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[Guidance Overview]

Changes to Puerto Rico's Tax Code and Trust Act Could Impact HCEs
"The Act sets the threshold for HCEs to $150,000 (currently $120,000 in the U.S., and previously the threshold under P.R. law). This HCE threshold is fixed, while the U.S. threshold is subject to cost-of-living adjustments.... Limits on per-participant contributions to defined contribution plans are currently the same under both the P.R. and U.S. tax codes: the lesser of 100% of compensation or $54,000. The Act limits contributions to the lesser of 25% of 'net income' or $75,000."
Willis Towers Watson

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Text of Sixth Circuit Opinion Upholding Denial of Lump Sum Benefits for Retiree Who Died Prior to Lump Sum Election Period (PDF)
10 pages. "Given that no power of attorney exists after death and Mr. Strang did not submit the form, Ford is correct to note that Mr. Strang did not comply with the terms of the plan. Such an interpretation is not arbitrary or capricious.... It is true that the facts here present a tragic case of the sometimes difficult nature of hard-line rules, but there is nothing in the plan that prevents Ford from keeping its structured plan intact so that it could provide an orderly system for the many other retirees that may have wished to elect their own lump-sum option." [Strange v. Ford Motor Co., No. 16-2090 (6th Cir. May 19, 2017)]
U.S. Court of Appeals for the Sixth Circuit

Reimbursement of Plan Sponsor Expenses
"[S]ome regular plan sponsors do bill their plans for the services the sponsor provides to them. And that practice -- while permitted under certain circumstances -- does present certain issues under ERISA. In this article we briefly review the rules under which a sponsor/fiduciary may be reimbursed for expenses, some of the pitfalls those rules present, and some recent litigation on the issue."
October Three Consulting

Average Fund Fees Paid by Investors Continued to Decline in 2016
"The asset-weighted average expense ratio across all funds was 0.57% in 2016, down from 0.61% in 2015 and 0.65% three years ago.... The simple average expense ratio of the largest 2,000 funds (in 2013), which accounted for 85% of assets in mutual funds and ETFs, was 0.72%, in 2016, unchanged from 2014 and 2015.... The asset-weighted average expense ratio of passive funds was 0.17% in 2016 compared with 0.75% for active funds. This wide fee gap, coupled with record flows of $429 billion into passive funds and $326 billion out of active funds in 2016, contributed to falling industrywide asset-weighted average expense ratios."

University of Chicago Latest College Hit with Retirement Plan Suit
"The lawsuit alleges the university selected and retained investment funds and insurance company annuities that caused the plans to incur far higher administrative fees and expenses relative to the size of the plans, causing participants millions of dollars in economic loss. The university selected numerous underperforming investment options when lower-cost alternatives were available, according to the complaint filed May 18 in federal court in Illinois."
Bloomberg BNA


A simple, illustrative guide for pension plan sponsors.

Sponsored by Russell Investments

This practical overview for corporate plan fiduciaries is not only a great reference work -- it's a high level guide that makes an excellent training tool for new board and investment committee members.

Former EBSA Secretary Phyllis Borzi Talks About Fiduciary, Fees, Fears
"Borzi began by noting there's no Consumer Reports for achieving a sustainable amount of retirement income, and she decried the plethora of industry designations that too often confuse and confound the general investing public.... One thing she and the department did not do wrong, she emphasized, 'was that we never stopped talking to the public,' throughout the period of the rule's development, both when the first proposed-rule was pulled, and when it was eventually reintroduced."
401K Specialist

Borzi: Fiduciary Rule Will Prevail Even If Repeal Is Attempted
"If the rule is repealed, consumer groups will challenge the action in court, [according to] Phyllis Borzi, the former assistant Secretary of Labor of [EBSA] ... Borzi maintained that the regulation's opponents 'have no new evidence' ... and won't be able to meet the court's high standards for repeal.... 'We were extremely meticulous in the way we approached the evidence,' she said ... '[The rule's opponents] need to create a record that is as strong as the record we created over six years.' "
Financial Planning

