Retirement Plans Newsletter

August 17, 2017 logo logo
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Employee Benefits Jobs

Client Service Associate (Nonqualified Division)
in TX

ERISA Associate Attorney
Durham Jones & Pinegar
in UT

Junior Plan Administrator
My Benefits, LLC
in GA

Senior Plan Administrator
My Benefits, LLC
in GA, Telecommute

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Webcasts and Conferences

Ethics Case Studies for Employee Benefits Practitioners
September 21, 2017 WEBCAST

Being Prepared for a HIPAA Audit
September 25, 2017 WEBCAST

Advanced IRA Training
September 26, 2017 WEBCAST
Wolters Kluwer

Coverdell Education Savings Account (CESA) IRA Training
September 27, 2017 WEBCAST
Wolters Kluwer

Simplified Employee Pensions (SEP) Training
September 27, 2017 WEBCAST
Wolters Kluwer

IRA Beneficiary Administration Training
September 28, 2017 WEBCAST
Wolters Kluwer

Are Prescription Drug Costs Making You Sick? How to Protect Your Plan
October 5, 2017 in MA
New England Employee Benefits Council

Consumer Experience & Digital Forum
December 5, 2017 in TN
America's Health Insurance Plans [AHIP]

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[Guidance Overview]

Final Mortality Table Regs Sent to OMB (PDF)
"Although the actual impact of the new mortality table will vary from plan to plan ... it is generally expected to increase plan liabilities. Prior estimates have indicated an average increase of around 8%, but the associated mortality improvement scale could mitigate the increase with an estimated 1.5-2% reduction. In addition to minimum funding requirements, the regulation would also affect the calculation of PBGC variable rate premiums.... The period needed for the OMB review casts doubts on whether the regulation will become effective in 2018."
Groom Law Group

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[Guidance Overview]

IRS Finally Allows Use of Forfeitures to Fund QNECs, QMACs, and More
"[T]he IRS has finally accepted the view that ... nonforfeitability conferred by the plan sponsor when such contributions are allocated to accounts is what matters. The new right to use forfeitures for QNECs and QMACs also extends to 401(k) safe harbor matching or nonelective contributions, which must also be fully vested when allocated.... Lingering remaining questions, however, are whether forfeitures could be used for safe harbor 401(k) contributions made for the 2016 year or even whether forfeitures arising in 2016 could be used in 2017."
Jackson Lewis P.C.

Tibble's Trials Nearly Over, with a District Court Win
"[T]he court noted that for the first time [defendant Southern California Edison] argues that they had a right to invest in the retail-class shares to take advantage of revenue sharing, but found several problems with this argument, notably that it could have been made eight years ago.... Applying guidance from the Supreme Court in Tibble I, the court held that the defendants were liable for breaching the duty to monitor from August 16, 2001, onward.... 'Thus, even if Defendants successfully showed it would take months to make the switch, they are nonetheless liable for losses on each mutual fund at issue either beginning on August 16, 2001, or on the day after 2001 that institutional funds became available,' [Judge Wilson] wrote." [Tibble v. Edison, No. 7-5359 (C.D. Cal. Aug. 16, 2017)]
National Association of Plan Advisors [NAPA]

Adding Sustainable and Responsible Investing Options: A Resource Guide for Defined Contribution Plan Sponsors (PDF)
12 pages. "This step-by-step guide assists plan sponsors considering the addition of a sustainable, responsible and impact investing (SRI) option to a defined contribution retirement plan.... [1] Increase your knowledge of SRI and related performance and fiduciary questions ... [2] Gauge participants' interest in adding an SRI option ... [3] Discuss implementation with your consultant and/or plan administrator ... [4] Choose a fund or funds (and monitor performance) ... [5] Educate participants."
US SIF Foundation

