Retirement Plans Newsletter

October 5, 2017

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Jobs

Client Service Associate (Nonqualified Division)
Milliman
in TX

Regional Client Manager
Ameritas
in CT, MA, Telecommute

Administrative Consultant for Qualified Retirement Plans
PenSys, Inc.
in CA, NC

Client Service Consultant
Beneco
in AZ

Cash Balance Plan Administrator
Cash Balance Actuaries, LLC
Telecommute

Associate Attorney
Well Established Detroit Area Law Firm
in MI

Litigation Attorney
Well Established Detroit Area Law Firm
in MI

Retirement Call Center Specialist
Alerus Financial
in MN

Plan Service Consultant
OneAmerica
in IN

►See 155 Jobs

►Post a Job


Webcasts, Conferences

IRA Reporting Training
October 18, 2017 WEBCAST
Wolters Kluwer

403(b) Prototype Document
October 31, 2017 in MA
FIS Relius Education

Fundamentals Series 06: ADP / ACP Test [2017]
November 6, 2017 WEBCAST
FIS Relius Education

ERISA Pre-Approved and Customized Benefit Plans: Overhauled IRS Procedures and Determination Letter Process
November 14, 2017 WEBCAST
Strafford

Proposed New Audit Requirements for Employee Benefits Plans
November 30, 2017 WEBCAST
American Bar Association Joint Committee on Employee Benefits [JCEB]

►See 167 Upcoming Webcasts and Conferences

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Discussions

New Topics on the BenefitsLink Message Boards

New Comments and Topics

All Topics, Grouped by Forum


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[Guidance Overview]

2018 IRS Mortality Tables Finally Released: What Plan Sponsors Need to Know
"2018 minimum funding results and calculation of PBGC premiums will be significantly affected by use of the new tables, with likely increases in the mid-single digits by percentage, depending on a plan's benefit structure and demographics of its participants. PBGC premium calculations are especially sensitive to this because sponsors will be subjected to variable rate premiums of at least $38 per $1,000 of underfunding on a PBGC basis in 2018, unless a plan has already reached the PBGC variable rate premium cap."
Cowden Associates, Inc.

[Advert.]

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]

403(b) Document Delays, The 'Once in Always In' Rule, and The 'Effective Date Addendum'
"The IRS requires that the 'once in, always in' term be included in the pre-approved [403(b) plan] document.... [M]any employers may not have not applied this rule, over time, consistent with the required plan document term. With the pre-approved document covering practices back to January 1, 2010, plans which adopted this the pre-approved plan with this term automatically included term might immediately have a 'form and operation' problem which would force them into EPCRS.... [T]here can be any number of practices required by the pre-approved document which the employers have not 'practiced' since January 1, 2010."
Business of Benefits

[Guidance Overview]

Hurricane Legislation Grants Retirement Plan Relief
"Plan sponsors must inform participants of their options under the hurricane relief provisions. IRA and employer plan service providers should evaluate forms, systems, and workflow processes to support qualified hurricane distributions, loan exceptions, and potential repayment and rollovers. For example, the legislation states that the [notice] given to recipients of eligible rollover distributions need not be provided with a hurricane-related distribution but other distribution consent and notice requirements still apply."
Ascensus

[Guidance Overview]

Q&A: Acting for Impaired Railroad Retirement Beneficiaries
"[W]hen physical or mental impairments make a railroad retirement annuitant incapable of properly handling benefit payments, or where the [Railroad Retirement Board (RRB)] determines that the interests of the annuitant so require, the agency can appoint a representative payee to act on the annuitant's behalf.... [These] questions and answers provide information for family members, or others, who may have to act on behalf of an annuitant."
U.S. Railroad Retirement Board

New Mortality Rates for Defined Benefit Plans Apply in 2018
"Although there was some dissent among the masses regarding the finalization of these rates, the majority of the pension and actuarial community recognized that increased longevity needed to be incorporated in the calculation of liabilities; and ultimately the IRS determined that these rates published by the Society of Actuaries were the best available for this purpose. The published rates include base mortality rates and a mortality improvement scale. The improvement scale will be updated routinely in future years."
Watkins Ross