Facts About Women's Retirement Outlook (PDF)
26 presentation slides. "Only 10 percent of women are 'very confident' in their ability to fully retire with a comfortable lifestyle, compared to 19 percent of men.... Many expect to retire after age 65 or not at all ... Half plan to work in retirement ... A majority of women are taking proactive steps to help ensure they can continue working past age 65.... Most lack a plan B if forced into retirement sooner than planned ... Seven in 10 women are saving for retirement."
Transamerica Center for Retirement Studies

Communicating Your ESOP
"Here are three practical ideas to make more of your annual statements: [1] Include ownership information and a 'how to read the statement' handout with your mailing.... [2] Hold a webinar to review the annual statement and ESOP results.... [3] Hold live meetings to build ESOP and business knowledge."
Blue Ridge ESOP Associates

Vermont Poised to Become Latest State to Set Up Retirement Program for Small Businesses
"The Vermont legislature passed an economic-development bill, S.135, establishing the Green Mountain Secure Retirement Plan, a multiple employer plan available on a voluntary basis to employers with 50 employees or fewer. Vermont intends to implement the program starting in January 2019[.]"

Americans Approaching Retirement Share Their Vision of Success for Their Post-Career Lives
"Among individuals who are 55 to 68 years old and planning to retire in the next five years, 96 percent say the flexibility to do what they want, when they want is an important consideration to their definition of a successful retirement. Spending time with family and friends (93 percent), relaxing (92 percent) and having the time to travel (80 percent) also are important to near-retirees."

The 99% Rule for Spousal Beneficiaries of Retirement Accounts
"When a spouse chooses to remain a beneficiary of an IRA, they are able to take penalty-free distributions from the account at any age and at any time.... The second option for a spouse beneficiary, and one available only to a spouse beneficiary is to ... [take] a distribution from their deceased spouse's IRA or a beneficiary IRA they inherited from the spouse and [move] the funds, either directly, or indirectly within 60 days, to their own IRA.... Once the funds are deposited into their own IRA, they are treated as if they were always in the account. There is no way, at this point, for the surviving spouse to change their mind and be treated as a beneficiary."
Slott Report

Puerto Rico Public Pension Fund Joins Government's Bankruptcy Case
"The government's request to include the pension system ... was approved by the oversight board [on May 22].... Guy G. Gebhardt, the acting U.S. trustee for the bankruptcy case, said in court documents that he will appoint a retiree committee for participants in the commonwealth's five public pension systems. An ad hoc retiree committee had already asked the court to form an official committee."
Pensions & Investments

Benefits in General

Form 5500 Delinquency Can Be Costly
"Article highlights: [1] [DOL] has established a new maximum penalty for failure to file; [2] Maximum monetary fine for Form 5500 filing violations is now $2,063 per day; [3] Penalties stemming from delinquent 5500 filings are to be treated on a cumulative basis."

Discussions on
the BenefitsLink Message Boards

Can a Retirement Plan Invest in Bitcoin?
"I have had a client ask if they can invest in Bitcoin. My initial reaction was 'no way.' However, there is a Bitcoin Investment Trust on the OTC market."
BenefitsLink Message Boards

Plan Operational Errors Found, 5500 Now Overdue Because Auditor Won't Issue Clean Report
"A client has a 403(b) plan that is now a large plan requiring an audit. The auditor uncovered several operational errors and a lack of adequate procedures to make sure the plan is compliant.... The 5500 is now overdue because the auditor will not issue a report. So a new late filing error has occurred and the penalty amount will continue to increase.... Is an auditor able to issue a qualified opinion in these circumstances -- stating the types of errors that were found and indicating that the sponsor is working with counsel to make appropriate corrections?"
BenefitsLink Message Boards

IRS Auditor Wants Docs Faxed to Avoid 'Disclosure'
"We have what should be an easy audit for a tiny plan, but the auditor works from her home and insists on everything being faxed for security. She says the IRS says that using Sharefile or something similar is 'disclosure.' Maybe I'm being stubborn but we're not faxing 80-100 pages from a fax machine, and I'm not inclined to spend even $1 on some program that will convert efiles to faxes."
BenefitsLink Message Boards

Press Releases

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BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2017, 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, 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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