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Trinity Pension Consultants, Inc.
in OH

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American Trust & Savings Bank
in IA

Defined Contribution Consultant/Administrator
SBC Benefit Consultants, Inc.
in NJ

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[Official Guidance]

Text of 2017 Draft Instructions for IRS Form 5500-EZ: Annual Return of One-Participant (Owners and Their Spouses) Retirement Plan (PDF)
12 pages; Sept. 20, 2017. "The Principal Business Activity Codes, located at the end of these instructions, have been updated and revised to reflect updates to the North American Industry Classification System (NAICS)."
Internal Revenue Service [IRS]


Online Learning Course: 401(k) Plan Administration

Sponsored by International Foundation of Employee Benefit Plans [IFEBP]

Learn more about plan design issues, plan investments, fiduciary responsibility and plan fees, employee communications and investment education, automatic enrollment, participant loans, distributions, and plan amendment and termination.

[Guidance Overview]

Employee Benefit Plan Hurricane Relief: Loans and Hardship Distributions from Qualified Plans
"Although the IRS has provided broad parameters for Hurricane Relief, the employer still has the discretion to decide which pieces to implement (e.g., does the employer want to take maximum advantage of the relief ... should the six month repayment be turned off, etc.).... [B]ecause hardships are not a protected benefit, it is possible to offer Hurricane Hardships as a limited window benefit for disaster relief instead of adding a permanent hardship feature."
Baker McKenzie

Fiduciary Risk and Active Management in DC Plans: A Legal Perspective (PDF)
"Here are five guiding principles under ERISA that can aid fiduciaries in selecting and monitoring investment options and assessing active strategies within their plan lineups: [1] It's about the process ... [2] Fiduciaries should focus on the value-for-cost proposition ... [3] There is no one-size-fits-all approach to investment menus.... [4] Range of choice and strategies can be appropriate ... [5] Fear-based decisions fall short of prudence."
Goodwin LLP, via T. Rowe Price

Novitex Sued Over 401(k) Plan Fees, Not First Modest Plan Hit
"Novitex and its employee benefits committee failed to monitor the plan's investment options -- including its selection of mutual funds and a stable value fund -- to ensure that they were diversified and not excessively priced, according to a lawsuit filed Sept. 20 in the U.S. District Court for the District of Connecticut. Novitex also breached its fiduciary duties under [ERISA] by retaining and excessively compensating UBS as the plan's investment adviser, the complaint alleges.... The company's 401(k) plan had $157 million in assets and more than 10,000 participants as of 2015, according to the lawsuit."
Bloomberg BNA

Should Your Retirement Plan Have an Education Policy Statement?
"[An education policy statement (EPS)] is a blueprint for how the plan fiduciaries will implement an employee education program for the plan and how they'll make sure it's meeting established goals. It's often seen as part of or as an extension of, the plan investment policy statement[.]"


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!

Leveraging: A Hidden Advantage of Roth 401(k) Accounts
"While no tax deduction is available for contributions to Roths, in general, distributions of both principal and earnings are tax-free. When combined with the ability for leveraging (subject to payment of unrelated business income tax (UBIT)), some interesting planning and tax saving opportunities arise. One such opportunity may be the ability to leverage a Roth account to enhance the deferral and tax-free distribution power of the Roth."
Fox Rothschild LLP

Retirement Might Be Cheaper Than You Think
"[R]etirement spending after age 75 appears to decline by as much as 30% from spending that takes place during the first half of a typical retirement. Furthermore, even after accounting for increasing health care costs ... the decline in overall retirement spending continues to outpace rising health expenditures."
Financial Finesse

Spouse Gets 5-Year Prison Sentence for Retirement Plan Theft and Other Fraud
"This cautionary tale for plan sponsors and service providers illustrates the challenges retirement and other benefit plans face with identity theft and fraudulent activities by individuals wishing to gain access to the retirement plan assets and other benefits of plan participants. Federal regulations and guidelines known as the 'Red Flags Rule,' which require certain businesses and organizations to implement written identity theft prevention programs, have not been applied to 401(k) plans. Nevertheless, plan sponsors concerned about identity theft may want to review their retirement plan operations with prevention in mind, and similar efforts should be considered for other benefit plans."
Thomson Reuters / EBIA

Public Pension Assets Quarterly Update, Q2 2017
"As of the second quarter of 2017 (June 30), public pension assets were a record $3.06 trillion, an increase of approximately 2.0 percent, from $3.98 trillion as reported for Q1 2017."
National Association of State Retirement Administrators [NASRA]

What's Cooking in Congress for Retirement Plans?
"While tax reform is a priority of the Senate, the lowering of retirement plan contribution limits does not appear to be a top-shelf item.... There is still hope that the Open MEP provision can be attached to tax-reform or some 'must pass' legislation in order to pass.... While there is a lot of interest in getting tax reform done in a bipartisan fashion, there is similar interest in keeping the gains that the private retirement system has made in the past several years.... It is likely that any individual retirement plan legislation will be incorporated as part of a 'must move' legislative vehicle, since Congress is in a place where not a lot is going to move on its own.... 'Rothification' is the new buzzword when it comes to tax reform as related to retirement plans."
Cammack Retirement Group