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Blockchain Technology Hits the Retirement Plan Industry
"[S]ome of the largest retirement service companies are trying to tap blockchain technology because of its potential to increase efficiency in record keeping, document sharing, transaction settlements, contract execution, and business collaboration. Blockchain is a real time distributed ledger system where every device in the network has a live copy of the ledger."
Bloomberg BNA

Interesting Angles on the DOL's Fiduciary Rule, Part 64
"While advisors may be obligated to recommend investment strategies that are consistent with generally accepted investment theories, a retirement investor can override those recommendations and direct that the account be invested differently. In that case, a fiduciary advisor is well-advised to obtain written directions from the retirement investor about how the investor wants the account to be invested. Armed with that direction the fiduciary advisor's duty is to provide advice within the limits imposed by the retirement investor."
FredReish.com

ERISA Excess Fee Litigation: Waiting for the Deluge
"It's exceedingly easy to gather information on plan fees from 5500 filings. It is in the public domain on the Labor Department website for everyone to see. Participants, vendors and attorneys will find opportunities to use it. If a plan is paying excessive fees someone will find out. Just about any law firm can now get in on this action. Before it was St. Louis-based Schlichter Bogard & Denton. This is no longer true. It doesn't take much to copycat an electronically previously filed complaint and use it for another. This means to me there will be more of these cases."
Fiduciary Plan Governance, LLC

Proposed Legislation Would Kill DOL's Fiduciary Rule, Create Best Interest Standard for Broker-Dealers
"U.S. Rep. Ann Wagner has introduced legislation that would ... repeal the DOL's fiduciary rule; create a best interest standard for broker-dealers; require broker-dealers to disclose compensation they receive and any conflict of interest that exists; limit U.S. [SEC] rulemaking authority under Section 913 of the Dodd-Frank Wall Street Reform and Consumer Protection Act; prevent the Department of Treasury and DOL from promulgating fiduciary regulations on broker-dealers under [ERISA]; and preempt state laws."
LegalNewsLine.com

The Risk of Overlooking Retirement Plan Loan Defaults
"A Wharton study found that $6 billion in loans default annually, and 86% of loans default when participants lose their jobs and are unable to repay. The majority go on to cash out, and when you factor that in, you're looking at over $20 billion dollars lost each year. But it's largely gone unnoticed because only 8% of loan defaults are separately reported on Form 5500."
George White, via PLANSPONSOR

Republican Tax Reform Proposal: Potential Effects on Retirement Savings Policy
"With regard to retirement savings policy, it's not exactly clear what this commitment 'to maintain or raise retirement plan participation of workers and the resources available for retirement' may mean.... If -- as seems likely -- it becomes necessary to find ways to raise revenue to pay for tax cuts, then there is a real possibility that policymakers will look to changes in retirement savings tax policy for 'revenue enhancements.' "
October Three Consulting

Are Your Older Employees Thinking Differently About Retirement?
"Many employers are well aware of their employees' desire and need to work past age 65, but they are woefully slow to act on that awareness.... 69% of employers say most employees at their company could work until age 65 and still not save enough to meet their retirement needs.... Most employers (71%) consider themselves to be 'aging-friendly' by providing growth opportunities, work arrangements, training and tools for employees of all ages. However, ... a gap ... may exist between many companies' self-perception and the reality of ageism in the workplace."
HR Daily Advisor

Improving the Saver's Credit for Low- and Moderate-Income Workers (PDF)
18 pages. "This report reviews the existing structure of the Saver's Credit and proposes several ways to make it more effective; it also discusses the current retirement plan coverage for low- to moderate-income workers and considers a number of ways to improve both the effectiveness and the utilization of the credit.... A series of changes -- some small and others more substantial -- would enable more of the tax credit's target population to benefit from the Saver's Credit and build significant retirement resources."
National Institute on Retirement Security [NIRS]

