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Retirement Plan Administrator
PlanTech, LLP
in AL, Telecommute

401(k) Administrator
Capital Retirement Plan Services, Inc.
in PA

Consultant - Defined Contribution Practice
in CT, FL, MO, NJ, NY

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[Official Guidance]

Text of 2017 IRS Form 8881: Credit for Small Employer Pension Plan Startup Costs (PDF)
Rev. Dec. 2017. "Eligible small employers use Form 8881 to claim the credit for qualified startup costs incurred in establishing or administering an eligible employer plan.... Taxpayers, other than partnerships and S corporations, whose only source of this credit is from a partnership or S corporation, are not required to complete or file this form. Instead, they can report this credit directly on Form 3800."
Internal Revenue Service [IRS]


Bring Employee Benefits Training Directly to Your Workplace

Sponsored by International Foundation of Employee Benefit Plans [IFEBP]

Choose On-Site Education from the International Foundation to bring the training to you! You'll receive industry-leading employee benefits education without the cost or inconvenience of travel. Learn More.

[Official Guidance]

Text of PBGC Disaster Relief Announcement 17-14 in Response to Hurricane Maria in the U.S. Virgin Islands
"[PBGC] is waiving certain penalties and extending certain deadlines in response to Hurricane Maria that began on September 16, 2017, in U.S. Virgin Islands.... The disaster area consists of islands of St. Croix, St. John and St. Thomas."
Pension Benefit Guaranty Corporation [PBGC]

[Official Guidance]

Text of PBGC Disaster Relief Announcement 17-15 in Response to Hurricane Maria in Puerto Rico
"[PBGC] is waiving certain penalties and extending certain deadlines in response to Hurricane Maria that began on September 17, 2017, in Puerto Rico.... The disaster area consists of any of the 78 municipalities in Puerto Rico."
Pension Benefit Guaranty Corporation [PBGC]

Wells Fargo Beats ERISA Challenge Over Cross-Selling Scandal
"Participants failed to show that the plan's fiduciaries couldn't have concluded that a disclosure of the unethical sales practices prior to 2016 would have done more harm than good to their investments, Judge Patrick J. Schiltz of the U.S. District Court for the District of Minnesota held Sept. 21.... Schiltz allowed [participants] to amend their claim of breach of the duty of loyalty, but they will have to specify exactly who breached the duty, when, and how." [In re Wells Fargo ERISA 401(K) Litig., No. 16-3405 (D. Minn. Sept. 21, 2017]
Bloomberg BNA

Jerry Schlichter's Fee Lawsuits Have Left an Indelible Mark on the 401(k) Industry
"All told, there were 31 so-called 'excessive fee' suits filed by Mr. Schlichter and other firms over 2006-07 ... Following several large monetary settlements, including $62 million from Lockheed Martin, the litigation caught a second wind beginning in 2015. Last year, there were 29 new cases filed through September ... That's the largest annual total to date, and there's no sign the pace is slowing down.... One result of the litigation has been increased fee transparency."


Form 5500 Reporting Update

Sponsored by Lorman and BenefitsLink

Oct. 2 webinar. Navigating the maze of changes with Form 5500 can leave you lost. Learn what and when to file, as well as some recent changes that may impact your filings. Discount for BenefitsLink readers.

Transparency Is the Best Sunlight: Due Diligence Questions Plan Sponsors and Plan Participants Should Ask
"[F]ive core questions ... analyze the true nature of the effective returns that investors receive once certain factors are considered. The four factors [to] consider in [a] forensics analyses are: nominal, or stated, annualized returns; load-adjusted annualized returns; risk-adjusted annualized returns, and potential 'closet index' returns, using both Ross Miller's Active Expense Ratio metric and [the author's] Active Management Value Ratio(tm) 3.0 metric."
The Prudent Investment Fiduciary Rules

Improving Diversification of Target Date Funds with Direct Real Estate
"Adding direct real estate as an allocation, may offer four key advantages for multiasset portfolios: [1] A track record of higher risk-adjusted returns ... [2] Potential for greater diversification, lower correlation ... [3] Managing liquidity ... [4] Boosting potential outcomes while reducing risk."
Pensions & Investments

