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[Official Guidance]

Social Security Announces Benefit and Wage Base Increases for 2018
"The 2.0 percent cost-of-living adjustment (COLA) will begin with benefits payable to more than 61 million Social Security beneficiaries in January 2018.... [T]he maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $128,700 from $127,200. Of the estimated 175 million workers who will pay Social Security taxes in 2018, about 12 million will pay more because of the increase in the taxable maximum."
U.S. Social Security Administration [SSA]


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[Guidance Overview]

Final Rule on Mortality Tables for Defined Benefit Plans Issued (PDF)
"The final rule generally is applicable for plan years beginning on or after Jan. 1, 2018, but also provides a limited one-year transition period (to Jan. 1, 2019), in certain circumstances.... Also released was Revenue Procedure 2017-55, providing instructions to obtain IRS approval of plan-specific mortality tables. Although the final rule is aimed at single-employer DB plans, its mortality assumptions are also used to determine 'current liability' for multiemployer pension plans and cooperative and small employer charity (CSEC) plans."

[Guidance Overview]

Hurricane Relief Legislation for Retirement Plans
"[W]ith the Disaster Tax Relief and Airport and Airway Extension Act, Congress has provided both for hardship distribution tax relief and more generous participant loan rules for participants whose principal abodes were in one of the declared disaster areas for Hurricane Harvey, Hurricane Irma or Hurricane Maria at the time that the respective hurricane hit."
Kilpatrick Townsend

Employee Benefit Plans: Mistakes and Summary of Available Correction Programs
"Employee benefit and retirement plans are required to comply with a number of complex laws and regulations, and failure to do so can result in significant penalties and/or disqualification of a plan.... Despite best intentions different plan errors can occur. The good news is that there are correction program options available for plan sponsors without sacrificing the qualified status of a plan."
WithumSmith+Brown, PC

Bill to Strike Fiduciary Rule Passes House Panel
"The Protecting Advice for Small Savers (PASS) Act of 2017, which aims to repeal the [DOL] conflict of interest rule, has passed the House Financial Services Commission. The bill seeks to establish its own best-interest standard for broker/dealers, while moving all fiduciary rule-making powers to the [SEC] and away from the DOL. It also means to erase 'related prohibited transaction exemptions published April 8, 2016.' "


Phased Retirement Programs: Exploring the Issues

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Oct. 27 webinar. Learn practical and legal advice for implementing a phased retirement program. Identify the situations in which phased retirement may be beneficial, structure arrangements in such a way as to avoid the practical and legal pitfalls.

U.S. Bank Wins Appeal Over Alleged Pension Plan Mismanagement
"U.S. Bank N.A. defeated an appeal by pension plan participants who sought to revive a proposed class action challenging the plan's allegedly risky investments, which the participants say caused a $1.1 billion drop in assets in 2008. Because the plan subsequently became overfunded, mainly after U.S. Bank contributed nearly $311 million, the participants lacked standing to sue under [ERISA], the U.S. Court of Appeals for the Eighth Circuit held[.]" [Thole v. U.S. Bank, N.A., No. 16-1928, (8th Cir. Oct. 12, 2017)]
Bloomberg BNA

St. Joseph's Healthcare Settles Challenge to Church Plan Status
"The agreement calls for St. Joseph to contribute $42.5 million within 60 days. If funding becomes insufficient to pay benefits over the next seven years, St. Joseph's must guarantee to ensure that all accrued benefits are paid. Those benefits are protected for seven years if the plan is amended or terminated, or if it is merged with another plan. Plan amendments call for the plan to be closed by Dec. 31, 2018."
Pensions & Investments

ERISA Industry Committee Files Lawsuit Against OregonSaves State-Run Retirement Plan
"ERIC believes OregonSaves imposes unnecessary reporting requirements that infringe on employers' ability to offer ERISA-qualified retirement plans and that such requirements are in violation of federal law. Therefore, ERIC is seeking relief by requesting an injunction against only the reporting requirement OregonSaves imposes on employers that already provide a retirement plan."
The ERISA Industry Committee [ERIC]

Phillips 66 Retirees Say 401(k) Plan Should Drop ConocoPhillips Stock Option
"Plan participants have funneled more than $1 billion into ConocoPhillips stock, representing about 25 percent of the plan's total assets. Many more have invested their retirement savings in Phillips 66 stock. Taken together, plan participants have put more than half their retirement assets into the stock funds of the two energy companies."
Houston Chronicle

Over a Quarter of Seniors Say Retirement Is Worse Than Expected
"The good news is that the reasons people gave for being unhappy with retirement were largely financial -- and therefore preventable. Of the 28% percent of retirees who are unhappy, 78% cited income as a reason, and 76% blamed an increased cost of living.... [T]here's a disconnect between expectations and reality for many unhappy retirees, particularly because they overestimate how much they'll receive in Social Security benefits and underestimate how much they'll pay in healthcare costs."
Motley Fool