SEC Chairman Tells Lawmakers SEC Is Drafting Its Own Fiduciary Duty Rule
"The agency is trying to catch up with the [DOL] ... The [SEC] is currently receiving public comments about a fiduciary rule. 'The next step in anything like this would be a rule proposal. We're working on such a proposal,' Mr. Clayton said in an appearance before the House Financial Services Committee."
Pensions & Investments

[Opinion]

South Carolina Can't Afford Its State Pension System
"Gov. Henry McMaster wants to abolish the state's defined-benefit pension system and replace it with a 401(k)-style plan, making state employees responsible for their own retirement income planning. Generations of future South Carolinians who understand what's at stake are turning cartwheels.... Why? Because South Carolina, like most public entities, has created a monster that must be slain."
GreenvilleOnline

[Opinion]

What's Wrong with Third-Party 3(38) Investment Managers?
"[T]here's a significant difference in value between the direct and indirect provision of 3(38) services. A 3(38) that provides its services directly is free from the influence of an entity with the power to highly restrict the available universe of investment options from which an outsourced 3(38) must assemble a plan's investment menu. Who is responsible for such restrictions? In these RFP situations, it's often insurance companies or stockbrokers."
W. Scott Simon, via Morningstar Advisor

[Opinion]

Obama's Fiduciary Rule Is Already Hurting Small Savers. Here's How to Roll It Back
"[The House Committee on Education and the Workforce] recently advanced the Affordable Retirement Advice for Savers Act, which will repeal the fiduciary rule and preserve access to affordable retirement advice. It also amends federal law to require retirement advisers to act in the best interests of their clients. Legislation -- not 1,000 pages of red tape -- is the right way to address an issue with such a widespread impact. This legislation proves we can hold financial advisers accountable without causing millions of Americans to lose access to affordable retirement advice."
Rep. Virginia Foxx and Rep. Phil Roe, via Washington Examiner

Executive Compensation
and Nonqualified Plans

[Guidance Overview]

Helpful Recent SEC Guidance on CEO Pay Ratio Disclosure
"To identify the median employee, companies may use existing internal records, such as tax or payroll records, which reasonably reflect annual compensation, even if those records do not include every element of compensation, such as equity awards widely distributed to employees.... Previous guidance indicated that companies may apply statistical sampling and other methods to identify the median employee. The SEC has clarified that companies are permitted to combine methods, applying the ones that best suit the facts and circumstances."
Morgan Lewis

Discussions
on the BenefitsLink Message Boards

RMDs and Rollovers by Terminated Participant
"I have a participant who is 76. She is retiring 11/30/17. She wants to roll her money to an IRA, and then, before 4/1/18, take the RMD from her IRA. Our procedure is to process the RMD first, and then the distribution. Can anyone point to IRS information that says she can go ahead and roll over her money without taking the RMD and then take it from her rollover? Her financial advisor is pushing us to do it this way."
BenefitsLink Message Boards

Cost of Conversion to a New Investment Platform/Recordkeeper: A Settlor Expense?
"Is the cost of conversion from one investment platform/recordkeeper to another considered a settlor expense? I think not, but want to confirm since it is a Trustee discretionary decision to move the plan's assets."
BenefitsLink Message Boards

Hurricane Irma - Due Date of DC Final Deposit
"If a client's 2016 corporate tax return is on extension from March 15, 2017 to September 15, 2017, normally the client would have until September 14 of 2017 to make the final 2016 contribution deposits such as match, profit sharing and Safe Harbor. Now, with Hurricane Irma relief, the client's corporate return does not have to be filed until January 31, 2018. Does that mean that the client now has up until January 30, 2018 to make the final 2016 contribution deposit?"
BenefitsLink Message Boards

Put a Check Mark on Schedule H, Line 4i(A)?
"When are we required to put a check mark for Schedule H -- Line 4i(a)? The instruction simply states, 'In column (a), place an asterisk (*) on the line of each identified person known to be a party-in-interest to the plan.' Is there a different meaning for 'a party-in-interest' to the plan when it comes to Form 5500?"
BenefitsLink Message Boards

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David Rhett Baker, J.D., Editor and Publisher  davebaker@benefitslink.com
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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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