that the difference between exit and claiming age strongly depends on the actuarial neutrality of the pension system and can become very large. Abolishing an earnings test as part of a 'flexibility reform' may therefore create more labor supply but at the same time, reduce the average claiming age when adjustments remain less than actuarial, thereby worsening rather than improving the sustainability of public pension systems." (National Bureau of Economic Research [NBER])
House-Senate Committee Tasked with Solving Multiemployer Pension Crisis by Year-End
"The committee will be comprised of six senators and six House members, equally divided between Republicans and Democrats, who will be appointed by House and Senate leaders. It will have instructions to report a bill by the last week of November, and will be required to hold at least five public meetings. If at least four members from each party agree on a compromise, the solution the committee produces will be guaranteed an expedited vote on both the House and Senate floors with no amendments[.]" (Chief Investment Officer [CIO])
2017 Pension Plan Report Card
"The major legislative event was tax reform.... With the passage of tax reform, companies will want to analyze the impact of making additional contributions to their plans and receiving higher deductions. Generally, contributions made by September 15, 2018 can be counted for the 2017 plan year and included on the sponsor's 2017 tax filing. With the highest corporate rate dropping from 35% to 21% the cost of each $100,000 of contribution increases $14,000 after the 2017 tax year." (P-Solve LLC)
Federal Budget Deal Becomes Law, Includes Retirement Provisions
"The provisions in [H.R. 1892, the 652-page 'Bipartisan Budget Act of 2018'] that affect the retirement industry include: [1] Remove six-month prohibition on contributions to retirement plans after a hardship withdrawal (section 41113) ... [2] Allow QNECs, QMACs and profit-sharing contributions to be included in a hardship withdrawal (section 41114) ... [3] Provide IRS authority to release a levy on property held in retirement plans (section 41104) ... [4] Special disaster-related rules for use of retirement funds for individuals impacted by the California wildfires (section 20102) ... [5] Create a Joint Select Committee on Solvency of Multiemployer Pension Plans (sections 30421-30424) ... [6] Create new Form 1040SR for individuals over age 65 (section 41106)." (National Association of Plan Advisors [NAPA])
FINRA 2018 Annual Regulatory and Examination Priorities Letter Makes No Mention of a Fiduciary Duty for Brokers
"It is clear that FINRA intends to spend a significant amount of time ensuring that senior investors are protected. In fact, FINRA indicates that an area of focus will be the 'rollovers of qualified plans into non-qualified accounts [IRAs] for senior investors.' " (Drinker Biddle)
Charles P. Rettig Nominated to Be IRS Commissioner
"During his 35+ year professional career with Hochman, Salkin, Rettig, Toscher & Perez, PC, Chuck Rettig has represented numerous taxpayers before every administrative level of the [IRS] as well as in matters before the Tax Division of the U.S. Department of Justice, and various other taxing authorities.... He is a certified specialist in taxation law, estate planning, and trust and probate law." (The White House)
Special Pension Committee Formed in Congress to Come Up with Multiemployer Bill
"Sen. Sherrod Brown [D-Ohio] ... during the Senate budget deal reached Wednesday ... secured a guarantee that whatever the select pension committee comes up with will get an expedited vote on both the House and Senate floors. The committee will have to hold at least five public meetings, including at least one field hearing so committee members can hear directly from affected retirees, workers and businesses." (Pensions & Investments)
[Opinion] Testimony for Senate Committee Hearing on 'Exploring the "Gig Economy" and the Future of Retirement Savings'
"In practice ... nonstandard work is often low-paid and precarious work that is not conducive to saving or accruing retirement benefits. The bad news is that this problem is likely to be getting worse. The good news is that efforts to improve retirement security for all workers would disproportionately help nonstandard workers." (Economic Policy Institute)
Federal Court Rules Against Naming Service Provider in Fiduciary Responsibility Case
"[A] terminated pension plan's attempt to shift blame to a third-party service provider it claimed was responsible for underpaying participants when settling their annuity contracts was denied by a U.S. magistrate judge. The plan had filed a motion to make the TPA a defendant in the case." [PBGC v. Idaho Hyperbarics, Inc., No. 16-325 (D. Id. May 15, 2017)] (HR Daily Advisor)
