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<< Older News Items  |  December 19, 2018

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.

Puerto Rico Qualified Plans Must Adopt Hurricane Maria Tax Relief Provisions by December 31, 2018
McConnell Valdes
[Guidance Overview]
Dec. 18, 2018
"Although the amendment is not considered a 'qualification amendment,' and therefore, it does not have to be filed with the Puerto Rico Treasury Department for an updated determination letter, it must be timely adopted to ratify the tax relief benefits granted on such eligible distributions and loans."
New Flexibility for Hardship Withdrawals: Permissive Changes Starting in 2019 and Required Changes by 2020
K&L Gates
[Guidance Overview]
Dec. 18, 2018
"Plan sponsors should begin considering whether they want to make the changes that are permitted, but not required, by the new rules. The plan sponsor will need to make that decision quickly and work closely with their third party administrator to implement the change and communicate it to participants.... For those plan sponsors that currently use the six-month contribution suspension, work should begin sooner than later on the changes needed to eliminate the suspension, and to implement the required employee representations contemplated by the Proposed Regulations, by no later than 2020."
Important Guidance and Relief for 403(b) Plan Sponsors Who Exclude Part-Time Employees
Jackson Lewis P.C.
[Guidance Overview]
Dec. 18, 2018
"[Notice 2018-95] contains many conditions to qualify for the relief. It also does not provide blanket relief covering all potential administrative issues involving the exclusion of part-time workers. So, just as important as the relief itself is what the relief does not cover, serving as an important reminder to plan sponsors about the circumstances in which part-time employees may be excluded from 403(b) plans."
2019 Trends for Retirement Plan Sponsors
Cammack Retirement Group
Dec. 18, 2018
"[1] Increased focus on non-savers ... [2] Locating 'missing' participants ... [3] The reemergence of MEPs ... [4] Focus on recordkeeper value vs. cost ... [5] Re-acquaintance with hardship distributions."
Retirement Industry Trends to Watch in 2019 (PDF)
Institutional Retirement Income Council [IRIC]
Dec. 18, 2018
"The enactment of legislation could usher in greater interest and adoption of guaranteed income options for 401(k) and other DC retirement plans.... [R]ecord-keepers will be under increasing pressure ... DC record-keepers that integrate with HSAs will have an advantage ... A more challenging stock market along with steadily rising interest rates ... could drive greater proliferation of, and demand for, products offering downside protection, stable value contracts, insurance products such as deferred annuities and guaranteed income benefits, alternative funds and real asset funds."
Benefit Plan Cybersecurity Considerations: A Recordkeeper and Plan Perspective (PDF)
Pension Research Council, The Wharton School of The University of Pennsylvania
Dec. 18, 2018
27 pages. "The U.S. has no comprehensive national law governing cybersecurity and no uniform framework for measuring the effectiveness of protections, though retirement plan record keepers maintain the personally identifiable information on millions of workers, collecting names, birth dates, social security numbers, and beneficiaries.... The SPARK Institute has outlined a flexible approach for an independent third-party reporting of cyber security capabilities with several key control objectives."
New ERISA Class Actions Claim Underpayment of Pensions Due to Unreasonable Actuarial Factors
Groom Law Group
Dec. 18, 2018
"Three recent lawsuits, filed within 15 days of each other, have targeted large corporate pension plans for using what the plaintiffs claim are unreasonable actuarial equivalent factors, including 'outdated' mortality tables, when calculating plan benefits payable in various annuity forms of distribution.... Given the lack of guidance in this area, the unsettled nature of the 'reasonableness' standard, and the interplay of fluctuating interest rates with gradual changes in mortality rates, it is difficult to predict how the courts will view these issues."
ERISA Record Retention Requirements In Plain English
Dec. 18, 2018
"A solid record retention policy allows you to quickly and easily respond to employee documentation requests or changes, deal with audits, and keep things compliant.... The 401(k)-related records you need to keep: [1] Fiduciary Plan Documents ... [2] Contracts & Agreements ... [3] Participant Notices ... [4] Compliance ... [5] Participant-Level Benefit Determinations ... [Y]ou can dispose of your physical copies once you've made and securely stored electronic copies ... However, there are requirements for correct electronic reporting."
Retirement Savings Reform a Focus for the Trump Administration and Congress
Squire Patton Boggs
Dec. 18, 2018
"The [DOL Association Retirement Plan] proposal differs in significant ways from several legislative proposals introduced in Congress. For one thing, the Department's proposal is more limited because it relies solely on the Department's authority to promulgate regulations administering title I of ERISA.... As such, it does not appear that the NPRM -- as currently drafted -- is likely to have much of a substantive impact on ongoing legislative efforts surrounding Open MEPs."