Legislation Emerges to Expand Hurricane Relief
"The draft legislation [dated Sept. 22, 2017], currently named the 'Disaster Tax Relief and Airway Extension Act of 2017,' mirrors the retirement plan savings relief previously provided by Congress to victims of Hurricanes Katrina, Wilma and Rita in 2005. In addition, the legislation includes other tax-related provisions to provide relief."
National Association of Plan Advisors [NAPA]

CalPERS Considers Paying Down New Debt Faster
"CalPERS plans to get local government reaction to a proposed new policy that would pay down new pension debt over a shorter period, yielding big savings in the long run but also requiring larger payments in the early years.... [F]or new debt from investment losses, the payment period would be shortened from the current 30 years to perhaps 20 years ... and the higher debt payments from years with investment losses could be offset by lower payments from years with gains."


Revisiting the Three Rs of Teacher Retirement Systems: Recruitment, Retention, and Retirement (PDF)
22 pages. "Teacher effectiveness increases with experience.... The cost of teacher turnover is quite high, both in terms of financial cost and loss of productivity to the school district.... Defined benefit pension plans help to recruit high quality teachers, and to retain highly productive teachers longer, as compared with defined contribution (DC) accounts.... In 2009, DB pensions helped to retain and additional 30,000 teachers nationwide.... In 2009, DB pensions saved school districts between $130.7 million and $284.4 million nationally in teacher turnover costs."
National Institute on Retirement Security [NIRS]


Kentucky Pension Blues: Let's Get This Fire Started
"[A] variety of proposals [have been] put forth to 'fix' the problem. None of them actually fix the problem: the pension benefits already promised and earned by current and past employees. The 19% fundedness of the state plan is not for future retirees ... It's for people currently getting pension benefits. It's for people who aren't yet retired but have 20 years' worth of pensionable service. It's for people with 5 years of service that they've earned.... It doesn't include future service, it doesn't include new employees. It's for benefits that have already been legitimately earned. Those benefits have got to be paid for."

Benefits in General

[Official Guidance]

Text of IRS Disaster Relief Notice VI-2017-02, for Victims of Hurricane Maria in U.S. Virgin Islands
"Individuals who reside or have a business in the Islands of St. Croix, St. John and St. Thomas may qualify for tax relief.... [C]ertain deadlines falling on or after Sept. 16, 2017 and before Jan. 31, 2018, are granted additional time to file through Jan. 31, 2018. With some exceptions, many of these deadlines were postponed by the IRS following the disaster declaration for Hurricane Irma[.]"
Internal Revenue Service [IRS]

[Official Guidance]

Text of IRS Disaster Relief Notice PR-2017-02, for Victims of Hurricane Maria in Puerto Rico
"Individuals who reside or have a business in any of the 78 municipalities in Puerto Rico may qualify for tax relief.... [C]ertain deadlines falling on or after Sept. 17, 2017 and before Jan. 31, 2018, are granted additional time to file through Jan. 31, 2018. With some exceptions, many of these deadlines were postponed by the IRS following the disaster declaration for Hurricane Irma[.]"
Internal Revenue Service [IRS]

[Guidance Overview]

Employee Benefit Plan Hurricane Relief: Available Reporting and Funding Extensions
"The IRS, DOL and PBGC recently provided various forms of relief intended to help employees and employers impacted by Hurricanes Harvey and Hurricane Irma. In this [article the authors] review funding and reporting relief and take a brief look at Vacation/PTO donation programs."
Baker McKenzie

[Guidance Overview]

Here in 14 Weeks: New Rules For Disability Benefit Claims (PDF)
"Improvement to basic disclosure requirements ... Right to claim file and internal protocols ... Right to review and respond to new information before final decision ... Avoiding conflicts of interest ... Deemed exhaustion of claims and appeal processes ... Certain coverage rescissions are adverse benefit determinations subject to the claims procedure protection ... Notices written in a culturally and linguistically appropriate manner."
Cowden Associates, Inc.