[Opinion] Why Insurance Companies and Wall Street Should Not Be Permitted to Redefine the Term 'Best Interests'
"Lobbyists for the insurance industry and much of the securities industry ... want to be able to say they are acting in the 'best interests' of their customers ... [by] simply redefining the term, 'best interests.' ... The [SEC] is said to be also considering a 'best interests' standard ... [This] comment letter to the NAIC [cautions] that any use of the term 'best interests' to describe a standard of conduct should be reserved for the bona fide fiduciary standard." (Ron A. Rhoades, JD, CFP)
Court of Appeals Answers More Questions on Church Plan Exemption
"The first question decided by the Court: is the entity that offered the plan a tax-exempt organization that is associated with a church? ... The second issue decided by the Court: is the entity's retirement plan maintained by an organization whose principal purpose is administering or funding a retirement plan for entity employees? ... The third issue: is principal-purpose organization itself associated with a church? ... Finally, the Court rejected the claim that the church plan exemption violates the Establishment Clause." [Medina v. Catholic Health Initiatives, No. 16-1005 (10th Cir. Dec. 19, 2017)] (Hodgson Russ LLP)
[Opinion] Alicia Munnell Explains the Social Security Fix No One Wants
"Policymakers should fix Social Security by raising taxes. Money doesn't come from heaven. It's going to have to come from someplace, and it should be done on the revenue side. We need to maintain benefits. People don't have anything else other than 401(k)s, and a significant portion of the population doesn't even have those." (ThinkAdvisor)
How New Leadership at DOL Could Address Retirement Rules
"[EBSA Secretary Preston Rutledge] has not commented publicly on the DOL's current fiduciary rule, other than to say the regulation should have had more input from the Treasury Department, which oversees IRAs but which by law must defer to the DOL in drafting prohibited transaction exemptions. Based upon comments made earlier by DOL Secretary Alexander Acosta, ... most of the [fiduciary rule] parts delayed until July 2019 will be radically scaled back or eliminated." (InvestmentNews)
[Opinion] The Argument for Ditching the 401(k) System and Starting Over
"The plan ... would supplant 401(k)s and individual retirement accounts with mandatory Guaranteed Retirement Accounts [GRA] that have these defining characteristics: [1] Workers and employers would each contribute 1.5 percent of wages or salary, maxing out at $3,750 each ... [2] Everyone contributing to a GRA would get a $600 refundable tax credit ... [3] Workers would own their GRA accounts and choose a pension manager to invest the money. But they wouldn't be able to withdraw money from the accounts before retirement.... [4] Upon retirement, the accounts would be converted into annuities[.]" (Justin Fox, via Bloomberg)
Supreme Court Shows Interest in ERISA Case Addressing Simultaneous Claims for Benefits and Fiduciary Breach
"On January 22, 2018, the U.S. Supreme Court requested the Solicitor General's opinion on whether a plaintiff can simultaneously bring a claim for benefits and a claim for breach of fiduciary duty under [ERISA]. A request for the view of the Solicitor Generally typically indicates the court's interest in hearing a case." [Strang v. Ford Motor Co. General Retirement Plan, No. 16-2090 (6th Cir. May 19, 2017; cert. pet. filed Oct. 5, 2017)] (Greensfelder)
[Opinion] American Benefits Council Letter to Congress Supporting Legislation Permitting Open MEPs
"As the gig economy has grown, and gig workers continue to be largely uncovered by retirement plans, the time has come for all of us to act. Today, businesses cannot cover gig workers under their retirement plans because gig workers are not employees. But a new answer is right in front of us -- open MEPs[.]" (American Benefits Council)
Will Work for No Benefits: The Challenges of Being in the New Contract Workforce
"[C]ontract work is booming, with 32 million Americans currently making their living that way. That trend is expected to accelerate over the next decade ... But that also raises big questions about the future of the safety net ... 51 percent of freelance and contract workers do not receive benefits common to many full-time jobs -- sick leave, unemployment insurance or retirement savings." (National Public Radio)
[Opinion] American Benefits Council Submits Recommendations for Standardized and Automatic Disaster Relief
