Retirement Plans Newsletter

June 26, 2017

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Pension Accounting Assistant
Primark Benefits
in CA, Telecommute

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USI Consulting Group
in CT

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Webcasts and Conferences

Health & Welfare Plan Fundamentals: Concepts and Conversations for Auditors, Consultants, and Others
RECORDED
Thomson Reuters / EBIA

Cybersecurity and Fraud Topics
RECORDED
International Foundation of Employee Benefit Plans [IFEBP]

Defined Contribution Plan Strategies
RECORDED
International Foundation of Employee Benefit Plans [IFEBP]

Projecting the ACA’s Impact on Self-Insurance in the Small Group Market
RECORDED
Society of Actuaries

Surviving Spouse’s Options with Respect to Their Spouse’s IRA
June 27, 2017 WEBCAST
Collin W. Fritz & Associates, Ltd.

Governmental Pensions: Prepare for a Changing Landscape
July 7, 2017 WEBCAST
AICPA

Top Six Employee Benefit Trends for 2017
July 11, 2017 WEBCAST
Clear Law Institute

Understanding the Math of Your Health Plan Renewal
July 21, 2017 WEBCAST
Clear Law Institute

Stop-Loss Insurance for Self-Insured Health Plans
July 27, 2017 WEBCAST
Thomson Reuters / EBIA

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Discussions

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New Comments and Topics

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'Auto' Features Beat Inertia But May Generate Exhaust
"Beneficiary designations -- improperly completed or not made at all -- can be a consequence of automatic enrollment ... The plan document should provide guidance regarding how to resolve beneficiary disputes, so plan sponsors are encouraged to proactively review issues relating to beneficiary designations ... Consider amending plan to have contesting parties first use the plan's administrative claims procedures.... Consider enhancing participant communication campaigns, using real life examples of how their intended beneficiaries might incur legal challenges."
American Society of Pension Professionals & Actuaries [ASPPA]

[Advert.]

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Sponsored by International Foundation of Employee Benefit Plans [IFEBP]

The Advanced Investments Management program is a 3-1/2 day intensive program building upon investment management fundamentals. Register today to gain the tools you need to make informed investment decisions.


Delaying Social Security Claims (or Not)
"In general ... retirees who saved a ton of money don't need to worry much about delaying Social Security benefits. The benefits won't make much difference either way. At the other extreme, a large majority of Americans will have very little in the way of retirement savings. About half will have almost no savings. These retirees may need the income as soon as they retire and will not be able to postpone claiming."
The Retirement Cafe

TSP Modernization Bill Introduced in House
"If enacted, the proposed TSP Modernization Act would allow multiple, partial post-separation withdrawals by retirees, and for active federal employees older than 59-1/2, multiple age-based withdrawals. The bill also seeks to encourage retention in the TSP by allowing quarterly or annual payments, and permitting periodic withdrawals to be changed at any point during the year."
Pensions & Investments

Time to Reduce Your Pension Plan Risk?
"With the impending change in corporate tax policy, it is important to consider how funding up the pension plan now, under the current tax structure, may be financially advantageous to your organization. Additional funding may then put you in a good position to take action with one or more of [these] 'de-risking' options ... Allow lump sum payments from the pension plan when individuals terminate employment ... Use a Liability Driven Investment (LDI) asset management approach ... Transfer longevity risk via use of insurance company products ... Plan termination."
Watkins Ross

When Will California Supreme Court Rule on Constitutionality of Reductions or Freezes in Future Pension Accruals?
"An early Supreme Court decision upholding the appellate rulings might allow time for reformers to consider putting an initiative on the state ballot next year. A favorable ruling also might prompt local action or labor bargaining to curb budget-squeezing pension costs. The four county suits and the state firefighters suit all challenge minor parts of Gov. Brown's pension reform that apply to employees hired before the reform took effect on Jan. 1, 2013."
Calpensions

[Advert.]

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Sponsored by WEB - Worldwide Employee Benefits Network

WEB members represent more than 25 professions and 30 areas of expertise within the pension and benefits industry -- administrators, consultants, attorneys, accountants, investment managers, communications experts and benefits managers. Join today.


