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News Items

Editor's Note: This page is an archive of news items that appear in our daily email newsletters. To automatically receive the latest news items -- plus links to the latest jobs, press releases, webcasts and events -- subscribe to our daily email newsletters.

Surprise! A QDRO Can Apply to a Welfare Benefit Plan
Dickinson Wright
May 24, 2019
"When the plan administrator receives a QDRO for a pension plan, does it have an affirmative duty to ask whether the divorce decree has any provisions regarding life insurance beneficiary designations? If the plan administrator receives a divorce decree with a provision regarding a life insurance beneficiary designation, does it have an affirmative obligation to determine whether the domestic relations order is 'qualified' and, if not, advise the parties so it can be corrected? Does the plan administrator need to revise its QDRO procedures to apply to welfare benefit plans as well as pension plans?"
House Passes the SECURE Act
May 24, 2019
"What are the absolute gems in this version of the SECURE Act? [1] Creates the Pooled Employer Plan (the new name for what has been referred to as an open MEPs). [2] Increases the Required Minimum Distribution start date from 70-1/2 to 72 (no one likes calculating a half year). [3] Allows penalty-free distributions of up to $5,000 within a year for new parents (birth or adoption). [4] Extends the period of time for companies to adopt new plans beyond the end of the year to the due date for filing the company tax return. [5] Permits employers to add a safe-harbor feature to their existing 401(k) plans once the year has already started if they agree to make at least a 4% of pay contribution to employees (instead of the regular 3%). What is potentially much ado about nothing? The annuities!"
House Passes SECURE Act by 417-3 Vote
October Three Consulting
May 24, 2019
"Many believe the overwhelming bipartisan support for SECURE in the House makes early passage of a final bill by the Senate more likely. In the current context, however, risks to final passage remain.... On May 14, 2019, Senators Portman (R-OH) and Cardin (D-MD) introduced the Retirement Security and Savings Act of 2019. The bill generally tracks legislation the Senators introduced last year, and many of the proposals included in it are expected to be part of the nextbipartisan retirement policy reform effort (after SECURE/RESA)."
The Art of Self-Correction: Retirement Plan Loan and Document Failures Under EPCRS
DLA Piper
[Guidance Overview]
May 24, 2019
"Self-correction requires an analysis of the facts of a plan operational failure to determine whether self-correction is an option as well as the correction process. It is imperative ... to maintain the correction data and document the process taken to correct a mistake as evidence of the decision to self-correct and the manner in which the correction was made."
Senate Could Vote Friday on Bill Expanding Annuity Options in Plans
May 24, 2019
"The SECURE Act is designed to expand access to workplace retirement plans, particularly for small businesses, and will improve the ability for employers to extend greater access to annuity options in those plans. House committees have debated the proposal for several weeks."
District Court Rejects Attempt to Certify Class Against Third-Party Plan Administrator
Baker Hostetler, via Lexology; free registration required
May 24, 2019
"In affirming its denial of class certification, the court recognized that ERISA Section 502(a)(3) does not address which parties may be sued under the statute and 'admits of no limits . . . on the universe of possible defendants.' However, the court recognized that there are limits on a plaintiff's ability to bring a Section 502(a)(3) claim against a nonfiduciary.... The court ultimately found that the appropriate equitable relief requirement doomed the plaintiff's class claims against the third-party administrator." [Duggan v. Towne Properties Group Health Plan, No. 15-623 (S.D. Ohio, Mar. 31, 2019)]
Bill Expanding Annuity Options in Retirement Plans Passes the House
May 23, 2019
"The Setting Every Community Up for Retirement (SECURE) Act is designed to expand access to workplace retirement plans, particularly for small businesses, and will improve the ability for employers to extend greater access to annuity options in those plans. The measure also requires retirement plans to provide participating workers with an illustration of how much monthly income a retirement savings account might deliver. Additionally, the bill raises the age to begin required minimum distributions from retirement accounts from 70-1/2 to 72."
House Passes Bill Making Big Changes to U.S. Retirement System
The Wall Street Journal; subscription may be required
May 23, 2019
"[T]he House version of the legislation would repeal the age cap for contributing to individual retirement accounts, currently 70-1/2. It would also increase the age to start taking required withdrawals from 401(k)s and IRAs to 72 from 70-1/2.... The bill passed Thursday, which includes many of the provisions in a similar bill in the Senate, would encourage 401(k)-style plans to offer annuities by giving certain employers some protection from future liability if their chosen insurer fails to pay claims.... Both the House and Senate versions allow employers without an affiliation to band together to offer a 401(k)-type plan."
