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[Official Guidance]

Text of 2017 IRS Form 4972: Tax on Lump-Sum Distributions (PDF)
"Use Form 4972 to figure the tax on a qualified lump-sum distribution you received in 2017 using the 20% capital gain election, the 10-year tax option, or both. These are special formulas used to figure a separate tax on the distribution that may result in a smaller tax than if you reported the taxable amount of the distribution as ordinary income."
Internal Revenue Service [IRS]


Original Plan Sponsor Communications Content on Generation Z

Sponsored by EACH Enterprise

Content for communication with 401(k) plan sponsors and advisors demonstrates your understanding of the current generation of workforce entrants (ages 16 to 23), helps you win new business and retain business among employers with a growing workforce.

[Guidance Overview]

PBGC Issues Guidance on 'Active Participant Reduction' Reportable Events
"The guidance clarifies that a plan that files a single-cause event notice is not required to file an attrition event notice at a later date due to the same active participant reduction.... This guidance applies until the PBGC publishes a final rule amending its reportable events regulations."

[Guidance Overview]

Disaster Legislation and Regulatory Update
"The House and Senate passed H.R. 3823, the Disaster Tax Relief and Airport and Airway Extension Act of 2017, on September 28 to provide additional disaster relief for those affected by Hurricanes Harvey, Irma, and Maria. The bill now goes to President Trump for his signature.... The relief provided by the legislation is on top of that already provided by Treasury/IRS, [DOL, and PBGC].
Plan Sponsor Council of America [PSCA]

[Guidance Overview]

Hurricane Relief Summary Charts
Chart of hurricane relief provided by IRS, DOL and PBGC, as of September 29, 2017.
Ferenczy Benefits Law Center LLP

Tips to Keep You and Your Recordkeeper on Track (PDF)
"One of a plan sponsor's many fiduciary responsibilities is to monitor its service providers. Best practices suggest that you and your committee should review your record keeper on, at least, an annual basis.... [C]heck your agreement for provisions for dealing with poor performance. For example, what happens if the record keeper doesn't send out participant statements on time or send out participant checks in a timely fashion? Is there anything in your agreement to make your record keeper accountable?"
Pavilion Advisory Group


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!

Claim Against Related Company for Withdrawal Liability Dismissed by Canadian Court
"The Supreme Court of British Columbia ... [held] that an ERISA controlled group claim fails because the claim raises a question of corporate personality -- namely, whether corporate separateness may be disregarded to impose a plan sponsor's liability on its affiliates -- and that the law of the place of incorporation, rather than U.S. law, applies to such questions. Because the laws of the places of incorporation, British Columbia and Alberta, do not include ERISA, and because ERISA's controlled group provisions were the sole basis for liability, the claim fails." [Walter Energy Canada Holdings, Inc. (Re), 2017 BCSC 709 (S. Ct. B.C. May 1, 2017)]
Latham & Watkins

Dismissal of Case Against Univ. of Pennsylvania Is Good News for 403(b) Plan Sponsors
"Participants in the plan asserted breaches of fiduciary duties arising out of a variety of decisions made by plan fiduciaries at UPenn: locking in the plan to certain TIAA-CREF accounts; allowing TIAA-CREF and Vanguard to serve as their own recordkeepers and use asset-based recordkeeping fees instead of flat, per-person fees; offering some retail class shares, rather than all lower-fee institutional class shares; and permitting some underperforming funds to remain in the plan. The judge dismissed all claims in their entirety." [Sweda v. The Univ. of Penn., No. 16-4329 (E.D. Pa. Sept. 21, 2017]
Verrill Dana LLP

Average 403(b) Fees: How Do Your Plan Expenses Measure Up?
"Smaller plans tended to incur higher costs to run their 403(b) plans. Plans with $1-$10 million in assets experienced total plan costs of 0.91% of assets, almost double the 0.46% costs incurred by non-profits with more than $1 billion assets in their 403(b). Even plans with $100-$250 million in assets, at 0.54%, experienced far lower costs than the smallest plans."