Executive Compensation
and Nonqualified Plans

[Guidance Overview]

SEC Releases New Pay Ratio Guidance
"The SEC acknowledges in the interpretive release that some imprecision is inherent in the preparation of pay ratio disclosures given that the data-gathering process and performance of the calculations involve several layers of estimation, adjustments, and statistical sampling. Accordingly, so long as issuers use reasonable estimates, assumptions, or methodologies, the pay ratio itself and the corresponding disclosure will not provide the basis for an SEC enforcement action, unless the disclosure was made or reaffirmed without a reasonable basis or was provided other than in good faith."
Winston & Strawn LLP

[Guidance Overview]

SEC Provides More Clarity on CEO Pay Ratio
"The Division of Corporate Finance clarified that companies may use a combination of statistical sampling and other reasonable methods in order to identify the median employee.... In addition, the Division of Corporate Finance provided examples of situations where other reasonable methods may be appropriate ... [and] provided examples of other reasonable methods[.]"
Winston & Strawn LLP

[Guidance Overview]

SEC Provides Further Guidance on Pay Ratio Disclosure Rule (PDF)
"The new guidance underscores that companies have broad latitude in complying with the disclosure requirement. The proposed sampling techniques and hypothetical examples will be particularly helpful to companies as they devise strategies for identifying the median employee's total compensation. The key takeaways from the new guidance are summarized [in this article]."
Sidley Austin LLP

Can You Accelerate Payouts Under Your Deferred Comp Plan?
"The termination of a deferred compensation plan involves both termination of employer and employee deferrals (unless otherwise already frozen) and the acceleration of the payment of accrued benefits. Such permitted plan terminations can only occur in one of three ways: in connection with the employer's insolvency, change in control of the employer, or in accordance with the 409A general plan termination rules."
Graydon Head & Ritchey LLP

on the BenefitsLink Message Boards

Section 409(p) Testing: Are These People Still Owners?
"We have an owner who is selling his shares to the ESOP, but the shares will be voted under a 'voting trust' where the trustee votes based on the selling owner's interests (the selling owner is the beneficiary of the voting trust). As the shares are paid off, the voting trust stops applying to the paid-off shares. Is the selling owner still considered an owner for purposes of 409(p) testing? The selling owner doesn't participate in the ESOP, but is related to someone who does, and whether or not the selling owner is still considered an owner could have a big effect on the test."
BenefitsLink Message Boards

Applying Code Section 401(a)(31)(B) -- Include Roth Accounts in Computing the $1,000 Ceiling?
"Does one include Roth accounts in the $1K threshold for 401(a)(31)(B)? Or are they treated separately?"
BenefitsLink Message Boards

Determining Prior Year's Comp Under Regs for Severance Pay Plans
"My question relates to 29 CFR 2510.3-2(b), 'Severance Pay Plans.' The regulation states 'the total amount of such payments does not exceed the equivalent of twice the employee's annual compensation during the year immediately preceding the termination of his service.' What does the phrase 'the equivalent of' mean? Is the DOL referring to the time value of money? In referring to the annual compensation, how is that determined? Is the annual compensation the employees previous year's salary or is it the salary it would have been if the individual had continued working? Essentially I'm asking if anyone knows what they mean by 'usual rate of compensation.' Thank you!"
BenefitsLink Message Boards

Last Day Rule for Match Despite Use of 'Subaccounts' During Plan Year?
"401(k) plan applies the last day rule to the company match. It matches employee contributions each payroll period, but the match is placed (real dollars) in a 'conditional match' subaccount within the employee's plan account. The employee has investment control over the subaccount, which accrues gains and losses. If the employee is not employed on the last day of the year, the subaccount is 'forfeited.' Is this plan design accepted practice now? I might argue on behalf of an otherwise 100% vested employee that his/her accrued benefit includes any amount allocated to the account, that there is no provision anywhere for 'conditional allocations,' that once real dollars are allocated to the subaccount they become part of the employee's accrued benefit, and that removing funds from the subaccount is a prohibited forfeiture under section 411. but I could be wrong..."
BenefitsLink Message Boards

Press Releases

IRI Congratulates Newly Elected Members of the Board
Insured Retirement Institute [IRI]

Connect   LinkedIn logo   Twitter logo   Facebook logo, Inc.
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(407) 644-4146

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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