Retirement Plans Newsletter

September 13, 2017

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Webcasts, Conferences

Basics of Benefits
October 10, 2017 WEBCAST
American Bar Association Joint Committee on Employee Benefits [JCEB]

PLANADVISER National Conference
October 11, 2017 in FL
PLANADVISER

►See 197 Upcoming

►See 1253 Recorded


Discussions

New Topics on the BenefitsLink Message Boards

New Comments and Topics

All Topics, Grouped by Forum


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[Official Guidance]

Text of PBGC Disaster Relief Announcement 17-11 in Response to Hurricane Irma in Florida
"This Disaster Relief Announcement provides relief relating to PBGC deadlines ... [to] any person ... located in the disaster area for which the [IRS] has provided relief in FL-2017-04 ... The relief generally extends from September 4, 2017 through January 31, 2018. The disaster area consists of Broward, Charlotte, Clay, Collier, Duval, Flagler, Hillsborough, Lee, Manatee, Miami-Dade, Monroe, Palm Beach, Pinellas, Putnam, Sarasota and St. Johns Counties."
Pension Benefit Guaranty Corporation [PBGC]

[Advert.]

ftwilliam.com -- Compliance Tests Webinar

Sponsored by Wolters Kluwer

In this webinar we will explain what nondiscrimination testing is for defined contribution plans and how tests are calculated. See how the ftwilliam.com software performs these calculations! Register here for this FREE webinar. Earn CE credits! Date: Thurs, Sept 21, 2017 Time: 1pm CT


[Official Guidance]

Text of PBGC Disaster Relief Announcement 17-12 in Response to Hurricane Irma in Puerto Rico
"This Disaster Relief Announcement provides relief relating to PBGC deadlines ... [to] any person ... located in the disaster area for which the [IRS] has provided relief in PR-2017-01 ... The relief generally extends from September 5, 2017 through January 31, 2018. The disaster area consists of the municipalities of Culebra and Vieques."
Pension Benefit Guaranty Corporation [PBGC]

[Guidance Overview]

IRS Extends Frozen Defined Benefit Plan Relief Through 2018
"Under the extended relief, if the defined benefit plan cannot pass Code Section 410(b) coverage testing on its own, it can be aggregated with nonelective contributions provided under defined contribution plan(s) maintained by the plan sponsor. Plans that are aggregated for coverage testing must also be aggregated for nondiscrimination testing under Code Section 401(a)(4) with respect to the benefits provided to participants covered by the aggregated plans."
Morgan Lewis

[Guidance Overview]

403(b) Plans Must Be Universally Available: Is Yours?
"A frequent error occurs when plan sponsors automatically exclude employees working less than full-time from making elective deferral contributions under a 403(b) plan. A 403(b) plan that wants to apply the statutory exclusion for part-time employment must determine the employee's eligibility for the 403(b) elective deferral contributions based on whether the employee is reasonably expected to normally work less than 20 hours per week and has actually never worked more than 1,000 hours in the applicable 12-month period."
EisnerAmper

[Guidance Overview]

How to Do a 403(b) Collective Trust: 'Reverse-Engineering' the University of California 403(b) CIT
"The University of California made news when it announced that it has found a way to apply the collective trust rules in such a way to make just such an offering to its 403(b) plan.... [This] really does speak to the sophistication of their counsel AND the hoops through which one must jump in order to make it happen. The downside to this is that it still does not 'crack the nut' to make CIT's available on a bulk basis as 81-100 trusts for unrelated employers. But it still is pretty cool."
Business of Benefits

[Advert.]

50th Anniversary Sale

Sponsored by DATAIR Employee Benefit Systems, Inc.