Public Fund Trustees Facing Host of Difficult Challenges
"Every public pension system and trustee is unique, and only the pension system itself can determine what governance approach works best for it ... However, common questions must be asked ... [G]ood governance is a four-legged stool ... The first leg is setting the direction of the organization, followed by directing staff and prudently delegating, overseeing what has been delegated, and correcting course when needed."
Pensions & Investments

69 Percent Funding Ratio Reported for State-Sponsored DB Systems (PDF)
"The funding ratio of state pension plans dropped four percentage points to 69 percent in fiscal year 2016 ... [For] the 103 state retirement systems that reported actuarial data for 2016, pension assets shrank by 1.8 percent ... in 2016 while liabilities grew 5.4 percent ... [A]ggregate shortfall, or net pension liability, [increased] $222.4 billion over fiscal 2016 from $963.2 billion to $1,185.6 billion."
Wilshire Associates

[Opinion]

Public Pensions: Why It's Important to Keep Watching
"It takes a long time for these problems to come to fruition. Much longer than it takes a company to run into trouble ... Part of the reason is the 'taxpayer put' ... there's a limit to how much governments can soak taxpayers, but they can increase the taxes over time until more and more people leave ... Another part of the reason is the 'bondholder put', which is exercised less frequently, and does a lot more damage when it's exercised by politicians. The biggest part of the reason is no oversight."
STUMP

[Opinion]

Will Public Pensions Sink Illinois?
"[W]hat Illinois and other states that suffer from similar pension woes need is to amalgamate all these public pensions at the state level, introduce better governance, adopt a shared-risk model, and get real on investment returns even if this means higher contributions from employees and the state government (these plans need be jointly sponsored). But none of these reforms are being discussed. Instead, lawmakers want quick fixes which will make things worse for everyone, including Illinois taxpayers."
Pension Pulse

Benefits in General

JBEA Advisory Committee to Meet in July
"The Joint Board for the Enrollment of Actuaries gives notice of a meeting of the Advisory Committee on Actuarial Examinations (portions of which will be open to the public) ... on July 13-14, 2017.... The purpose of the meeting is to discuss topics and questions that may be recommended for inclusion on future Joint Board examinations in actuarial mathematics and methodology ... and to review the May 2017 Pension (EA-2L) and Basic (EA-1) Examinations in order to make recommendations ... Topics for inclusion on the syllabus for the Joint Board's examination program for the November 2017 Pension (EA-2F) Examination will be discussed."
Joint Board for the Enrollment of Actuaries [JBEA]

Executive Compensation
and Nonqualified Plans

An Open or Closed Section 409A Case (PDF)
"One unresolved issue that has caused significant concern among practitioners is whether a failure to timely distribute an amount of deferred compensation in a taxable year that becomes time-barred by the statute of limitations for tax assessments (a 'closed' year) continues to result in liability under Section 409A in a subsequent taxable year that is not time-barred (an 'open' year). This article briefly describes the applicable law and available guidance, illustrates the issue in an example, and provides two plausible analyses that result in dramatically divergent tax results."
Groom Law Group, via Bloomberg Law Pension & Benefits Daily

New York Court Addresses State's Limits on Executive Compensation and Administrative Costs of State-Funded Providers
"The [New York State Appellate Division, Third Department] affirmed the decision of the court below and upheld the 'hard' cap imposed by the [Department of Health (DOH)] -- capping state dollars for executive compensation at $199,000 -- but determined that the DOH exceeded its authority with respect to the 'soft' cap -- regulating executive compensation from all sources of funding. This decision is in conflict with earlier decisions rendered by the Appellate Division, Second Department upholding the soft cap as well as the hard cap, and sets up a possible appeal to the New York State Court of Appeals." [LeadingAge New York, Inc. v. Shah No. 523308 (N.Y. App. Div. June 22, 2017)]
Cadwalader, Wickersham & Taft LLP

Discussions on
the BenefitsLink Message Boards

457(b) Deferrals Hurting My Eventual Social Security Benefit?
"I work for a governmental entity and make elective deferrals into its 457(b) plan. How do they affect my future Social Security benefit, if at all? For example, if my salary is $100,000 and I defer $15,000 of its into the 457(b), are my reportable earnings to SSA only $85,000?"
BenefitsLink Message Boards

What's the Latest Beginning Date for This Participant's Required Minimum Distributions?
"I have a participant who turned 70½ back in 2013, but at that time he wasn't eligible to receive his pension. The 2016 plan year was his fifth, making him eligible to start receiving a pension (although he is still working and has already accrued another year of service in the 2017 plan year). So what would the deadline for his first required minimum distribution? He wasn't eligible on April 1 of the year in which he turned 70½."
BenefitsLink Message Boards

Spouse's Entitlement to 100% of Death Benefit Under a Plan Not Subject to Joint-and-50%-Survivor Rules
"Under a DC plan that's not subject to the J&S rules, a participant designated his wife and two children as equal 1/3rd beneficiaries. The wife did not consent to the 2/3 designation of the children. The participant has died, and the spouse wants the designation of the children to be honored. Would this cause a tax qualification problem? If she must be the sole beneficiary of the account, could she spouse use a state-law "disclaimer" of 2/3rds of her benefit without causing a tax qualification problem?"
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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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