Employers Link Student Loan Payments to 401(k)s
Squared Away Blog, by the Center for Retirement Research at Boston College
May 23, 2019
"Employees who put at least 2 percent of their income toward student loan payments will qualify for Abbott's 5 percent contribution to their 401(k) account -- without the worker having to put his own money into the 401(k).... After a burst of sign-ups following the August rollout, enrollment has increased steadily. All workers who are paying off their own student loans are eligible, including brand new hires. Older workers paying for a child's education cannot participate."
Clearing Up Cybersecurity Confusion for Investment Advisers
Morningstar Advisor
May 23, 2019
"[M]any advisors assume that protecting client data and staying compliant require outsourcing these tasks entirely, purchasing expensive tools, or both. While outsourcing and quality cybersecurity tools can certainly be of benefit, advisors would be best served to understand what's required, what's best practice, and what their risks are before tackling the cybersecurity process and compliance."
Defined Contribution Plan Participants' Activities, 2018 (PDF)
Investment Company Institute [ICI]
May 23, 2019
16 pages. "In 2018, 3.4 percent of DC plan participants took withdrawals, the same share as in 2017.... Only 1.6 percent of DC plan participants took hardship withdrawals during 2018, compared with 1.7 percent in 2017.... In 2018, 2.3 percent of DC plan participants stopped contributing, compared with 2.7 percent in 2017.... At the end of December 2018, 16.7 percent of DC plan participants had loans outstanding, compared with 16.7 percent at year-end 2017, and 17.0 percent at year-end 2016."
Text of Exposure Draft: Pri-2012 Private Retirement Plans Mortality Tables (PDF)
Society of Actuaries
May 23, 2019
"Most plan sponsors that update their mortality assumption from the RP-2006 tables to the Pri-2012 tables will experience only a small change in their pension liabilities, usually within plus or minus 1%.... [P]articipants in multiemployer plans did not exhibit significantly different mortality than participants in single employer plans.... When comparing the RP-2006 and Pri-2012 total dataset tables, the life expectancy as of 2019 for an age-65 female remained roughly constant at 87.4 years, while for an age-65 male, life expectancy declined slightly from 85.0 years to 84.7 years."
How to Establish a Strong Investment-Focused Retirement Plan Committee
May 23, 2019
"At the broadest levels, the investment-oriented committee's main objectives are to establish an investment selection process, implement investment decisions, analyze offerings and expenses and make changes where warranted.... These broad objectives can be broken down into a more manageable list of responsibilities."
Product Development Moves Beyond the 401(k) Plan
May 23, 2019
"Retirement plan advisers with established 401(k) businesses are finding new revenue streams and client engagement opportunities among nonprofits and educational institutions, and in the area of estate planning."
An Actuarial Perspective on the 2019 Social Security Trustees Report (PDF)
American Academy of Actuaries
May 23, 2019
10 pages. "In order to achieve viability of Social Security in the foreseeable future, any modifications to the system should include sustainable solvency as a primary goal. Sustainable solvency means that not only will the program be solvent for the next 75 years under the reform methods adopted, but also that the trust fund reserves at the end of the 75-year period will be stable or increasing as a percentage of the annual program cost.... Providing for solvency beyond the next 75 years will require changes to address micro-aging, as beneficiaries will likely be receiving benefits for ever-longer periods of retirement."
Be a Faithful Fiduciary: Keep Politics Out of Your Decisions When Investing Other People's Money
Institute for Pension Fund Integrity
May 23, 2019
"[V]ocal opponents of current immigration policies ... have advocated for divestment from private prison companies.... [CalPERS] felt this pressure as it faced a pending bill to divest its holdings from these companies, which total over $10 million in stocks.... CalPERS recently voted to oppose the pending bill which would mandate divestment.... The private sector should follow CalPERS' lead and prioritize its fiduciary responsibility over that of political expediency."
The Future of Retirement Plans
Cammack Retirement Group
May 23, 2019
"[P]articipant-directed investments ... will be replaced by turbo-charged managed accounts that are automatically customized to the needs of each individual participant.... The concern over individuals saving enough for retirement may disappear ... [with] all participants auto-enrolled at a customized contribution rate that is projected to accumulate enough savings for each individual's retirement.... Pricing could FINALLY be easy to understand."
DOL Regulatory Agenda, Spring 2019
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]
[Official Guidance]
May 22, 2019
Proposed Rules (EBSA): [1] Fiduciary Rule and Prohibited Transaction Exemptions, [2] Grandfathered Group Health Plans and Grandfathered Group Health Insurance Coverage, [3] Improving Effectiveness of and Reducing the Cost of Furnishing Required Notices and Disclosures. Final Rules (EBSA): [1] Amendment of Abandoned Plan Program 1210-AB47, [2] Electronic Filing of Apprenticeship & Training Plan Notices, and Top Hat Plan Statements, [3] Adoption of Amended and Restated Voluntary Fiduciary Correction Program, [4] Health Reimbursement Arrangements and Other Account-Based Group Health Plans, [5] Definition of an 'Employer' Under Section 3(5) of ERISA -- Association Retirement Plans and Other Multiple Employer Plans.
