Retirement Plans Newsletter

April 21, 2017

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Employee Benefits Jobs

Retirement Plan Administrator
Continental Benefits Group, Inc.
in NJ

Director Prod. Mgmt Retirement Products & Services
DST Systems
in MO

Attorney
Haynes Benefits PC
in MO

Retirement Plan Specialist
Oasis DEG, Inc.
in MN

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2017 Target Date Fund Landscape: Answers to Frequently Asked Questions (PDF)
91 pages. "Assets in target-date mutual funds reached an all-time high of $880 billion by the end of 2016 ... At the end of 2016, 12 firms offered more than one target-date series ... whereas no firm offered more than one 10 years ago.... Fees for target-date funds continue to decline ... The average equity glide path hasn't changed dramatically in recent years, particularly for the youngest and oldest investors. However, midcareer investors have seen a modest in crease in equity exposure."
Morningstar

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Upstate Teamsters (Local 294) Gets Reprieve from Pension Cuts
"Earlier in April, the agency sent back the Upstate Teamster's blueprint to regain solvency. The agency offered several suggestions, including an updating of the fund's actuarial mortality tables. Federal officials also wanted the fund operators to make a more optimistic assumption about their annual rate of return, which was pegged at 6.75 percent for the next decade."
TimesUnion.com

The First Dinosaur Has Died: Multiemployer Plan Runs Out of Money, Other Insolvencies Loom
"The New York Teamsters Road Carriers Local 707 Pension Fund (the 'Local 707 Pension Fund') is dead, reportedly having run out of money in early March 2017.... The average monthly payment will be slashed by the PBGC to $570. This is a reduction of 56% for a population which is aging and unlikely to be able to engage in full-time employment.... [T]he Local 707 Pension Fund was one of several pension funds that sought relief under [MPRA] to be permitted to have its participants consider a reduction of core benefits. However, its application was rejected by the Department of Treasury."
Jackson Lewis P.C.

How Should You Invest Your Roth IRA?
"Use it as an emergency fund.... Save for a short term goal.... Choose investments that complement your other retirement accounts.... Choose a more conservative mix for early retirement.... Choose more aggressive investments for long term tax-free growth.... Keep it simple."
Financial Finesse

Innovative Strategies to Maximize Social Security Benefits (PDF)
20 pages. "No other vehicle can match the combination of inflation-fighting increases, longevity protection, investment risk elimination, and spousal coverage that Social Security delivers -- potentially making it one of the most valuable sources of retirement income. While the Bipartisan Budget Act of 2015 restricted the use of certain Social Security claiming techniques, there are many remaining strategies that can help maximize Social Security benefits and enhance retirement security."
Prudential

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Find the 'Goldilocks' Solution for Spend-Down During Retirement
"[Sequence of return risk (SORR)] is generally not as significant of an issue with those who use more dynamic spending strategies that periodically adjust for actual investment experience. It is more of an issue with individuals and their financial advisors who disassociate spending decisions from actual investment performance. Rather than having faith that such a decoupling approach will work ... an actuarially determined spending budget [can] be determined each year and that the resulting amount be used as another 'data point' in making spending decisions."
Ken Steiner, FSA Retired

Another Question is Answered in the Who's the Employer Q&A Column
"Doctor X owns 100% of Corporation A and 100% of a professional corporation (Corporation B). A and B are in a controlled group. A pays compensation to Doctor X, and sponsors a DC plan in which Doctor X participates. B is a 25% partner in Partnership P that provides medical imaging services. Other partners in P are individual doctors or their professional corporations. Assume that an affiliated service group (ASG) exists (consisting of P, B, and the other professional corporations that are partners). A is not part of the ASG. B pays compensation to Doctor X (its sole employee). P sponsors a separate DC plan. B has signed P's plan as a 'participating employer.' The question: must annual additions for Doctor X under the two plans be aggregated to apply the Code 415 limit?"
S. Derrin Watson, on BenefitsLink

Benefits in General

Employee Benefits Considerations in Mergers and Acquisitions
"Due diligence is a critical first step in a merger or acquisition transaction.... Don't rely on the seller's representation of the condition of the benefit plans.... As you consider the impact of benefit plans on the transaction, also take into account how the type of deal -- asset or stock -- can impact the buyer's or seller's perspective.... [D]on't wait until after closing to develop a game plan for integration."
Milliman Retirement Town Hall

Avoid Costly Litigation Over Beneficiary Designations
"Language in plan documents, employee communications, and Summary Plan Descriptions should be clear and consistent. Plan administrators may also want to regularly (i.e. annually) remind participants on how to update their beneficiaries in light of life-changing events and provide them with the necessary beneficiary designation forms to do so."
Butterfield Schechter LLP

Get Your ROI on Employee Benefits Spending
"[M]ost companies hand their new hires a 20-page benefit guide with countless details, benefit jargon, and acronyms, and expect employees to figure it out.... Employees want more communication. They want more information, they want it more frequently, and they want it to be personalized. They expect to receive information through multiple channels, including video, online, mobile, and print.... [T]hey want to be educated consumers who have the information they need to make smarter decisions."
Ron Shah of Hodges-Mace, via CFO

Discussions on
the BenefitsLink Message Boards

Are Participant Loans Really Taxed Twice?
"The author of the article purports that merely because the loan repayments are made with after-tax dollars, the compensation needed to repay the loan represents a double taxation (i.e., because every dollar of loan payments = $1.33 of comp). But the analysis does not take into account that the $10,000 of pre-tax money was received without paying any taxes."
BenefitsLink Message Boards

When Does a TPA Need a Form 2848 to Represent a Taxpayer Before the IRS?
"As a former IRS agent I was told only two things could get you fired: [1] Blowing a statute of limitations; and [2] Unauthorized release of taxpayer information. Because of #2 we were taught you don't talk to anyone other then the taxpayer or a person with a valid Form 2848."
BenefitsLink Message Boards

Why Make a Plan-to-Plan Transfer?
"An employee terminates from Employer A and starts working for Employer B. They are unrelated employers. Both plans allow Plan-to-Plan transfers into and out of the plans. What is the benefit of this participant doing such transfer instead of a rollover?"
BenefitsLink Message Boards

Press Releases

DOL Recovers More Than $41K for the St. Paul-based Weinhagen Tire Co. Inc. 401(k) Plan
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

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Lois Baker, J.D., President  loisbaker@benefitslink.com
David Rhett Baker, J.D., Editor and Publisher  davebaker@benefitslink.com
Holly Horton, Business Manager  hollyhorton@benefitslink.com

BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2017 BenefitsLink.com, Inc. All materials contained in this newsletter are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of BenefitsLink.com, Inc., or in the case of third party materials, the owner of those materials. You may not alter or remove any trademark, copyright or other notices from copies of the content.

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