Retirement Plans Newsletter

June 28, 2017

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Employee Benefits Jobs

401k Service Administrator
Retirement Direct
in NC

Defined Contribution Plan Administrator
United Retirement Plan Consultants
in CA, CO, MD, NC, OH, PA, RI, TX, WA

NQDC Client Service Manager
PEN-CAL Administrators, Inc.
in CA, Telecommute

401(k) Plan Administrator
Brewster & Brewster, Inc.
Telecommute

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Webcasts and Conferences

401(k) Plan Duties and Liabilities Update
RECORDED
Clear Law Institute

Theory in Action: Asset Manager Solutions to Address the Retirement Income Challenge
RECORDED
fi360

Decision Making for ESOP Sustainability
July 11, 2017 WEBCAST
National Center for Employee Ownership [NCEO]

Basics of Roth IRAs - Establishing / Contributions
July 13, 2017 WEBCAST
Collin W. Fritz & Associates, Ltd.

Basics of Roth IRAs - Distributions
July 13, 2017 WEBCAST
Collin W. Fritz & Associates, Ltd.

Effective ESOP Communications Committees
August 8, 2017 WEBCAST
National Center for Employee Ownership [NCEO]

Proprietary Funds in 401(k) and Retirement Plans: A View From the Trenches
August 9, 2017 WEBCAST
Strafford

VFCP and Abandoned Plan Workshop
August 17, 2017 in KY
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

5th Annual Forum: Increasing the Utilization and Services of Onsite Health Centers
September 17, 2017 WEBCAST
National Association of Worksite Health Centers

Advanced Testing II: Coverage and Non-Discrimination Testing
November 7, 2017 WEBCAST
ASPPA [American Society of Pension Professionals & Actuaries]

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Discussions

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How America Saves 2017: Small Business Edition
36 pages. "Vanguard Retirement Plan Access (VRPA) is a comprehensive service for retirement plans with up to $20-plus million in assets.... In 2016, 1 in 5 (21%) VRPA plans allowed employees to make voluntary contributions immediately after they joined their employer ... 41% of plan sponsors required eligible employees to have one year of service before they could make employee-elective contributions to their plans.... Forty-four percent of VRPA plans provided only a matching contribution in 2016 ... Two-thirds of VRPA plans with an employer contribution had adopted a safe harbor design."
Vanguard

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Benefit Plan Self-Audits
"There are certain mistakes ... that regulatory authorities say cause the most compliance issues. To manage your resources wisely, consider focusing on the following high-risk areas. [1] Timeliness of deposits ... [2] Not following plan provisions ... [3] Over-Reliance on Service Providers ... If you do all of these steps in your self-audit, document it in an Excel spreadsheet and save the information in the retirement plan file. If you ever do get audited you can show the IRS or DOL the steps you performed and this will show them you are trying to do everything you can to ensure compliance."
Belfint Lyons & Shuman, CPAs

Nationwide Accused of Charging Excessive 401(k) Fees
"The lawsuit, filed June 27 by a participant in a small 401(k) plan sponsored by Andrus Wagstaff PC, says Nationwide's practice of charging a flat, 1 percent fee for administrative services allowed the company to collect fees that were nearly 10 times the median fee throughout the industry."
Bloomberg BNA

Supreme Court's Church Plan Decision Restores Order (PDF)
"In a concise and clearly written opinion, Justice Elena Kagan restored order in the church plan universe -- and validated nearly 40 years of administrative decisions by the [IRS], the [DOL] and the [PBGC] -- by explicitly affirming that church-affiliated hospitals and other organizations can establish benefit plans that should be accorded the same treatment as plans actually established by a church. [The] decision completely shut down the primary line of argument pursued by plaintiffs in a series of class action lawsuits." [Advocate Health Care Network v. Stapleton, No. 16-74 (U.S. June 3, 2017)]
Arthur J. Gallagher & Co.

Elements of an Investment Policy Statement
"Intention to comply with ERISA section 404(c) ... Eligible investments ... Prohibited investments ... Roles and responsibilities ... Investment option selection criteria ... Investment option monitoring process ... Investment option replacement criteria."
Lawton Retirement Plan Consultants

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Prohibited Transactions for Fiduciaries After DOL Rule Change
"One viable recommendation for reducing legal risk is to adopt a third-party verification system. A third-party verification (TPV) service would allow plan providers to ensure a customer understands the recommendation for a rollover or change in investment. This includes understanding the fees and costs associated with a financial transaction, compensation for the advisor, benefits, and risk of the investment, and the reasons for making the transaction. A TPV could also provide documentation of the client's understanding should litigation arise."
Butterfield Schechter LLP

Thoughts on Data and ESG Investing
"Due to imperfect reporting and inconsistent metrics across industries and companies, investment managers have to 'trust, but verify' the actions of their portfolio companies post-engagement. Some typical ways managers can assess the impact of their engagement is by reviewing internally generated proprietary ESG ratings, target setting (e.g., emission, waste, water usage, etc.), and engagement reporting."
Callan Associates