Fiduciary Rule Update, August 2017
"The new FAQs state that it would not be 'fiduciary investment advice' to encourage additional contributions to a plan or IRA to 'maximize the value of employer matching contributions or ... to meet objective financial retirement milestones, goals, or parameters based upon the participant's age, time to retirement or other similar measures' provided no specific investment recommendations are made.... Some have suggested that the position being taken by DOL in this new FAQ guidance may conflict with earlier DOL guidance. In any case, the new guidance raises a question: does it extend to a recommendation that a participant not decrease her savings, e.g., not take a cash distribution on termination of employment?"
October Three Consulting


SPARK Forum - November 5-7, 2017 -- The Breakers, Palm Beach, FL

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IRS Issues New Procedures for Pre-Approved Plans (PDF)
"Over the years, the IRS has expanded its Pre-Approved Program and lessened the distinctions between different Pre-Approved Plan types. The new program continues this trend by making the Pre-Approved Plan program much more straight-forward and cost effective. This is beneficial to organizations sponsoring Pre-Approved Plans and adopting employers. The new program also helps the IRS in dealing with its budget and staff issues, by encouraging the use of Pre-Approved Plans rather than individually-designed plans."

Alight Solutions 401(k) Index: July 2017 Observations
"July was the lightest trading month for defined contribution plan investors in over five years. Just 0.11% of balances were traded in the month -- the lowest level since April 2012 and the second lowest month since 1997 when the Index was started.... On average, 0.012% of balances traded each day. There was one day of above normal trading."
Alight Solutions

Say Goodbye to the myRA Account
"On July 28, the Treasury Department announced that it was ending the myRA program.... The myRA thus goes the way of federal regulations encouraging state and city sponsored IRAs for those who have no access to employer sponsored retirement plans.... Current participants in the myRA program are being notified of the changes and will be provided with information on rolling over their myRA savings to another Roth IRA in the private sector."
Slott Report

Key Rules for Non-Spouse Beneficiaries
"It is very important to check the terms of the agreement that governs the inherited retirement account to determine if the beneficiary is subject to the five-year rule or the life expectancy rule. In some cases, the beneficiary might be required to make an election by certain deadlines in order to be subject to the rule that he wants to use."
Appleby Retirement Dictionary


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ERIC Comments on Nevada Fiduciary Rule
"ERIC urges the Securities Division to model or mirror the language provided for under the DOL's rule.... S.B. 383 places a greater burden through more prescriptive requirements on brokers-dealers, investment advisers, and other financial planners that advise on retirement plans. While states are within their right to provide for greater standards than what the federal government requires, Nevada should be hesitant if doing so would lead to more cumbersome and costly administrative processes."
The ERISA Industry Committee [ERIC]


Fiduciary Rule Critics Cry Wolf
"Wall Street has received the message, and it isn't waiting around for the Labor Department. Brokers are paring high-priced funds from their mutual fund offerings to retirement savers. They're also moving those investors from commission-based accounts -- which charge a fee for each transaction -- to fee-based accounts -- which charge an annual fee based on assets."
Nir Kaissar, via Bloomberg

Discussions on
the BenefitsLink Message Boards

Former Participant Mistakenly Treated as Nonvested; Retroactively Entitled to Early Retirement Benefit?
"Our company's DB plan states that an employee becomes 100% vested upon termination of employment after age 55 if he has worked at least a year (which is an exception to the 5-year cliff vesting schedule that otherwise would apply). An individual met those requirements but the recordkeeping system did not record him as becoming vested when employment terminated. Now, at age 65 (the plan's normal retirement age), he has contacted the plan administrator and wants back payments as if he had elected early retirement at age 62. The plan responded that he should have applied for his early retirement benefit before he became 62. Is the plan required to make those back payments?"
BenefitsLink Message Boards

Am I Practicing Law When I Draft a QDRO?
"I don't know why I feel like drafting a QDRO goes over the line, but I think it's because a judge ends up signing the document."
BenefitsLink Message Boards

Press Releases

Court Orders $5M to Be Restored to Employee Stock Ownership Plan
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

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David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager

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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