Text of IRS Regulatory Agenda, Spring 2019
Internal Revenue Service [IRS]
[Official Guidance]
May 22, 2019
Benefits-related items include: Determination of Line of Business for Purposes of No-Additional-Cost Service and Qualified Employee Discount Fringe Benefits; Further Guidance on the Application of Section 409A to Nonqualified Deferred Compensation Plans; Deferred Compensation Plans of State and Local Governments and Tax-Exempt Entities; Additional Rules Regarding Pension Plan Funding and Benefit Restrictions; Collectively Bargained Welfare Benefit Funds; Guidance on Rules Applicable to IRAs Under Sections 408 and 408A; Spousal IRAs, SEPs and IRA Technical Changes; Requirements for Employee Stock Ownership Plans; Minimum Vesting Standards; Stage Withholding on Certain Retirement Plan Distributions Under Section 3405(a) and (b); Definition of Church Plan; Application of Various Provisions of Section 2711 of the Public Health Service Act, the [ACA], and the Internal Revenue Code to Health Reimbursement Arrangements; Voluntary Employees' Beneficiary Association (VEBA) Regulations ; Notice to Participants of Consequences of Failing to Defer Receipt of Qualified Retirement Plan Distributions; Expansions of Applicable Election Period and Period for Notices.
PBGC Regulatory Agenda, Spring 2019
Pension Benefit Guaranty Corporation [PBGC]
[Official Guidance]
May 22, 2019
Proposed Rules: [1] Valuation Assumptions and Methods: Interest and Mortality Assumptions for Asset Allocation in Single-Employer Plans and Mass Withdrawal Liability Determination in Multiemployer Plans; [2] Benefit Payments; [3] Miscellaneous Corrections, Clarifications, and Improvements; [4] Administrative Review; [5] Multiemployer Plan Guaranteed Benefits; [6] PBGC-Approved Arbitration Procedures -- Multiemployer Plans; [7] Release of Official Information and Testimony by PBGC Employees; [8] Benefits Payable in Terminated Single-Employer Plans: Assumptions for Determining Lump Sum Amounts; [9] Examination and Copying of Pension Benefit Guaranty Corporation Records; [10] Filing and Issuance Rules; and [11] Improvements to Rules on Recoupment of Benefit Overpayments. Final Rules: [1] Methods for Computing Withdrawal Liability, and [2] Adjustment of Civil Penalties.
Best Practices for Plan Sponsors: Lessons Learned from Litigation -- the Anthem Case
May 22, 2019
"The recent settlement of the Anthem case is a good example of the importance of using appropriate share classes and of other practices in selecting investments and monitoring service providers. This article discusses the complaint, the settlement and risk management for plan sponsors and their fiduciary committees."
The IRS Determination Letter Program Reopens (a Little) for More Business
May 22, 2019
"The IRS clarifies in [Rev. Proc. 2019-20] that this determination letter opportunity cannot be used to avoid [VCP] user fees for any document failures discovered during the review.... If the failure meets a specific 'good faith' standard, it will only be subject to the reduced VCP sanctions. With respect to statutory hybrid plans, failures related to the final hybrid plan regulations are not subject to such sanctions. For merged plans, a failure related to the merger amendment itself is likewise not subject to sanctions."
Using Behavioral Finance to Drive Retirement Outcomes, Part 2
Greenspring Advisors
May 22, 2019
"As an industry, incredible amounts of time and money have been spent trying to educate people and get them to better balance short-term and long-term rewards with little incremental impact being made.... [W]orkers with income in the bottom quartile were projected to have to replace 82% of their pre-retirement income. Social Security was projected to contribute 59% and 23% needed to come from personal retirement savings. To replace that 23% of income, these workers needed total savings rates of between 9% and 11%."
More Than Half of Small Businesses Plan to Offer New Benefits in 2019
Wolters Kluwer; free registration required
May 22, 2019
"More than half of small businesses (56 percent) plan to offer new benefits to their employees in 2019, according to recent research from small business consultant Clutch. Small businesses offering new benefits are most likely to offer paid time off (19 percent), health benefits (15 percent), and retirement benefits (11 percent)."
Retirement Plan Participants' Trust in Providers: Much Room for Improvement
PLANSPONSOR; free registration may be required
May 22, 2019
"[O]verall satisfaction with providers has declined by 24 percentage points in the past six years to a new low.... Only 25% of participants feel that they can always trust their employer. As to which factors build their trust, participants said satisfaction with the education provided, transparent fees, receiving relevant information, viewing their provider as if they were a partner and believing that the information the provider gives them is in their best interest."

<< Older News Items  |  May 25, 2019

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