Retirement Plans Newsletter

September 6, 2017

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Webcasts, Conferences

What You Should Know About Your Retirement Plan
September 13, 2017 WEBCAST
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

Everything Roth
September 21, 2017 WEBCAST
Ascensus

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

IRA University
October 4, 2017 WEBCAST
Ascensus

Nuts and Bolts of Executive Compensation
October 30, 2017 WEBCAST
American Bar Association Joint Committee on Employee Benefits [JCEB]

►See 207 Upcoming

►See 1244 Recorded


Discussions

New Topics on the BenefitsLink Message Boards

New Comments and Topics

All Topics, Grouped by Forum


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U.S. Tax Issues for U.S. Expats in U.K. Pension Schemes (PDF)
"[W]ith the rise of tax information sharing among country tax authorities, it is increasingly important to be aware of cross-border tax issues that may arise at the member level.... [T]he US income tax system taxes US citizens and green card holders and residents ... on their worldwide income.... [B]eing a member in a pension scheme, having options or other share rights, or even bonus arrangements, may be considered having a financial account ... For a US taxpayer to not properly treat or disclose such benefit for US tax purposes can lead to significant penalties, and for their employers, some reputational risk or embarrassment."
Groom Law Group

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Ascension Health Grants $29.5M Backstop for Wheaton Pension
"Ascension Health will guarantee $29.5 million in benefit payments under Wheaton Franciscan Services Inc.'s pension plan, ending a lawsuit accusing Wheaton of wrongly treating the plan as a 'church plan' exempt from federal law ... The deal, announced in court papers filed Sept. 1, requires Ascension to guarantee payment of the first $29.5 million paid out under the Wheaton pension plan in the event the plan can't cover the payments itself. Ascension, which acquired part of Wheaton's health-care business in 2016, also agreed to provide plan participants with annual notices of the plan's funding levels." [In re Wheaton Franciscan ERISA Litig., No. 16-4232 (N.D. Ill. motion for preliminary settlement approval filed 9/1/17 ]
Bloomberg BNA

American Bar Association Beats Pension Whistle-Blower's Lawsuit
"An American Bar Association employee who said he was fired for blowing the whistle on mismanagement of the association's pension plan lost his appeal before the U.S. Court of Appeals for the Seventh Circuit ... The employee, who sought $800,000 in damages from the ABA after he was removed from his position as plan administrator and later terminated, wasn't authorized to challenge these actions under [ERISA] ... because he wasn't a plan participant or beneficiary, and after his removal as plan administrator, he wasn't a plan fiduciary either, the court said." [Trujillo v. Am. Bar Assoc., No. 16-3612 (7th Cir. Sept. 5, 2017; unpub.]
Bloomberg BNA

Recent Plan Fiduciary Victories in ERISA Single-Stock Fund Litigation
"In recent months, there have been at least 12 decisions holding in favor of ERISA plan fiduciaries sued for alleged breaches related to single-stock funds. These recent plan fiduciary victories suggest the U.S. Supreme Court's decision in Fifth Third Bancorp v. Dudenhoeffer may be having a chilling effect on single-stock fund ERISA claims."
Morgan Lewis

Retirement Plan Participation: The More Things Change, the More Things Stay the Same
"[P]lan participation rates have improved from 65% in 2000 to 79% in 2016. That's a rise of more than 20%.... [M]ore than 20% additional people are saving for retirement in these plans today than were saving just 15 years ago.... In 2016 nearly half of plan sponsors defaulted participants at 4% or more -- double what it was 10 years ago. And 20% of plan sponsors defaulted participants at 6% or more -- three times what it was 10 years ago.... [But it's] striking ... that participation rates for people in plans with voluntary enrollment are pretty much the same today as they were back in 2000."
Vanguard

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Will You Still Need Me When I'm 104? The Challenge of Longer Lifespans
"Life expectancy has been increasing by about one year every five years. A child born in the United States now is projected to live to age 104. Most retirement systems were designed to provide financial support for 10 to 15 years of retirement, and the age thresholds of those systems have not increased nearly enough to account for rising life expectancies. Meanwhile, multiple factors are also making the traditional retirement-plan vehicles less dependable for the future."
InvestmentNews

The Problem with Using a Funded Ratio to Track Progress Toward Retirement
"The virtue of the funded ratio is that it takes an abstract account balance and relates it directly to a goal or outcome, and can give savers a sense of accomplishment as the percentage slowly and steadily climbs towards 100%. The bad news, though, is that once account balances grow large, the funded ratio itself can become highly volatile as markets move up and down, and the discount rate used to calculate the funded ratio can unwittingly turn into an indirect absolute return benchmark that is difficult to keep up with."
Nerd's Eye View