Comparison of Retirement Programs Available to Public School Corporations (PDF)
"This chart outlines the rules for qualified retirement plans only.... [D]ifferent rules often apply to non-governmental tax-exempt employers and for-profit companies.... [A] public school corporation may maintain a grandfathered 401(k) plan that was adopted before May 6, 1986. Since there are very few grandfathered 401(k) plans, this chart does not outline the applicable rules for those plans."
Ice Miller LLP


Why Aren't Advisor Groups More Involved in Efforts by States to Protect Investors?
"State securities regulators have historically been far less conflicted and 'captured' than the SEC, and have been on board with the idea that advisors should manage or avoid conflicts from the beginning. But at present, they don't have anything resembling a unified position on what a fiduciary law should look like. The logical group to propose model state legislation is the Financial Planning Coalition -- made up of NAPFA, the FPA and the CFP Board."
Bob Veres in Inside Information


ERIC Comment Letter to AICPA on Proposed Modification of Auditing Standards for ERISA-Covered Employee Benefit Plans
"[1] The scope of the proposed changes are overly-broad and could discourage the use of limited scope audits. [2] The additional audit requirements change the nature of the audit process and disrupt the relationship between plan sponsors and auditors. [3] The scope of the changes in the Exposure Draft requires an economic analysis to show the economic impact of the proposed changes. [4] Future work on this Proposal should be delayed until the revised Form 5500 is finalized."
ERISA Industry Committee [ERIC]

Benefits in General

Third Circuit Upholds Retirement Plan Administrator's Interpretation of 'Ambiguous' Plan Terms
"[The court determined that] the plan is silent as to how to calculate Final Average Compensation specifically for disabled participants. The court also found that the plan is ambiguous due to its structure, where the relevant plan terms are strewn throughout three Articles of the massive plan document. The court determined that there is nothing unreasonable about the plan administrator's interpretation which harmonizes Credited Service with the calculation of Final Average Compensation." [Dowling v. Pension Plan for Salaried Employees of Union Pac. Corp. & Affiliates, No. 16-1977 (3d Cir. Sept. 15, 2017)]
Roberts Bartolic

Aon Sues Willis Towers Watson, New CFO Over Breaking Non-Compete Agreement
"Willis Towers Watson and its new Chief Financial Officer Michael Burwell, who is scheduled to start Oct. 2, are being sued by rival Aon over allegations that Mr. Burwell violated a two-year non-compete agreement because he had access to Aon trade secrets in his role as a consultant helping restructure the company. The lawsuit ... seeks to prevent Mr. Burwell from working for Willis Towers Watson for two years and is seeking $75 million in damages. It accuses both Willis Towers Watson and Mr. Burwell of violating the Illinois trade secrets act. It also accuses Mr. Burwell of breaching his fiduciary duty and Willis Towers Watson of unfair competition."
Pensions & Investments

Executive Compensation
and Nonqualified Plans

[Guidance Overview]

SEC Relaxes Pay Ratio Rules to Facilitate 2018 Proxy Disclosures
"The SEC expanded the flexibility afforded by the pay ratio disclosure rule. The latest guidance should alleviate some compliance costs and administrative burdens for many issuers.... Now that the pay-ratio rule is confirmed to be in place for reporting in 2018, it is rather unlikely that Congress will take any immediate action that would preclude pay-ratio reporting or otherwise lead the SEC to reconsider the pay ratio rules."

on the BenefitsLink Message Boards

For an Academic Purpose, Will You Share Examples of Good and Bad 408(b)(2) Disclosures?
"I hope to show my students some real-world effects of the 408b-2 rule. To do so, I'd like to show them a contrast of disclosures:

  • one that is short, clear, easy to read, and fulfills the purpose of furnishing useful information to an unknowledgeable fiduciary; and
  • one that is too long, ambiguous, a pain-in-the-neck to read, and difficult to understand.
I'm looking for disclosures addressed to plans smaller than $50 million, and preferably including small and 'micro' plans. Likewise, because the difficult issues often aren't in a TPA's disclosures, I'm looking for disclosures of investment brokers, insurance companies, or recordkeepers that get (and keep) 'revenue-sharing' or indirect compensation."
BenefitsLink Message Boards

401(a)(17) Excess Contributions Corrected Under SCP Subject to 4972 Excise Tax?
"When an employer self-corrects an error of matching contributions calculated on compensation in excess of the 401(a)(17) limit, are those amounts subject to 4972 excise tax? I don't find this addressed in the EPCRS Revenue Procedure. I have never had an IRS auditor ask for this on audit, but someone else in my office is asserting that we need to compute and pay the tax on a Form 5330."
BenefitsLink Message Boards

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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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