"[We] encourage the Agencies to work together to develop their own standardized and automatic inter-agency disaster relief system for employer-provided benefits that can be triggered by a single announcement. For example, ... PBGC could agree to automatically make available certain relief, like extended premium deadlines, to employers already covered by the IRS's automatic disaster tax relief press release system. Similarly, DOL could agree to not treat any person as having violated Title I of ERISA solely for utilizing disaster tax relief offered by the IRS or PBGC." [Similar letters also sent to IRS and PBGC.] (American Benefits Council)
Tax Expenditures for Retirement Plans
"Congress provides tax breaks for retirement plans as a way of encouraging employers and workers to save for retirement. Because retirement seems remote to many workers, people will often give priority to more immediate needs. Retirement tax expenditures provide incentives for employers to create retirement plans for their employees, and for employees to save for themselves through workplace plans and through IRAs." (Pension Rights Center)
Tenth Circuit Diminishes Ability to Challenge Church Plan Status of Healthcare Organization's Retirement Plan
"The Tenth Circuit analyzed these open issues by answering three questions: [1] Is the entity offering the plan a tax-exempt nonprofit organization associated with a church? [2] If so, is the entity's plan maintained by a principal-purpose organization? That is, is the plan maintained by an organization whose principal purpose is administering or funding a plan for entity employees? [3] If so, is that principal-purpose organization itself associated with a church?" [Medina v. Catholic Health Initiatives, No. 16-1005 (10th Cir. Dec. 19, 2017)] (Seyfarth Shaw LLP)
Survey Says: Least/Most Effective Retirement Industry Developments in the Last 25 Years
"The No. 1 pick for developments in the retirement industry respondents think has been the most effective for improving retirement outcomes is the adoption of automatic enrollment for defined contribution (DC) plans (48.9%).... [The least effective was the] increase in move from defined benefit (DB) plans to DC plans (45.6%), followed by increase in pension transfers to insurance companies (17.4%) and increased focus on retirement income options by regulators (10.9%)." (PLANSPONSOR)
Pending Legislation Could Significantly Change the Retirement Plan Landscape
"[A] number of bills have been introduced in recent weeks that, in addition to simplifying some of the rules, could encourage employers to set up plans and help increase employees' retirement savings. Many of these changes have been proposed in the past and enjoy bipartisan support.... The Automatic Retirement Plan Act (H.R. 4523) ... The Small Business Add Value for Employees (SAVE) Act (H.R. 4637) ... The Retirement Plan Simplification and Enhancement Act (H.R. 4524) ... The Receiving Electronic Statements to Improve Retiree Earnings Act (H.R. 4610)." (J.P. Morgan Asset Management)
Supreme Court Will Hear Railroad Retirement Tax Act Issue
"[The] narrow, technical question that the Supreme Court will address ... is whether stock received upon the exercise of stock options that railroads award to their employees as part of their compensation package is taxable compensation under the RRTA.... The circuits ... are split on whether income from stock options is covered by the term money remuneration, making it taxable under the RRTA." [Wisconsin Central Ltd. v. U.S., No. 17-530 (7th Cir May 8, 2017; cert. pet. granted Jan. 12, 2018) (Squire Patton Boggs)
Putnam Gets Industry Support in 401(k) Fund Appeal
"The Investment Company Institute, the U.S. Chamber of Commerce, and other groups urged the U.S. Court of Appeals for the First Circuit to uphold a ruling rejecting claims that Putnam was wrong to put its own investment funds -- which earned fees for the company -- in the 401(k) plan for its workers. The groups argued against a judicial standard that would require Putnam -- and not the workers -- to prove that the challenged investments caused losses to the company retirement plan." (Bloomberg BNA)
[Opinion] Those Corporate Pensions Weren't Always So Great
"Corporate pensions in the U.S. were structured to reward a particular kind of worker -- the kind that spent his or her (usually his) entire career at a large company -- and leave most others in the cold.... It is possible to imagine an alternate reality in which Congress engineered a smooth transition from old-style pensions to a more sustainable, more portable setup." (Bloomberg)
Verizon Pensioners Still Want to Recoup ERISA Protections
