Retirement Plans Newsletter

July 13, 2017

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Employee Benefits Jobs


Webcasts and Conferences

GASB Statement No. 68 - In-Depth Government Pension Accounting & Auditing
RECORDED
AICPA

Saving the Bottom Line with HSAs
RECORDED
ConnectYourCare

Surviving Spouse’s Options with Respect to Their Spouse’s IRA
July 20, 2017 WEBCAST
Collin W. Fritz & Associates, Ltd.

Inherited IRAs for Non-Spouse Beneficiaries
July 20, 2017 WEBCAST
Collin W. Fritz & Associates, Ltd.

Chicago Health Care Summit
July 25, 2017 in IL
Midwest Business Group on Health

Governmental Pensions: Prepare for a Changing Landscape
August 3, 2017 WEBCAST
AICPA

ERISA Basics National Institute
October 25, 2017 in IL
American Bar Association Joint Committee on Employee Benefits [JCEB]

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Discussions

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New Comments and Topics

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[Official Guidance]

Text of PBGC Interest Rate Update for Benefits Payable in Terminated Single-Employer Plans, August 2017
"The August 2017 interest assumptions under the benefit payments regulation will be 0.75 percent for the period during which a benefit is in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. In comparison with the interest assumptions in effect for July 2017, these assumptions represent a decrease of 0.25 percent in the immediate rate and are otherwise unchanged."
Pension Benefit Guaranty Corporation [PBGC]

[Advert.]

ftwilliam.com -- ERISA's Latest Developments Webinar

Sponsored by Wolters Kluwer

Join industry expert, Brian Furgala, for an ERISA Update and find out what the Government is doing now and for the rest of 2017. Register here for this FREE webinar and earn 1 hour CE credit. Date: Thurs. July 25, 2017 Time: 1 pm (CT)


[Official Guidance]

Text of IRS Notice 2017-39: Weighted Average Interest Rates, Yield Curves, and Segment Rates Applicable for July 2017 (PDF)
"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)."
Internal Revenue Service [IRS]

[Guidance Overview]

401(k) Plan Fix-It Guide Updated for Changes to EPCRS
"The Guide helps plan sponsors find, fix, and avoid common 401(k) plan compliance errors by providing a table of 12 common mistakes ... and links to detailed discussions of each mistake. The discussions provide examples, explanations of available correction programs, and links to IRS guidance. In addition to the latest EPCRS changes, the updated Guide incorporates recent guidance on determination letters and other revisions."
Thomson Reuters / EBIA

Say It Loud and Clear: The Importance of Good Plan Communications
"As pre-approved plans in which boxes are checked to select plan provisions became popular, vendors stopped drafting SPDs and notices that described the plan provisions that actually applied to the participants. As a result, confusing and unhelpful text such as, 'Your plan has one of the following four contribution formulas' started appearing in SPDS and safe harbor notices.... SPDs are supposed to be self-contained documents, not a list of questions to ask the plan sponsor or check elsewhere. It is not clear that 'one size fits all' SPDs are compliant because these communications certainly don't do the job of explaining the plan provisions in plain language."
PenChecks

Latest Wave of 401(k) Suits Yields Big Wins, and Big Losses, for Plaintiffs
"Since 2006, plaintiffs' firms have filed more than 90 lawsuits against employers and other parties alleging excessive fees in 401(k)-style retirement plans ... Last year alone, firms representing 401(k) participants filed more than 25 such cases -- a record annual number. Many of the latest suits target companies -- including a number of financial-services firms -- for using their own investments in their retirement plans."
The Wall Street Journal; subscription may be required

[Advert.]

Things Have Changed – Are You Up-To-Date?

Sponsored by ASPPA

Keep up to date on the latest rules and regulations with the ERISA Outline Book, THE resource for information on qualified plans. Choose from two great formats; hardcopy or online, including access to a fully searchable and cross-referenced website.


