Retirement Plans Newsletter

July 27, 2017

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Norfolk Southern Corporation
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Webcasts and Conferences

New Era Menu Design - How Evolving Behavioral Insights are Improving Fiduciary Decision-Making
July 27, 2017 WEBCAST
Manning & Napier, Inc.

Affordable Care Act Workshop
August 9, 2017 WEBCAST
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

Choosing a Retirement Solution for Your Small Business Workshop
August 9, 2017 WEBCAST
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

All About Leave: From FMLA Requests to Benefits Plans and ADA Obstacles in Between
August 18, 2017 in AL
Ogletree Deakins

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Discussions

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[Guidance Overview]

IRS's New 401(k) Pre-Approved Document Rules Suggests a Path to Address 403(b) Document Challenges
"The IRS has taken the position that all 403(b) plans must be on a pre-approved document in order to gain the 'reliance' value of a determination letter.... This can be a challenge for many 'legacy' 403(b) plans which have been in existence for many generations (keep in mind that the first 403(b) type of plan showed up in 1919).... Buried in [Rev. Proc. 2017-41] is something we have been looking for in the 403(b) space, which actually would help alleviate some of the concerns document drafters have with these long-standing plans."
Business of Benefits

[Advert.]

Online Learning Course: 401(k) Plan Structure - BenefitsLink Discount

Sponsored by International Foundation of Employee Benefit Plans [IFEBP]

Review considerations for structuring a 401(k) plan. Topics include salary deferral limits and catch-up contributions, matching and profit-sharing contributions, nondiscrimination testing and safe harbors. Use code BL2017 for 15% discount - good through July 31.


[Guidance Overview]

IRS Revamps Pre-Approved Qualified Plan Program (PDF)
"Sponsors of master and prototype and volume submitter plans will want to take this new guidance into account, and in the case of defined contribution plans, prepare for a filing season to begin October 2, 2017. Sponsors should also watch for anticipated updated 'LRMs' which may be released in the near future. Many of these changes appear to be designed to make pre-approved plans more attractive and usable in place of individually designed plans[.]"
Groom Law Group

Retirement Plan Fees: Top Questions Answered
"[1] What fees should be reviewed and how frequently? ... [2] What benchmarks should be used when comparing fees? ... [3] What is the best way to allocate recordkeeping fees to participants?"
Cammack Retirement Group

New Retirement Readiness Resources Embody Industry Trends
"The proliferation and evolution of retirement readiness resources continue to be of the most prevalent trends within the digital retirement space. As more and more recordkeepers introduce new and upgrade current resources, the selections of retirement readiness tools and calculators available on participants have become increasingly user-friendly and comprehensive."
Corporate Insight

Why Millennials Should Embrace Roth 401(k)s
"On average, 13% of workers saved on a Roth basis when it was offered in 2016, an increase from 12% in 2015 and from 8% in 2011. And 19% of 20- to 29-year-olds made Roth contributions in 2016, compared to 7% of workers aged 60-plus."
Forbes

[Advert.]

Reforms, Regulations & Retirement Realities

Sponsored by ASPPA

This October the nation's retirement industry elite will converge at ASPPA Annual, in our nation's capital, with insights from industry insiders, regulators, pundits and the nation's leading voices. Join us!


Katrina, Fukushima and Retirement Risk: When Risks Create Risk
"[R]uin appears to result most often from multiple dependent risks ... such as an illness that results in job loss and large medical bills that, in turn, generate unserviceable credit card debt that ultimately forces the household into bankruptcy.... Not only are risks difficult to quantify but they are even difficult to identify and they are often inter-dependent (not independent)."
The Retirement Cafe

Public Universities Offer Superior Retirement for Professors
"Of the surveyed institutions, 42 percent offer a 401(k)-style defined contribution plan; only 12 percent offer a defined benefit pension plan; and 41 percent offer faculty a choice among either a defined contribution plan, a defined benefit plan, or both.... What is particularly striking, however, is the division between public and private institutions. Of the universities offering a defined contribution-only plan, 76 percent were private. Of the universities offering a defined benefit-only plan, a whopping 94 percent were public."
National Public Pension Coalition

