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Automatic Enrollment: Are You Sure It's Right for Your Small Business 401(k) Plan?
"While automatic enrollment can be a great tool for a 401(k) plan to increase employee participation, plans that don't need the help should avoid the feature. That's because it adds annual administration responsibilities that can be expensive to fix if done improperly. If you're considering automatic enrollment for your 401(k) plan, you'll want to understand these requirements to determine whether feature's benefits will make them worthwhile."
Employee Fiduciary
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Some Small Business 401(k)s Could Vanish Under Tax Plan 'Glitch'
"Under the proposed tax plan, retirement plan contributions from pass-through small-business owners would be deductible against the 25 percent tax rate, but could be taxed at the individual rate of 35 percent when the 401(k) funds are withdrawn.... If this isn't fixed, small-business owners would see a much bigger benefit in taking the money they would have contributed to their employees' retirement plans and investing it on a capital gains basis."
Bloomberg BNA
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How Policymakers Can Restore the Role of Lifetime Income in Workplace Retirement Plans (PDF)
36 pages. "The U.S. private retirement system is intended to help Americans accumulate financial resources beyond Social Security for retirement.... Over the past 25 years, DC plans that enable employees to save in the workplace have become the growth engine of the U.S. retirement system.... Many agree that today's system needs significant improvement to close three key gaps. In two, the coverage gap and the savings gap, policymakers are implementing new strategies. In the third, the guarantee gap, there has yet to emerge policy or regulatory consensus on reform."
TIAA
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The Pension Plan Underfunding Dilemma: Analyzing the Trends
"While conditions differ somewhat by plan size and by industrial sector, companies on average are currently in a holding pattern: Plan assets may be increasing as capital markets improve, but liabilities are rising as well, as longer-term interest rates hold to near historical lows. Unfunded pension liabilities are more of a concern, however, as in 2016 they represented a greater portion of company net income, ... representing a greater potential drain on company financials."
Conning
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[Advert.]
Reforms, Regulations & Retirement Realities
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!
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House and Senate Bills Would Provide Loans for United Mine Workers Pension Fund
"Bipartisan legislation creating an emergency loan program allowing the United Mine Workers of America 1974 Pension Plan, Washington, to avoid insolvency was introduced Tuesday in the House and Senate. As of June 30, 2016, the pension fund had $4.1 billion in assets and $6.17 billion in liabilities, but with more than 10 times as many retirees as active participants, it is only 39.8% funded by actuarial standards."
Pensions & Investments
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Latinos Seeking Retirement Planning Assistance from Employers
"More than half (71%) of middle-income Hispanics feel they are behind on preparing for retirement as opposed to 63% of the general population ... 63% of Latinos wish their employers would provide a greater degree of education on saving for retirement."
PLANSPONSOR
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Better Budgeting with the IRS RMD Table?
"[W]hile the IRS RMD [strategic withdrawal plan (SWP) may be a tad simpler than the Actuarial Approach, ... the more exact actuarial calculations is definitely worthwhile and can improve retirement outcomes even more.... [1] The IRS RMD SWP is quite conservative; [2] SWPs frequently do not coordinate well with other sources of retirement income; [3] SWPs generally do not adequately recognize non-recurring expenses in retirement and do not anticipate different rates of increase in future recurring expenses; [4] SWPs generally don't permit 'budget shaping' to meet individual retirement goals, and [5] SWPs generally don't do a particularly good job of helping you with pre-retirement planning."
Ken Steiner, FSA Retired
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[Opinion]
Why You Can't Be 'Three-Quarters of a Fiduciary'
"[T]he range of outcomes on fiduciary rulemaking at the Labor Department, SEC -- and in the Certified Financial Planner Board of Standards' proposed conduct standards -- [are coming into] focus. Two main and disparate outcomes stand out. One comprises 'suitability' rules and more disclosures and falls short of fiduciary duties for retail investors. The other comprises fiduciary duties to reasonably ensure conflicts are managed and mitigated.... Managing and mitigating conflicts is essential to fulfilling fiduciary requirements, not just desirable or an elective duty ... The present lack of guidance virtually assures that many CFPs will not address conflicts appropriately."
Institute for the Fiduciary Standard
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Benefits in General
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[Guidance Overview]
DOL Final Regs on Disability Claims Procedures: January 1 Implementation May Be Best Practice
"Despite the pending OMB review, because January 1, 2018, is quickly approaching, ... plan sponsors [should] review their claims procedures, health and welfare plan documents, retirement plan documents, summary plan descriptions (SPDs), disability claims and appeals denial notices, and any other forms and documents containing claims procedure information, and update them to comply with the Final Rule. Although it might be possible to retroactively amend plan documents after January 1, 2018, [the authors] suggest completing any necessary updates by January 1, 2018, to ensure full compliance."
Nixon Peabody LLP
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[Guidance Overview]
Disaster Relief Issued for Employee Benefit Plans (PDF)
"[This article] provides an overview of the federal agencies' employee benefit plan-related guidance to date, along with a summary chart. Although the guidance offers relief to those directly in the covered disaster areas, it also applies some relief to retirement plans with participants in other parts of the country with relatives in the disaster areas."
Milliman
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Tax Reform Might Not Spare Employee Benefits
"The Republican framework for tax reform that the White House unveiled last week does not propose specific changes to how employer-sponsored benefit plans are taxed, but that doesn't mean Congress won't choose to do so when it crafts legislation.... While eliminating current deductions to offset lower tax rates could prove tempting to Congress, there also may be opportunities to improve the tax treatment of some employee benefits[.]"
Society for Human Resource Management [SHRM]
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Executive Compensation
and Nonqualified Plans
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The Trump/GOP Tax Reform Framework: What It Means for Stock Compensation
"[T]he proposed changes that are likely to have an indirect impact on stock compensation include: simplification of individual income tax rates; elimination of the AMT; [and] elimination of the estate tax. Notably, the framework proposes to give Congress the prerogative to create a higher top income tax rate for the wealthiest individuals, in addition to the three tax rates presented. That would almost certainly apply to executives with stock compensation."
myStockOptions.com
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Discussions
on the BenefitsLink Message Boards
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Partial Plan Termination Under These Facts?
"A very large plan with 3,300 or so participants terminates 500 participants (15.1% of the plan size) in 2016. The auditor asks the TPA whether or not this constitutes a partial plan termination and the answer from the TPA is no, since the termination represented less than 20% of the participants in the plan. However, the auditor is aware that an additional 700 employees (25% of the remaining participants) have/will be terminated in 2017. Therefore, knowing what the auditor knows, is there a partial plan termination for 2016?"
BenefitsLink Message Boards
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Handling Remaining Forfeitures Even After Applying Trust's Forfeitures Account to Fees and Employer Contributions
"Plan document says profit sharing forfeitures are to be used to pay expenses, or reduce employer contributions. Plan Sponsor declared $0 profit sharing contribution for last year, but there remains a balance after payment of fees. Can that balance remain in the forfeiture account until a contribution is declared? Perhaps a contribution for that amount should be declared for 12/31 of last year equal to the forfeiture account balance at that date? With no actual deposit occurring, would there be any affect on Plan Sponsor's non-retirement plan accounting?"
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BenefitsLink.com, Inc.
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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 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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