Another Hearing on -- and Attempted Repeal of -- the Fiduciary Regulation
"Aside from repealing the fiduciary regulation right up front, the draft text of the bill indicates that brokers would have to provide recommendations that 'reflect reasonable diligence, care, skill and prudence,' and they would also have to disclose at the point of sale their compensation and 'any material conflict of interest.'"
National Association of Plan Advisors [NAPA]

Would More Generous Buyouts Trigger Long-Rumored Federal Employee Retirement Wave?
"[OMB confirmed] that the Trump administration has asked Congress to expand government-wide a Defense pilot program boosting the cap on civilian employee Voluntary Separation Incentive Payments from $25,000 to $40,000.... [M]ore generous buyout offers could be a deal clincher for employees considering early retirement as a result of ongoing budget uncertainty and proposed cuts to retirement benefits and the federal workforce as a whole."
Government Executive

An Alternative to Voluntary Retirement Programs
"If a voluntary severance plan is properly drafted and distributed in accordance with ERISA, an employer should be able not only to exclude from consideration certain groups, positions etc., but also to reserve the absolute right to say 'No' to any particular employee in a non-excluded position who applies for an exit package if the employer's concludes that the employee's departure is not in the employer's best interests."
Duane Morris LLP, via Lexology

Accelerate Pension Funding and De-risking Ahead of Tax Reform: A Less Taxing Exercise
"With the possibility of corporate tax reform on the horizon, plan sponsors may have a unique opportunity now to reduce PBGC expenses by accelerating funding and to deduct plan contributions at the current higher tax rate, resulting in a low risk, positive net present value (NPV) outcome. Further, by de-risking now, whether through enhanced LDI interest rate strategies or transferring risk, sponsors can avoid risk and potential costs associated with maintaining a plan."
Prudential

[Opinion]

ACLI Testimony to House Subcommittee on the Impact of the DOL Fiduciary Rule on the Capital Markets
"ACLI supports the Discussion Draft being reviewed by the Subcommittee at today's hearing.... The Discussion Draft would establish a 'best interest' standard of conduct to govern the relationship between broker-dealers and their individual representatives with retail investors ... [which] would apply to the totality of the relationship between consumers and financial professionals; not just the one dimension of the relationship that involves ERISA plan or IRA assets."
American Council of Life Insurers [ACLI]

Benefits in General

The Full Fifth Circuit Will Re-Visit the Standard of Review in Denial of Benefits Cases
"[It] is not the least bit surprising that the Fifth Circuit has decided to re-examine the standard of review it applies in ERISA denial of benefits cases. And it is probably not too difficult to guess that the Court, en banc, will reverse Pierre, and align with other circuits holding that a de novo review is called for when reviewing decisions made by retirement and health plans[.]"
Jackson Lewis P.C.

Why Do More New Englanders Receive Disability Insurance Benefits for Mental Disorders?
"A greater share of people in New England states receive Social Security Disability Insurance (DI) benefits for mental disorders than the share nationwide.... [E]vidence suggests that demographics and economics play a large role, as does greater access to health insurance and health care."
Urban Institute

Executive Compensation
and Nonqualified Plans

Reminder on CEO Pay Ratio Disclosure for 2018
"[T]he process for a company to identify its median employee, calculate that employee's annual total compensation, calculate the pay ratio, and prepare any accompanying narrative disclosure can be a significant and time-intensive undertaking. Since a repeal or delay of the pay ratio rule appears increasingly less likely, [the authors] recommend that companies continue to prepare or, for those that have not yet started, begin the process of preparing the methodology they will use to develop their CEO pay ratio disclosure ... In addition, companies may want to consider the impact on its workforce of disclosing the compensation of the company's median employee."
Ropes & Gray LLP

Discussions on
the BenefitsLink Message Boards

Correcting Deferral from Voided Paycheck
"A 401k Plan Sponsor sent a payroll file with deferrals for a participant whose check was later voided. So bottom line he had a deferral deposited into the plan assets on money he did not receive. What is the BEST way to handle this as far as correcting the error? It's a small amount -- $9.75, but the platform wants $100 to correct it (move it to the administration account)."
BenefitsLink Message Boards

5500 Reporting for 'New' 401(k) Plan After Asset Transfer
"Potential client started up a typical 401(k) plan with safe-harbor match and profit sharing as of 1/1/2012. Plan number: 001. In 2015 they moved their money to John Hancock and got a new document with an effective date of 1/1/15 and when 5500-SF forms were done for 2015 there was a final one for 2015 under 001 showing assets transferred to a new plan (002) and a first one for 002. Plan 001 listed an asset transfer and not payouts and question 13a on whether there was a resolution to terminate the plan was answered 'no'. Questions: [1] Is this proper? [2] Would there be an issue with the mandatory waiting period after terminating a 401(k) plan? [3] How would you proceed? Amend 2015 filing for 001 and continue filing under 001 or go ahead with 2016 filing under 002?"
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David Rhett Baker, J.D., Editor and Publisher  davebaker@benefitslink.com
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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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