SEC Chairman Promises Action on Fiduciary Rule
"SEC Chairman Jay Clayton pledged to move forward on the fiduciary rule in a 'coordinated' process with the [DOL].... The SEC and Labor Department must work together on 'the very complicated issue' of the rule, he said.... 'What's happening at the [DOL] is going to affect the markets we regulate, and vice versa.' "
Financial Planning

Can Sidecar Accounts Meet Consumers' Short- and Long-Term Financial Needs? (PDF)
13 pages. "This brief will explore the possibility of linking a short-term savings, or 'sidecar,' account to a traditional retirement account to better meet consumers' short- and long-term financial needs. Such an innovation could help address families' current inability to cope with financial shocks and volatility, as well as their over-reliance on withdrawals from retirement accounts to fund current consumption....[T]he brief will explore the advantages and disadvantages of various design approaches to implementing a sidecar account."
Aspen Institute

American Academy of Actuaries Issue Brief: Overview of Multiemployer Issues (PDF)
9 pages. "Of the more than 10 million people who participate in multiemployer pension plans, approximately 1 million are in 100 plans that are projected to be unable to pay the full benefits that have been promised.... Tackling the multiemployer pension plan issue will require solutions that focus on securing 'legacy' pensions and also assuring a secure retirement system in the future. There are only two ways to remedy the situation -- infuse more money into the plans or reduce benefits."
American Academy of Actuaries

Cybersecurity: Are Public Sector DC Plans at Risk? (PDF)
"One major challenge faced by many public sector defined contribution plan sponsors is internal, sometimes antiquated, IT systems ... and the heavy reliance on third party data recordkeeping systems.... [T]here is no comprehensive federal regulatory scheme that governs cybersecurity for retirement plans and their associated service providers.... [W]hile governmental defined contribution plans are not subject to [ERISA], the ERISA fiduciary and the DOL's cybersecurity rules can serve as best practices for governmental defined contribution plan sponsors."
National Association of Government Defined Contribution Administrators [NAGDCA]

UPS to Freeze Two DB Plans in 2023
"As of Jan. 1, 2023, active non-union employees will no longer accrue additional benefits under those plans. Concurrent with the DB freeze, UPS will amend the UPS 401(k) Savings Plan ... to make previously ineligible non-union employees eligible for UPS retirement contributions, which range from 5% to 8% of an employee's salary based on their length of employment. The amendment also provides for 'transition contributions' to certain participants beginning Jan. 1, 2023[.]"
Pensions & Investments

Benefits in General

Midsized Employers Worrying More About Compliance, Health Care Costs, Reform, and Less About Employee Engagement
"Of the midsized business owners surveyed, 40 percent indicate they have experienced unintended expenses related to noncompliance with government regulations. The number of larger midsized companies that cited unintended compliance penalties grew significantly in 2016, up to 51 percent from 40 percent in 2015. The number of smaller midsized businesses that cited receiving penalties for noncompliance remained relatively steady at 37 percent in 2016, a slight increase from 35 percent the previous year."
Wolters Kluwer Law & Business

Executive Compensation
and Nonqualified Plans

IRS Addresses Back-to-Back Arrangement's Failure to Comply with Section 409A
"The back-to-back arrangement involved a foreign investment fund, the ultimate service recipient (USR), and its investment manager, the intermediate service recipient (ISR). The fund and its manager were parties to a deferred compensation arrangement (the USR plan) under which the manager deferred some of its management and performance fees. The manager sponsored a deferred compensation arrangement for its employees (the ISR plan). Under the plans, the deferral elections and payment events triggering payments from the fund to the manager were coordinated with the deferral elections and payment events triggering payments from the manager to its employees. The IRS concluded that the USR plan did not meet the requirements of Section 409A."
Thomson Reuters Practical Law

Discussions on
the BenefitsLink Message Boards

Adding Safe Harbor Non-Elective and Deferrals to Profit Sharing Plan Mid-Year
"Profit sharing plan's year ends Dec. 31. Boss wants to convert the plan to add deferrals and a safe harbor non-elective 3% employer contribution. I know the regs treat this as a new plan for ADP/ACP and notice purposes. The deferrals will go into effect on August 1, but Boss wants the safe harbor provisions to be effective as of Jan. 1, 2017 so the employer can make the 3% contribution for 2017, using it as an offset for the profit sharing piece. I know the compensation computation period can exclude pre-participation comp, but something about this doesn't sit right with me. Is there a rule that would preclude safe harbor treatment prior to August 1 because nobody will have been able to defer during that period?"
BenefitsLink Message Boards

Reporting Roth 401(k) on a Schedule K-1
"Anyone know how a CPA should be reporting Roth 401(k) contributions on a Schedule K-1 for IRS Form 1065? I am concerned that the partners are doing Roth 401(k) but there doesn't seem to be a coding mechanism as on Form W-2, to clarify what was Roth and what was pre-tax."
BenefitsLink Message Boards

Should We Hire a Consultant to Lead the RFP for a 401(k) Record Keeper?
"What is the the prevalence of hiring an outside consultant to lead 401(k) recordkeeping RFPs? Some folks in my company are pushing pretty hard to do it internally, but I have reservations in terms of our in-house availability and expertise. Our plan has approximately 5,000 participants, and the trust is in the 'large' asset category ($200M -- $1B). The plan is safe harbor and fairly vanilla otherwise."
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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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