"[T]he 2017 Advocate Report ... includes a full pension de-risking study ... [which] focuses on PBGC and Congressional actions that may slow pension de-risking activity, and highlights the drivers and causes of de-risking ...'The study found that reducing PBGC single-employer premium levels or stemming their rapid growth is likely to decrease risk transfer activity,' [Jack Cohen, Association of BellTel Retirees chairman,] notes.... 'We have to wonder if the insurance companies can stand to take all that risk, and how they will manage it.' " (PLANSPONSOR)
[Opinion] Proposed Loan Programs for Multiemployer Plans
"If the loan benefits retirees mostly and relies on active member contributions for repayment this is illegal and will not work.... If active members will object, what about employers? ... If contributions cannot repay the loan what of investment interest income? ... Do we assume that public pensions will remain silent if loans are available to private pensions?" (Burypensions)
Multiemployer Plans: Their Current Circumstances in Historical Context (PDF)
88 pages. "As of September 2017, the Treasury has approved only three of the 15 benefit-cut requests submitted ... [F]our applications still remain under review. So, while the ultimate effectiveness of MPRA still remains to be seen, it is clear that other solutions must be explored to meet the multiemployer challenge ... [T]here are 11 relatively large critical plans -- covering about 86,000 members -- that could become 'critical-and-declining' in the near term. Early action that focuses on some of these indicators might be able to stabilize other plans heading for trouble." [Sept. 29, 2017; posted on EBSA website Jan. 16, 2018] (IMPAQ International, for Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])
Legislation to Promote Retirement Plan Lifetime Income Options Introduced in the House
"Reps. Tim Walberg (R-MI) and Lisa Rochester (D-DE) have introduced the Increasing Access to a Secure Retirement Act (H.R. 4604), which is legislation intended to clarify and simplify rules under which retirement plan sponsors may offer certain lifetime income investments to their plans' participants.... H.R. 4604 has been referred to the House Committee on Education and the Workforce." (Ascensus)
EBRI Policy Forum on Retirement and Financial Wellbeing, 2017: Summaries and Links to Presentations (PDF)
"[P]resenters at EBRI's 82nd Policy Forum examined retirement security topics with a special focus on overall financial wellbeing.... [Topics included:] [1] How sufficiently have Americans saved for retirement ... [2] Whether options are available to help improve the current state ... [3] How can we protect retirement security for those who struggle with their financial wellbeing? [4] What are the best ways to examine and address financial difficulties? [5] [What are the] research tools, ideas, and analyses that employers, policymakers, and other stakeholders can use in approaching these and other questions?" (Employee Benefit Research Institute [EBRI])
[Opinion] Garden State Crowd-Out: How New Jersey's Pension Crisis Threatens the State Budget (PDF)
16 pages. "Since 2014, it has become clear that New Jersey needs a new strategy to address its pension problems.... Absent some unexpectedly robust acceleration of the economy, it is highly unlikely that New Jersey will generate enough new revenues to meet its pension commitments without severely hobbling the rest of the state's budget. At the same time, allowing its pension system to continue to accumulate debt by not contributing adequately to it will push New Jersey toward a potentially catastrophic failure of its government pensions." (Manhattan Institute for Policy Research)
New Tax Law Means Fighting Over Underfunded State Pension Plans Is About to Get Worse
"Unless states can implement effective ways to circumvent the SALT restriction, they will face much higher political barriers to meeting their unfunded benefit obligations through increased tax revenues. Instead, states will be forced to severely cut spending on public services and/or adopt major reforms of their benefit plans.... [A table] summarizes the situation for each of four states with the highest unfunded liabilities relative to their revenues in 2016 -- Illinois, New Jersey, Connecticut and Kentucky." (MarketWatch)
Missouri Introduces Proposal to Create Secure Choice Savings Program
"The bill would allow employers with 25 or more workers that do not already offer employees a retirement plan to automatically enroll workers aged 18 and older in a state-run payroll-deduction Roth IRA. It would apply to for-profit and non-profit employers and would be open to employers with fewer than 25 workers who wish to participate on a voluntary basis." (National Association of Plan Advisors [NAPA])
Conflicting Decisions in California as to 'Vested Rights' of Public Employees: Where Will the State Supreme Court Land?