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Employee Engagement a Better Measure of Financial Wellness Program ROI
"Maximizing ROI starts with knowing the employee base -- age, career stage and income ranges.... It requires a deeper understanding of workforce psychographics -- how employees think and feel about money ... Employers should ask: What are employees' money habits? How satisfied are they with their current personal financial situation? Do financial concerns affect their family relationships? How much time do they spend worrying about their personal financial situation?"
PLANSPONSOR

Senate Considers Cutting Retirement Benefits for Feds Working for Unions
"The Senate is poised to vote on two measures aimed at curbing federal employees' ability to work on union representational issues while on the clock ... The more controversial measure ... would prevent employees from counting years where they worked at least 80 percent on union representational duties toward their retirement pensions."
Government Executive

Texas Teacher Retirement System Adjusts Proposed 403(b) Rule Amendments
"TRS is sticking with its current rule allowing a 10-year surrender period (12 years with disclosure) at 10%, instead of its proposal to halve the penalty to five years and 5%. Additionally, TRS is opting to raise the caps it previously proposed on asset-based fees and split those caps into two categories, one for variable annuity (VA) products and one for non-annuity products[.]"
National Tax-Deferred Savings Association [NTSA]

ERISA's 'Reasonable Fee' Requirement
"Plan fiduciaries have become acutely aware of their fiduciary risk and that they need the requisite level of expertise and protection. Packaged, outsourced 3(38) services offered by less specialized advisors are merely fund selection services without any focus on benchmarking and plan governance. These service agreements often include disclaimers of responsibility, resulting in less than a complete fiduciary risk management offering.... [P]lan fiduciaries are increasingly replacing their nonfiduciary brokers with 3(21) advisors -- and their 3(21) advisors with 3(38) advisors -- as they become more knowledgeable about fiduciary risk and marketplace offerings."
The CPA Journal

DOL's Fiduciary Rule: Death by a Thousand Cuts (PDF)
"The palpable animosity towards the rule within the DOL and elsewhere with in the administration is not without clear manifestations that have real impact.... [W]hile we do presently have an applicable rule, the administration's negativity regarding the rule seems to be coalescing such that the rule is progressively being pared down.... [D]uring the transition period, which now may apparently be extended at least through June 2019, the rule has in some ways effectively been significantly declawed."
Dechert LLP

[Opinion]

Wells Fargo Comment Letter to DOL on Proposed Delay of Fiduciary Rule (PDF)
"A July 1, 2019 applicability date will provide the Department time to analyze the Rule and its effect on the market for retirement services, including the ways in which the Rule is limiting retirement investors' access to retirement investment information and financial advice. Furthermore, a delay will allow the Department to work with the [SEC] to address these harms on a coordinated basis. In particular, a delay provides the Department and the Commission with the opportunity to resolve the market dynamics already adversely affecting retirement investors by establishing a harmonized standard of conduct for retirement and non-retirement brokerage accounts."
Wells Fargo

[Opinion]

NAIFA Comment Letter to DOL on Proposed Delay of Fiduciary Rule (PDF)
19 pages. "NAIFA fully supports a time-certain delay of the current January 1, 2018 applicability date until at least July 1, 2019.... [W]ithout such a delay, regulated businesses will incur undue expense. Moreover, absent a delay and substantial revisions to, or withdrawal of, the current fiduciary rule and PTEs, Main Street savers will continue to be harmed."
National Association of Insurance and Financial Advisors [NAIFA]

[Opinion]

American Retirement Association Comment Letter to DOL on Proposed Delay of Fiduciary Rule (PDF)
"The ARA recommends using a 'tiered' approach to determine the applicability date for the delayed provisions of the Best Interest Contract Exemption, the Principal Transaction Exemption, and amendments to PTE 84-24 (the 'Delayed Guidance'). Under this approach, the Delayed Guidance would become applicable as of the later of July 1, 2019, or a date that is at least 18 months from the date a revised exemption (or rule) is promulgated."
American Retirement Association [ARA]

Benefits in General

[Official Guidance]