IRS Formalizes and Provides Relief for Section 403(b) 'Once-In-Always-In' Part-Time Rule -- Immediate Action Required
Eversheds Sutherland
[Guidance Overview]
Dec. 17, 2018
"This appears to be yet another instance where an unrelated retirement plan requirement -- in this case, under ERISA -- is imported through the section 403(b) tax regulations and generally extended to section 403(b) programs.... The plan document relief is highly pragmatic; pre-approved documents are widely in use for section 403(b) programs, and the need to adopt plan amendments is limited to the smaller population of individually designed plans ... The operational relief is less pragmatic, in that the Notice requires all section 403(b) programs potentially to be dealing with its implications in January 2019, less than a month after its release."
IRS Provides 403(b) Plan Relief for Improper Exclusion of Part-Time Employees
McDermott Will & Emery
[Guidance Overview]
Dec. 17, 2018
"Employers must begin to operate the part-time employee exclusion under their 403(b) plans correctly for the plan year immediately following the transition relief period, which will mean as soon as January 1, 2019 for many 403(b) plan sponsors.... [M]any employers will need to amend their 403(b) plans to properly reflect the conditions that must be satisfied to exclude part-time employees from 403(b) plan participation."
Text of IRS Notice 2019-03: Weighted Average Interest Rates, Yield Curves, and Segment Rates Applicable for December 2018 (PDF)
Internal Revenue Service [IRS]
[Official Guidance]
Dec. 17, 2018
"This notice provides guidance on the corporate bond monthly yield curve, the corresponding spot segment rates used under Section 417(e)(3), and the 24-month average segment rates under Section 430(h)(2) ... In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under Section 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008 and the 30-year Treasury weighted average rate under Section 431(c)(6)(E)(ii)(I)."
Second Circuit Holds that Participants Stated Plausible ERISA Claim for Breach of Duty to Manage ESOP Assets Prudently
Kantor & Kantor
Dec. 17, 2018
"[T]he Court was presented with the question of what standard one must meet to plausibly allege that fiduciaries of an [ESOP] have violated ERISA's duty of prudence.... On appeal, Plaintiff proposed just one alternative action: early corrective disclosure of the microelectronics division's impairment, conducted alongside the regular SEC reporting process. The Court found that a prudent fiduciary could not have concluded that the corrective disclosure would do more harm than good." [Jander v. Ret. Plans Comm. of IBM, No. 17-3518 (2d Cir. Dec. 10, 2018)]
Ninth Circuit Addresses 'Actual Knowledge' in ERISA Statute of Limitations Decision
Dec. 17, 2018
"The Court determined that based on current law and precedent, 'actual knowledge' is something more than knowledge that a transaction has occurred.... The Court noted that the required level of knowledge will vary depending on the nature of the claim ... 'The key is that, whatever the underlying ERISA claim, the limitations period begins to run once the plaintiff has sufficient knowledge to be alerted to the particular claim.' " [Sulyma v. Intel Corp. Investment Policy Comm., No. 17-15864 (9th Cir. Nov. 28, 2018)]
New Class Action Wave: Actuarial Equivalents in Pension Plans (PDF)
Dec. 17, 2018
"A court in New York is being asked to certify a class action lawsuit served on MetLife earlier this month. This was followed by a nearly identical lawsuit in Texas served on American Airlines as well as another in New York served on PepsiCo. The first two suits fault the use of an old mortality table in determining optional forms of distribution; the PepsiCo suit faults simplified option factors.... These cases highlight the possible need to periodically re- evaluate the reasonableness of factors currently used in ERISA pension plans."
Litigation Lessons for 401(k) and 403(b) Fiduciaries: Apply These in 2019
Cohen & Buckmann, P.C.
Dec. 17, 2018
"[1] Your process matters.... [2] Put it in writing.... [3] Know and review your options.... [4] Understand target date funds.... [5] Benchmark plan fees ... [6] Retain an expert to help you.... [7] Consult outside counsel when necessary.... [8] Hold regular committee meetings.... [9] Review your providers.... [10] Schedule regular RFPs."
Editor's Pick State of the Insured Retirement Industry: 2018 Review and 2019 Outlook (PDF)
Insured Retirement Institute [IRI]
Dec. 17, 2018
32 pages. "Demographic trends continue to favor growth of lifetime income solutions. 2018 saw continued shifts in the leading annuity product types across distribution channels, a trend that will continue in 2019. An improving interest rate environment will improve capacity and potentially have a positive impact on lifetime income benefit design. Rising market volatility will create both challenges (sales disruption) and opportunities (highlighting the value of protecting financial assets and income)."