"A California Court of Appeal recently issued a decision with implications that can affect all public employers in California and in contrast to a decision by another Court of Appeal just over a year ago.... [The judge] found that applying detrimental changes to the pension benefits of Legacy Members is only justified by compelling evidence that the required changes manifest a material relation to the successful operation of the pension system.... [We] now have two divergent decisions on the fundamental notion of a vested right to immutable pension benefits in the aftermath of PEPRA." [Alameda County Deputy Sherriff's Ass'n v. Alameda County Employees' Retirement Ass'n, No. A141913 (Cal. Ct. App. Jan. 8, 2018)] (Liebert Cassidy Whitmore)
Baltimore Fire and Police Pension Changes Ruled Unlawful
"Reforms implemented in 2010 ... increased employees' contributions and replaced a variable benefit tied to investment returns with a tiered cost-of-living increase. Instead of annual increases that averaged 3% under the variable benefit, the 2010 pension reforms created a tiered COLA that gave older retirees 2% increases, while retirees under 55 did not receive an increase. In the latest ruling, issued Jan. 2, [Baltimore Circuit Judge Julie Rubin] said the variable benefit change was a breach of contract." [Cherry v. Mayor and City Council of Baltimore City, No. 24-C-16-004670 (Cir. Ct. Balt. Jan. 2, 2018)] (Pensions & Investments)
'Composite' Solution for Multiemployer Plans in the Works
"[T]he Give Retirement Options to Workers (GROW) Act ... would facilitate a transition to what is being called a 'composite' retirement plan ... [which would combine] the key features of defined benefit and defined contribution plans. Proponents say that this new structure will give peace of mind to workers who will still receive lifetime income through the composite plan, while giving employers certainty in how much they will be required to pay into the system. Opponents ... argue that the option would divert much-needed funding from legacy DB plans." (National Association of Plan Advisors [NAPA])
National Taxpayer Advocate Releases Annual Report to Congress, Discusses Tax Reform Implementation, Unveils 'Purple Book'
"In Volume 1 of this year's report, we have identified 21 Most Serious Problems, made 11 Legislative Recommendations, and discussed the 10 Most Litigated Issues, along with significant stand-alone decisions. Volume 2 includes seven research studies and two Literature Reviews.... The Purple Book is a compendium of 50 legislative recommendations for strengthening taxpayer rights and improving tax administration that we and others have made over the years." (Taxpayer Advocate Service, Internal Revenue Service [IRS])
[Opinion] Joint Statement Opposing 'Composite' Pension Legislation
"The composite legislative proposal does not ensure that earned pensions will be fully paid in either existing multiemployer pension plans or in newly created plans. The composite proposals put benefits at risk, even in those multiemployer plans that are well-funded today.... [M]oney that would be needed for the new composite plans will be taken from money needed to fund existing plans -- likely leading to underfunding of both plans -- without adequate benefit protections." (AARP; Int'l Ass'n of Machinists and Aerospace Workers; Int'l Brotherhood of Boilermakers; Musicians for Pension Security; Nat'l United Comm. to Protect Pensions; Nat'l Retirees Legislative Network; Pension Rights Center; Others)
National Retirement Risk Index Shows Modest Improvement in 2016
"Between 2013 and 2016, the National Retirement Risk Index improved modestly, dropping from 52 percent to 50 percent of working-age households. The improvement was driven mainly by rising home prices, with stock market gains also contributing. At the same time, Social Security's rising 'Full Retirement Age' and declining interest rates served as a headwind against greater progress.... [R]etirement security remains a major challenge that requires today's workers to save more and/or work longer." (Center for Retirement Research at Boston College)
High Hurdle for Pension Cuts in New California Court Ruling
"[A California appeals court] ruled that the pensions of current employees can be cut without providing an offsetting new benefit, but only if there is 'compelling evidence' that a reduction is needed for the successful operation of the retirement system. The new ruling in three consolidated county cases is a much higher hurdle than an appellate ruling in a well-publicized Marin County case two years ago that said pensions can be cut if the employee is not deprived of a 'reasonable' pension." [Alameda County Deputy Sherriff's Ass'n v. Alameda County Employees' Retirement Ass'n, No. A141913 (Cal. Ct. App. Jan. 8, 2018)] (Calpensions)
What Does Sen. Hatch's Departure Mean to the Retirement Industry?
