Retirement Plans Newsletter

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Retirement Plan Administrator
Fringe Benefits Design, Inc.
in MN

Retirement Plan Consultant
The MandMarblestone Group llc
in PA, Telecommute

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Webcasts, Conferences

Intermediate IRA Training Part 1
October 10, 2017 WEBCAST
Wolters Kluwer

Intermediate IRA Training Part 2
October 12, 2017 WEBCAST
Wolters Kluwer

Fee Equalization in 401(k) Plans
October 19, 2017 in CA
Western Pension & Benefits Council - Orange County Chapter

Bulletproof Your 401(k)
November 2, 2017 in MA
New England Employee Benefits Council

Introduction to IRAs
November 16, 2017 WEBCAST

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►See 1287 Recorded Webcasts


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New Comments and Topics

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[Guidance Overview]

Interesting Angles on the DOL's Fiduciary Rule, Part 63
"In order to comply with BICE, the supervisory entity and the advisor must satisfy the three Impartial Conduct Standards: the best interest standard of care; no more than reasonable compensation; and no materially misleading statements. It is commonly believed that BICE requires satisfaction of only those three conditions. However, that is not the case. There is a fourth, and less well-known, requirement."

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Standard Items Appearing in an Investment Policy Statement
"The [investment policy statement (IPS)] serves as a policy guide that can offer an objective course of action to be followed when emotional or instinctive responses might otherwise motivate less prudent action.... The IPS should be written to allow fiduciaries latitude to use their best judgment based upon a given set of circumstances. Rigid investment policies that are not followed could be used against fiduciaries in a court of law."
Strategic Benefit Services

How to Evaluate a Target Date Fund's Glide Path
"Choose a glide path, not a target date.... Study the fund's holdings.... Look for anomalies.... Know who's in charge."
U.S. News & World Report

2018 Retirement Plan Limits Seek New Heights
"With both the July and August rates in hand, there is little doubt that we will see some increases in the benefit limits for 2018 ... From time to time, we have seen the CPI-U retreat slightly, but the September figure would need to drop back to its level in January to eliminate the projected increases [shown in this article]."

Tax Reform Could Undermine Incentives for Small Business Retirement Plans
"An outline of the Republican tax reform plan ... includes a proposal to cap the tax rate on small business 'pass-through' income at 25%.... [M]any of these businesses may reconsider adopting or maintaining a qualified retirement plan because of significant financial disincentives woven into the fabric of the tax reform proposal. These disincentives arise because of the difference between the 25% maximum 'pass-through' rate and the 35% top rate on 'ordinary income' (as well as the favorable tax rate on capital gains income at 20%)."
American Society of Pension Professionals & Actuaries [ASPPA]


Reforms, Regulations & Retirement Realities

Sponsored by ASPPA

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Millennials and Retirement Planning (PDF)
24 pages. "Millennials want flexibility and choice during retirement.... 50 percent believe retirement means being able to decide whether, or how much, to work ... Only one in four Millennials believe Social Security will provide meaningful income during their retirement years, versus 53 percent who believe they will realize meaningful income from a workplace retirement account ... Millennials are risk-averse: only one in five consider themselves 'high risk' investors, and only 22 percent would invest in a financial product that offers a high potential return but carries a substantial risk of investment loss[.]"
Insured Retirement Institute [IRI]

Employee Contributions to Public Pension Plans (PDF)
10 pages; Sept. 2017. "[By] providing a consistent and predictable stream of revenue to public pension funds, contributions from employees fill a vital role in financing pension benefits. Reforms made in the wake of the 2008-09 market decline included higher employee contribution rates in many states. This issue brief examines employee contribution plan designs, policies and recent trends."
National Association of State Retirement Administrators [NASRA]

Not-For-Profit Plan Sponsors and Participants Could Use More Lifetime Income Education
"More than half (59%) of plan sponsors in the not-for-profit sector are concerned that employees will run out of money in retirement... [T]he top concern among sponsors is that workers would delay retirement due to inadequate savings (64%).... [L]ifetime income options across the board can be very complicated for several participants to comprehend.... [P]lan sponsors can benefit from a targeted, holistic approach to educating employees around key aspects of their retirement plans, including annuities as investment options."