Help People Work Longer by Phasing Retirement
The Brookings Institution
Dec. 17, 2018
"If we're serious about a transition to working longer, there ought to be a legal framework for doing so.... [It's] easier to measure the costs of older workers than the benefits of having them. Those benefits ... range from reduced turnover and onboarding costs to quicker productivity gains for younger workers through formal mentoring programs. The most important question, however, is especially hard to measure: Are older workers less or more productive than younger ones?"
Deep-in-Debt CalSTRS Also Has $9.8 Billion Surplus
Dec. 17, 2018
"The main CalSTRS pension fund is seriously underfunded, and school district pension costs are more than doubling, biting deep into classroom budgets. But a CalSTRS inflation-protection fund has a growing $9.8 billion surplus and an eye-popping positive cash flow.... [T]he add-on inflation protection is a separate special fund ... [which is] paid for only by the state ... Step-by-step, inflation protection grew from 58.4 percent to 85 percent of original purchasing power."
National Federation of Independent Businesses Comment Letter to DOL on Proposed Regs on Association Retirement Plans and MEPs (PDF)
National Federation of Independent Businesses [NFIB]
Dec. 17, 2018
17 pages. "NFIB continues to object to the control and commonality-of-interests tests as a misconstruction of section 3(5) of ERISA. The Department should revise its proposed rule ... to allow an association to demonstrate in ways other than 'control' that the association acts in the interest of the employers in the association and should recognize small business size as itself a commonality of interest."
American Benefits Council Letter to New Jersey Bureau of Securities: State Fiduciary Standards Should Not Apply to ERISA Plans
American Benefits Council
Dec. 17, 2018
"[The Council is] concerned that state action on this matter could quickly evolve into a major threat to the workability of employee benefit plans maintained by large multi-state plan sponsors because different states' rules will inevitably adopt standards different from each other and different from the federal standards imposed through ERISA. ERISA explicitly protects employee benefit plans from this type of disruption."
Text of PBGC Comprehensive Premium Filing Instructions for 2019 Plan Year (PDF)
Pension Benefit Guaranty Corporation [PBGC]
[Official Guidance]
Dec. 14, 2018
70 pages. "This document provides information for plans paying premiums for plan years beginning in 2019, including instructions for each data element that must be reported.... [K]ey changes to note for 2019: [1] Changes in premium rates ... [2] included information about the process by which plan administrators may certify the filing manually instead of electronically.... [3] revised the instructions regarding disaster relief to reflect recent changes made to PBGC's practice.... [4] increased My PAA functionality by adding a 'Submit a Request' Quick Link button.... [5] clarified the instructions for reporting the business code.... [6] expanded the list of common filing errors."
IRS Issues Proposed Regs Amending Rules for Hardship Distributions
Drinker Biddle
[Guidance Overview]
Dec. 14, 2018
"The proposed regulations include the following changes: [1] Elimination of the six-month suspension requirement; [2] Elimination of the plan loan requirement; [3] Modifications to the list of hardship distribution events; [4] Addition of participant representation requirement; [5] Expansion of sources available for hardship distributions.... [T]he Treasury Department and IRS expect that plans will need to amend their hardship distribution provisions to reflect some or all of the changes in the proposed regulations."
DOL Private Pension Plan Bulletin: Abstract of 2016 Form 5500 Annual Reports (PDF)
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]
Dec. 14, 2018
68 pages. "The total number of pension plans grew again in 2016 to approximately 703,000 plans, a 1.2 percent increase over 2015. The number of DC plans grew by 1.2 percent, while the number of DB plans in creased by 1.4 percent.... The number of 401(k) type plans increased yet again in 2016 by 2.5 percent, from 547,000 to 560,000. There were 67.1 million active participants in 401(k) type plans.... The share of DB plans reporting being fully frozen decreased to 19.9 percent of all DB plans; however, the amount of assets in fully frozen DB plans increased from 15.4 percent to 17.1 percent in 2016." [Also available: Data tables in XLSX and XML formats.]
Market Volatility: Check Your Emotions at the Door
Financial Industry Regulatory Authority [FINRA]
Dec. 14, 2018
"Investors have been on a rollercoaster ride that raises the question: what should you do in times of volatile markets? In many situations, the answer is sit tight, and take the long view.... Whether any given day's drop reflects a market correction, an anomaly or the beginning of a bear market can take time to figure out -- and is outside the control of any one investor. So control what you can -- and focus on key investing concepts such as staying diversified and rebalancing to stay aligned with your goals."

<< Older News Items  |  December 19, 2018

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