Web Page of IRS Help and Resources for Victims of Hurricane Irma
The IRS has published a web page containing a comprehensive list of disaster relief for victims of Hurricane Irma. Also posted are IRS news releases, legal guidance, and links to other disaster relief resources.
Internal Revenue Service [IRS]

[Official Guidance]

Web Page of IRS Help and Resources for Victims of Hurricane Harvey
The IRS has published a web page containing a comprehensive list of disaster relief for victims of Hurricane Harvey. Also posted are IRS news releases, legal guidance, and links to other disaster relief resources.
Internal Revenue Service [IRS]

Executive Compensation
and Nonqualified Plans

The Do's and Don'ts of CEO Pay Ratio Communications
"[D]isclosing the median worker's job title helps personalize a company's brand and may be worthwhile to consider for an organization in a single line of business.... It's trickier to decide whether or not to provide a peer comparison for the CEO pay ratio disclosure ... [It] will be difficult to anticipate what pay ratios will be at peer companies, which will make it a riskier proposition because of the potential variability of CEO pay at those peers.... [It's] worthwhile to draft messages that incorporate your employee value proposition, helping you frame your company's narrative."
Willis Towers Watson

Do Performance Shares Actually Perform?
"In the sample plan [evaluated by two MIT professors], 50% of each grant ... is tied to TSR relative to 11 peers over a three-year period. Although the company's annualized TSR ranked 10th, the CEO still received 80% of the target payout. The authors opine that this is not truly 'pay for performance.' Instead, they reason, if the TSR ranks in the lower half of the peer group, the payout should be less than half."
myStockOptions.com

Prepare for the Impact of Four Accounting Rule Changes
"[F]our recent changes in the accounting rules [may] have an impact on equity and other incentive compensation in the upcoming award and proxy season. The first two are well-known to executive compensation professionals. The second two do not directly relate to equity compensation, but could affect the financial performance metrics for outstanding grants and future grants, especially those with performance periods that include the 2017 fiscal year[.]"
Winston & Strawn LLP

Discussions
on the BenefitsLink Message Boards

Has Anyone Seen a Lawsuit Over Imprudent Selection of Investment Funds, Rather Than Self-Dealing or Excessive Fees?
"So far, it seems there are two kinds of claims against defined contribution plan fiduciaries having to do with a plan's menu of self-directed investment options. One kind asserts self-dealing. Another kind alleges that a plan could have chosen other options that provided essentially the same investments but at a lower expense. Has anyone seen a lawsuit that simply alleged a fiduciary chose optional self-directed investments that were weak on their merits?"
BenefitsLink Message Boards

401(k) Plan Entry Date for Employees of Newly Acquired Employer
"Company B, which did not maintain a 401(k) plan, became a wholly owned subsidiary of Company A per an acquisition effective 4/1/16. Company B will adopt Company A's 401(k) plan, and they want to use the coverage transitional rule. So the plan does not have to cover Company B's employees until 7/1/17 -- correct? Plan does not count years of service for eligibility with Company B prior to the acquisition date."
BenefitsLink Message Boards

Reporting the Distribution of a Stale Distribution Check
"A terminated participant was provided a distribution check for $150 in December 2016. In 2017, the investment company determined that the check was never cashed and has reversed the transaction and is including the funds in the plan's assets. A new check was written in June to the participant and he is cashing the check. For 5500 reporting at 12/31/16, should the stale check be included in the ending asset balance? Also, should the 2016 1099-R for the participant be amended to reflect $0 distribution and a new 1099-R prepared for 2017 showing the payment?"
BenefitsLink Message Boards

Spousal Death Benefit Rollover to a 401(k)?
"A participant's wife -- who worked for Company A and has an account in Company A's 401(k) plan -- has died. The participant is the designated beneficiary. The participant (in the 401(k) plan sponsored by his employer, Company B) would like to roll over his wife's account into his plan. Will Company A's plan accept a rollover of the spousal death benefit, or instead must this participant roll over the death benefit into an IRA?"
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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