Westinghouse DB Plan Short $937 Million If Terminated, PBGC Says
"[Westinghouse] could wind up having to put $937.4 million into its defined benefit plan if the bidder for the bankrupt company declines to assume the plan ... Westinghouse filed for Chapter 11 bankruptcy on March 29 ... On Aug. 29, PBGC filed a claim for the amount it calculated would be due if the pension plan were terminated and transferred to the PBGC."
Pensions & Investments

Testimony of SEC Chairman to Senate Committee on Banking, Housing and Urban Affairs: 'Oversight of the SEC'
"The SEC's mission to protect investors, maintain fair, orderly and efficient markets and facilitate capital formation is deeply engrained throughout our offices and divisions.... [O]ur analysis starts and ends with the long-term interests of the Main Street investor; or as I call them, 'Mr. and Ms. 401(k).' At a time when greater responsibility is shifting to Main Street investors to save for their own retirement, I am confident that this is the correct metric for our analysis of success in meeting our tripartite mission. If Mr. and Ms. 401(k) are able to invest in a better future, then the SEC is serving them and our markets well."
U.S. Securities and Exchange Commission [SEC]


Will 401(k) Plans Be 'Rothed'?
"[T]he Democrats have two good responses. One is the valid criticism that switching 401(k) plans from being tax-protected now to tax-protected later consists of kicking the fiscal can down the road. The action only modestly increases federal revenues over the long haul.... The second assertion ... is that in moving to a Roth 401(k) approach, the GOP would take from the middle classes to give to corporations.... [T]hat is not correct; the proposal delays the 401(k) tax benefit to employees but does not eliminate it. But who said that successful political claims must be accurate?"
John Rekenthaler, in Morningstar Advisor

Benefits in General

[Guidance Overview]

Text of IRS IR-2017-160: Recap of Key Tax Relief Provisions Available Following Harvey, Irma and Maria
"[The IRS is providing this] rundown of key tax relief that has been made available to victims of Hurricanes Harvey, Irma and Maria. In general, the IRS is now providing relief to individuals and businesses anywhere in Florida, Georgia, Puerto Rico and the Virgin Islands, as well as parts of Texas. Because this relief postpones various tax deadlines, individuals and businesses will have until Jan. 31, 2018 to file any returns and pay any taxes due."
Internal Revenue Service [IRS]

What Will the Independent Workforce Look Like in 2027? (PDF)
"In 2027, more than half of the workforce will be, or will have been, an independent.... Independents will cycle in and out of traditional employment ... People will buy results, not labor ... Independents will team up to get maximum results.... Gen Z will become the most independent generation yet.... Traditional 'Retirement' will no longer be the goal."
MBO Partners

Executive Compensation
and Nonqualified Plans

[Guidance Overview]

SEC Issues Pay Ratio Guidance
"Although the interpretive release and the new guidance provide issuers with increased flexibility and helpful examples, they all but eliminate any hope that the SEC will delay implementation of the pay ratio disclosure rule. [A table] summarizes the key takeaways from the September 21st publications and, where applicable, the conforming changes to the previously released C&DIs."
Shearman & Sterling LLP

[Guidance Overview]

Pay Ratio Clarifications: SEC Adopts New Guidance
"The Staff provided three hypotheticals, which are summarized in [a table in this article] ... The Staff noted that some of the techniques ... might be more suitable for larger companies with more complex workforces, and that the hypotheticals are not meant to suggest that companies should follow any particular approach. As further noted in the Staff guidance, simpler approaches to determining the pay ratio may be appropriate in many cases."
Nixon Peabody LLP

SEC's New Guidance on CEO Pay Ratio Emphasizes Flexibility and Reasonableness
"The SEC guidance fell short for any companies hoping for more drastic change, such as relief from the requirement to include their non-US employees in the employee pool when determining the median employee. However, the Interpretive Release clarifies that companies may use appropriate existing internal records in determining whether the 'de minimis exemption' is available to permit exclusion of employees who are outside the United States in an amount up to 5% of total employees."
Baker McKenzie


SEC Eases Compliance with Pay Ratio Rule
"[T]he relaxed standard for calculating pay ratios certainly does not make them more comparable from company to company.... [T]he SEC has stated that the purpose of the pay ratio is not to facilitate such comparisons but 'to allow shareholders to better understand and assess a particular registrant's compensation practices.' Still, it's very possible that those with the highest ratios will suffer negative consequences such as unwanted press coverage, protests, boycotts, or negative ad campaigns."

on the BenefitsLink Message Boards

Applying the 402(g) Limit When Plan Sponsors Are Unrelated
"An employee participates in two unrelated plans that we administer. We see that he deferred $24,000 under Plan A, and $350 under Plan B. My original thought was to distribute the $350 as a 402(g) error. But, because the deferrals are under two unrelated plans, do I need to get the employee to specify which plan is to make a refund?"
BenefitsLink Message Boards

Press Releases

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David Rhett Baker, J.D., Editor and Publisher
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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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