The Push for Full Funding of Public Pensions: Is It Worth It?
"[P]ublic pension liabilities are long-dated and unlike corporate pensions, there is no solvency threat to treat them the exact same way as their corporate counterparts.... [P]ensions are all about matching assets and liabilities but more importantly, they are about fulfilling a pension promise to allow plan beneficiaries to retire in dignity and security."
Pension Pulse


ARA Comment Letter to AICPA on Proposed Modification of Auditing Standards for ERISA-Covered Employee Benefit Plans (PDF)
"[ARA's recommendations] are limited to three areas of immediate concern ... [1] Eliminate the public disclosure requirement for plan failures. [2] Retain the materiality threshold for performing audit procedures. [3] Extend the effective date of the Proposal by at least two years."
American Retirement Association [ARA]

Executive Compensation
and Nonqualified Plans

[Official Guidance]

Text of SEC Interpretive Guidance on Pay Ratio Disclosure (PDF)
"In light of the approaching compliance date and concerns raised about the implementation of the disclosure requirement, this release provides additional guidance to assist registrants in their compliance efforts. In addition, the Commission staff is publishing guidance about the use of statistical sampling to assist registrants in determining their median employee for purposes of the pay ratio disclosure."
U.S. Securities and Exchange Commission [SEC]

[Official Guidance]

Text of SEC Division of Corporation Finance Guidance on Calculation of Pay Ratio Disclosure
"[T]he Commission expressly sought to provide flexibility to registrants by not specifying the 'other reasonable methods' that may be appropriate, allowing each registrant to determine the method that best suits its own facts and circumstances. The rule also provides for flexibility in setting the parameters of the statistical sampling method.... In order to assist registrants in determining how to use statistical sampling methodologies and other reasonable methods, [the SEC] is providing the following guidance and hypothetical examples of use of sampling and other reasonable methodologies."
U.S. Securities and Exchange Commission [SEC]

[Official Guidance]

Text of SEC Press Release: SEC Adopts Interpretive Guidance on Pay Ratio Rule
"The guidance: [1] States the Commission's views on the use of reasonable estimates, assumptions and methodologies, and statistical sampling permitted by the rule; [2] Clarifies that a company may use appropriate existing internal records, such as tax or payroll records, in determinations about the inclusion of non-U.S. employees and in identifying the median employee; [3] Provides guidance as to when a company may use widely recognized tests to determine whether its workers are employees for purposes of the rule."
U.S. Securities and Exchange Commission [SEC]

[Guidance Overview]

SEC Issues Guidance on Pay Ratio Rule
"In light of the use of estimates, assumptions, adjustments, and statistical sampling permitted by the rule, the Commission noted the pay ratio disclosures may involve a degree of imprecision.... In the Commissions view, if a registrant uses reasonable estimates, assumptions or methodologies, the pay ratio and related disclosure that results from such use would not provide the basis for Commission enforcement action unless the disclosure was made or reaffirmed without a reasonable basis or was provided other than in good faith."

Lessons from Wells Fargo: Forfeiture and Clawback Policies
"Although the Dodd-Frank Act requires regulators to implement clawback regulations, those regulations have not yet been finalized. Absent final regulations, the industrywide best practice is to provide that the occurrence of certain triggers will lead to a review. However, the compensation committee typically retains discretion to determine whether a forfeiture or clawback is appropriate and, if so, the amount."
Meridian Compensation Partners, LLC

on the BenefitsLink Message Boards

Matching Contributions Made to Separate Plan; Destroys ERISA Exemption?
"If a 501(c)(3) organization sponsors a 403(b) deferrals-only program plus a separate Code section 401(a) qualified plan to which it makes matching and non-elective contributions, is there any defensible argument that the deferrals-only program is exempt from ERISA (and exempt from 5500 and plan audit)?"
BenefitsLink Message Boards

Election to Apply Balances
"Does an election to apply the balances to the required minimum or quarterly need to specify the amount applied? Specifically, Plan year ends May 31. The minimum as of June 1, 2016 is $700,000. Prefunding Balance as of 6/1/2017 is $150,000. Plan was frozen 6/1/2017. The 6/1/2017 valuation is not complete yet, but the minimum will surely be much less than $700,000 since there is no target normal cost. It will probably be about $300,000. Therefore, the 9/15/2017 quarterly will probably be about $67,500 ($300,000 * 90% * 25%). Can the plan sponsor just elect to apply whatever is needed to cover the quarterly? Should it elect to apply the whole $150,000?"
BenefitsLink Message Boards

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Lois Baker, J.D., President
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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