Judge Rules Against Contribution Cap for Arizona Plan
"Judge Timothy J. Thomason of Maricopa County Superior Court in Phoenix ruled Monday in favor of two retired judges and participants in the plan who had filed a lawsuit in 2016 charging that the EORP is not being funded by an annual actuarially determined employer contribution rate as required by the Arizona Constitution. The cap of 23.5% on employer contributions, established by the Arizona Legislature in 2012, should be thrown out, [the court ruled], because it prevents that rate actuarially determined rate from ever being implemented."
Pensions & Investments

Benefits in General

Supreme Court Church Plan Ruling May Bring Wider Interpretation in the Future
"This ruling significantly weakens the retirement security of participants in benefits plans managed by religiously affiliated health-care organizations.... However, the ruling does have a perversely beneficial effect for the same group of employees. Insured health, disability and life programs administered by the same organizations that have been exempted from ERISA as church plans will regain the protection of state laws that protect consumers, including the right to sue for damages and penalties for bad faith claim handling."
DeBofsky, Sherman & Casciari, PC

Cost of Providing Employee Benefits Has Risen 24% Since 2001
"The total cost of employer-provided benefits -- health care, retirement and postretirement medical -- rose from 14.8 percent of pay to 18.3 percent of pay, a jump of 24 percent. Health care costs for active employees more than doubled, rising from 5.7 percent to 11.5 percent of pay. Retirement benefit costs, which include defined benefit (DB), defined contribution (DC) and postretirement medical plans (PRM), declined by 25 percent between 2001 and 2015, from 9.1 percent to 6.8 percent of pay."
Society for Human Resource Management [SHRM]

Executive Compensation
and Nonqualified Plans

Compensation for Outside Corporate Directors Stabilizing
"Total pay for outside directors at the nation's largest corporations increased by a modest 2% in 2016, driven by increases in both cash and stock compensation ... [Of] all pay elements in a director's total package, the annual cash retainer for board service experienced the largest increase, jumping 6% in 2016."
Willis Towers Watson

[Opinion]

Goodbye to the Rules on Incentive Compensation Risk for Financial Institutions?
"This is a godsend not just for financial institutions, but for the rest of corporate America. The onerous and prescriptive proposed rules issued in April 2016 would have wreaked havoc on the affected institutions by substantially increasing their compliance and compensation costs and reducing their ability to compete for talent in the marketplace."
Winston & Strawn LLP

Discussions on
the BenefitsLink Message Boards

Payment of Expenses During Bankruptcy: Required by the Plan?
"Actuary performs the annual valuation for a DB plan, delivers the report to the sponsoring employer, and sends invoice. Plan document says 'The trust fund shall be used for the exclusive benefit of the participants and their beneficiaries and to pay administrative expenses of the plan and trust to the extent not paid by the Hospital' ... A few months later, the sponsor declares chapter 11 bankruptcy and files for a PBGC distress termination, without involvement of this actuary. Sponsor refuses to pay the invoice and refuses to send the invoice to the plan trustee for payment. Sponsor's bankruptcy attorney says, 'get in line, like everyone else.' Doesn't the plan require the sponsor to direct payment of the invoice from the trust because the sponsor has not paid?"
BenefitsLink Message Boards

Attribution from a Trust to Its Beneficiaries
"Question about attribution from a grantor trust to the beneficiaries of a trust. The ERISA Outline Book says that if a trust has an ownership interest in another organization, that interest is attributed to the beneficiaries in the trust who have a 5% or more actuarial interest in the trust, in proportion to each beneficiary's actuarial interest. What is actuarial interest and how is it determined? In the Who's the Employer Q&A column on BenefitsLink, S. Derrin Watson says (Q&A 167) that it's determined according to IRS actuarial tables, but what table and how?"
BenefitsLink Message Boards

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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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