"Hatch's announcement ... increases the level of uncertainty that there will be action on retirement issues in 2018. In addition, Hatch's Finance Committee staff just lost the service of its highly regarded Benefits Tax Counsel, Preston Rutledge, who was confirmed Dec. 21 as Assistant Secretary of Labor for [EBSA]. In the meantime, several bills were introduced in the House in late 2017 that seek to encourage small businesses to offer retirement plans and make a variety of other changes to existing retirement law." (American Society of Pension Professionals & Actuaries [ASPPA])
[Opinion] Retirement Industry Trends to Watch in 2018 (PDF)
"[In-plan] retirement income solutions will continue to evolve this year with a goal of providing retirement plan participants with more flexibility.... Guaranteed and non-guaranteed de-accumulation products and strategies should grow this year ... [H]elpful fiduciary guidance by the Departments of Labor and Treasury regarding annuities and other income products will help plan sponsors add retirement income strategies to their retirement plans.... For consultants, the rule and the integration of the SEC could bring further changes to business models and a continuation of the merger activity we saw in 2017" (Institutional Retirement Income Council)
Tax Law's Pass-Through Provision Could Harm 401(k) Plans
"The alarm stems from a new tax mismatch created by the rules on pass-through entities ... This lower rate provides a disincentive for small-business owners to stash pre-tax money in a 401(k) plan, observers argue. Their logic: Why save money in a 401(k) now and likely pay a higher rate later upon withdrawal, when the owner can pay a lower tax rate now?" (Pensions & Investments)
New Tax Law Has Minimal Impact on Retirement Plans
"[The only] change directly affecting corporate retirement plans is an amendment of the rollover rules to allow an individual until their tax return due date (with extensions) to roll over the balance of a loan that is unpaid as of separation from service or plan termination.... [I]ncreases in investment returns, stimulated by the corporate tax cut, will increase the retirement savings tax benefit ... [This article] consider[s] some key elements of the bill bearing on retirement savings tax policy." (BMO Retirement Services)
How Digital Tools and Behavioral Economics Will Save Retirement
"[T]he digital space allows us to conduct research much faster, as we test out multiple designs to see which one works best. Instead of waiting years to see if an intervention is effective, we can often get results in days or weeks.... [T]he digital world offers unprecedented scale: by fixing a single website or app, we can potentially help millions of people make better financial decisions." (Shlomo Benartzi, in Harvard Business Review)
Details of the 'Retirement Plan Simplification and Enhancement Act'
"[The Retirement Plan Simplification and Enhancement Act of 2017] seeks to eliminate the current 10% cap on automatically-increased deferral rates of employees who are automatically enrolled in a plan.... [E]mployees who work for three consecutive years with at least 500 hours of service each year would have to be made eligible to participate in an employer's plan, but would be excluded from coverage, top-heavy, and nondiscrimination testing." (planadviser)
Update on Washington State's Retirement Marketplace
"Official launch of [the] Retirement Marketplace is drawing near, and with it, help for Washingtonians to comparison shop for low-cost retirement plans.... [The State Department of Commerce has] five plans from two providers verified for the Retirement Marketplace.... As soon as they're loaded and tested, Washington's Retirement Marketplace will be live and available to the public." (Washington State Department of Commerce)
'I Hope I Can Quit Working in a Few Years' -- A Preview of the U.S. Without Pensions
"The way major U.S. companies provide for retiring workers has been shifting for about three decades, with more dropping traditional pensions every year. The first full generation of workers to retire since this turn offers a sobering preview of a labor force more and more dependent on their own savings for retirement." (The Washington Post; subscription may be required)
2017 Annual Report of the PBGC Participant and Plan Sponsor Advocate (PDF)
44 pages. "New to this report ... is a pension de-risking study commissioned by the Office of the Advocate at the request of plan sponsors. The study focuses on PBGC and Congressional actions that may slow pension de-risking activity, and highlights the drivers and causes of de-risking. This study found that reducing PBGC single-employer premium levels or stemming their rapid growth is likely to decrease risk transfer activity." (Pension Benefit Guaranty Corporation [PBGC])
Proposed Legislation Would Enhance Auto Enrollment, RMD, Lifetime Income, and Other Retirement Plan Rules
"[Provisions of the Retirement Plan Simplification and Enhancement Act of 2017 (RPSEA) include:] ... No RMDs for certain individuals ... Increased RMD age ... Qualifying longevity annuity contract (QLAC) enhancement ... More self-correcting for employer plans ... Grace period for automatic-enrollment failures ... Simplify notice requirements ... Incentive to allow early plan entry ... Simplified reporting and disclosure ... [Expands] safe harbor plan designs with the Secured Deferral Arrangement (SDA)." (Ascensus)
Outlook 2018: EBSA Awaits New Direction from Rutledge
"At the top of the list for [EBSA], as it has been for nearly a decade, is the fiduciary rule.... Years of DOL guidance could be reversed by [a] new regulation which will likely make it easier for individuals and small businesses to join association health plans.... When [Preston Rutledge] takes the helm at EBSA, it's a guessing game as to what retirement and benefits issues he may want tackled other than the fiduciary rule and association health plans." (Bloomberg BNA)

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