What Would a Government Investigation Reveal About Your Retirement Plan?
"[P]roper documentation can go a long way to reducing the risk of violations.... [P]lan administrators should regularly review plan documents to make sure they are adhering to the plan procedures, and documenting the steps taken in compliance with the plan.... [E]mployers and plan administrators should listen to the plan participants themselves when they point out issues they are experiencing with the retirement plan."
Butterfield Schechter LLP

Hardship Rules Relaxed by Federal Retirement Plan for Persons Affected by Harvey
"The nearly 60,000 government employees living or working in the area hit by Harvey, as well as those supporting eligible family members in the region, qualify for withdrawals under the loosened rules. TSP also waived the rule barring employees from contributing to their investments in the six months after making a withdrawal, meaning employer contribution matching still applies."
Government Executive

Impact of Proposed Rule Amendments on the Teacher Retirement System of Texas (PDF)
50 presentation slides. "While TRS does not recommend 403(b) providers or investments, the certification and registration process gives the appearance of TRS endorsement.... [Proposed amendments include:] Require certification application disclosures. Adjust allowable maximum fees, costs, and penalties. Increase company certification and product registration fee from $3,000 to $5,000 and from $3,000 to $10,000 respectively ... Formalize the closed and restricted product list."
Teacher Retirement System of Texas [TRS], via National Tax-Deferred Savings Association [NTSA]

What's the Maximum Possible Social Security Benefit in 2017?
"The average monthly Social Security payment for retirees was $1,360 in January 2017. But many retirees receive over $2,000 per month from the Social Security Administration, and the maximum possible benefit is $3,538 in 2017. However, qualifying for payments worth $3,000 or more requires some serious career planning throughout your life. Here's what you need to do to qualify for the maximum possible Social Security payment."
U.S. News & World Report

[Opinion]

The Rise and Demise of Corporate Pension Plans
"To read the headlines today gives the appearance there's a consensus among retirement policy pundits that 'things would be better if only we had our old pensions back.' Despite these rosy memories, actual history shows, with a few notable exceptions, pensions were never as universal or as lucrative as imagined.... In theory, the traditional corporate pension plan remains as originally advertised. Unfortunately, in practice, today's work environment just can't meet the assumptions of that theory."
Fiduciary News

Benefits in General

ERISA Advisory Council to Meet September 25
"[An] open meeting of the Advisory Council on Employee Welfare and Pension Benefit Plans (also known as the ERISA Advisory Council) will be held as a teleconference on September 25, 2017.... The purpose of the open meeting is to discuss reports/recommendations for the Secretary of Labor on the issues of [1] Reducing the Burden and Increasing the Effectiveness of Mandated Disclosures with respect to Employment-Based Health Benefit Plans in the Private Sector, and [2] Mandated Disclosure for Retirement Plans -- Enhancing Effectiveness for Participants and Sponsors."
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

Discussions
on the BenefitsLink Message Boards

ADP Testing in a Controlled Group
"I have a controlled group of two plans. Plan A has deferral and profit sharing and plan B is deferral and match. They have always passed combined 410(b) testing by including the participants from the other plan. They use top-paid group, so HCE's vary from year to year. Some years there are none in Plan B and some years there are 2 or [3] Some years the ADP test fails separately, but combined with the two plans, it will pass. If Plan B would go to a safe harbor match, how does that affect Plan A and the ADP testing? Is it even allowed?"
BenefitsLink Message Boards

Contributing to SEP and Profit Sharing Plan in Same Year
"I have a client that had a business with employees and maxed out his profit sharing/401(k) for 2016 ($59,000). He sold the business and terminated the plan during 2016. He then received 1099 consulting income from the company that purchased his business. Can he contribute under a SEP with respect to the consulting income, and maximize that contribution for 2016 also?"
BenefitsLink Message Boards

Maximum Employer Contribution If No IRC Section 404 Test Needed?
"Being not-for-profits, there's no deduction for the employer contribution, so is there any maximum limitation? I get that most NFPs don't have tons of leftover cash to make excessive plan contributions, but let's say that this year is an anomaly. Example: NFP has $800,000 payroll. if this were a regular corp, the deduction limit (and therefore the maximum total contribution) would be 25% x $800K = $200K. Is this the same for a NFP?"
BenefitsLink Message Boards

Retirement Plan Design for Law Firms
"A number of law firms seem to have 2 separate plans: one for partners and for associates. Why? Isn't it more efficient and less expensive to have all levels of attorneys in one plan?"
BenefitsLink Message Boards

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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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