Economic Policy Institute Comment Letter to SEC on Possible Fiduciary Rule
"While we recognize that the SEC has an important role in setting the standards that apply to broker-dealers and investment advisers, many of the questions you ask were satisfactorily answered by the [DOL], the Council of Economic Advisors (CEA), consumer advocates, and other experts representing the interests of retirement savers who submitted comments and testified in the process of crafting the DOL fiduciary rule.... We urge the SEC to build on the DOL rule addressing conflicts of interest that harm retirement savers to extend protections to other investors."
Economic Policy Institute


The Pension Crisis Is a Myth, Part Five
"The most common argument against teacher pensions is that they reward teachers who stay the longest and don't benefit short-term teachers. The truth is, while teachers who commit to the profession for the long-term will earn the greatest benefit from their pension, the majority of teachers, regardless of years of service, will be better off in a pension rather than a 401(k)."
National Public Pension Coalition


Bad News: Your 401(k) Won't Give You a Decent Retirement
"A new survey ... demonstrates ... that 401(k) plans are destined to fail millions of Americans. They're not offered by enough employers, they're not taken up by enough workers, and for most people, their balances aren't large enough to provide for a decent retirement. All these factors weigh most heavily on middle- and lower-income workers, the segment in which the participation rate and balance accumulation are disproportionately low."
Michael Hiltzik, in the Los Angeles Times

Benefits in General

[Official Guidance]

Text of IRS IR 2017-172: Disaster Relief for Victims of California Wildfires (PDF)
"Currently, the IRS is providing relief to seven California counties: Butte, Lake, Mendocino, Napa, Nevada, Sonoma and Yuba. Individuals and businesses in these localities, as well as firefighters and relief workers who live elsewhere, qualify for the extension. The agency will continue to closely monitor this disaster and may provide other relief to these and other affected localities."
Internal Revenue Service [IRS]

[Guidance Overview]

DOL Publishes Proposed Rule to Delay Implementation of New ERISA Disability Claims Regs
"[Some of the information] the DOL wants to consider ... [1] the number of disability claims that are filed and denial rates for such claims ... [2] how often plans rely on new or additional evidence or rationales during the claims review process ... [3] loss ratios and the breakdown of expenses (claims, sales, claims processing, etc.); [4] aggregate, average, and median benefits paid and ages of claimants; [5] the projected litigation costs associated with the new procedural requirements for disability claims provided in the Final Rule; [6] the number of new claims that will be granted that, but for the provisions in the Final Rule, would have been denied, and the value of those benefits[.]"
Lane Powell PC

President Trump Nominates Preston Rutledge to be an Assistant Secretary of Labor, Employee Benefits Security Administration
"Mr. Rutledge currently serves as senior tax and benefits counsel on the Majority Tax Staff of the U.S. Senate Finance Committee where his responsibilities include employee benefits, retirement issues, tax-exempt organizations, health tax issues, and the tax provisions of the [ACA]."
The White House

Fake Insurance Tax Form Scam Aims at Stealing Data from Tax Pros, Clients
"There may be variations but here's how one scam works: The cybercriminal, impersonating a legitimate cloud-based storage provider, entices a tax professional with a phishing email. The tax professional, thinking they are interacting with the legitimate cloud-based storage provider, provides their email credentials including username and password. With access to the tax professional's account, the cybercriminal steals client email addresses. The cybercriminal then impersonates the tax professional and sends emails to their clients, attaching a fake IRS insurance form and requesting that the form be completed and returned."
Internal Revenue Service [IRS]

IRS Warns Taxpayers, Tax Pros of New E-Services Scam
"The scam email claims to be from 'e-Services Registration' and uses 'Important Update about Your e-Services Account' in the subject line. It states, in part, 'We are rolling out a new user agreement and all registered users must accept its revised terms to have access to e-Services and its products.' It asks the individual to review and accept the agreement but takes them to a fake site instead."
Internal Revenue Service [IRS]

Loose Language Makes Second-Level Appeal a Right, Not an Obligation
"The plan administrator asserted that the lawsuit was premature because the claimant had not completed the plan's required second-level appeal to the appeals committee and thus had not exhausted her administrative remedies ... The claimant's appeal was made to -- and denied by -- a contracted claims administrator, not the committee. The court concluded that the claimant's suit was permitted because nothing in the plan's communications expressly required second-level appeals or an appeal to the committee. The court's analysis focused on the summary plan description (SPD) and the letter denying the claimant's appeal." [Laura B. v. United Health Group Co., No. 16-1639 (N.D. Cal. Aug. 25, 2017)]
Thomson Reuters / EBIA

Federal District Court Holds the Ministers Housing Allowance Unconstitutional (PDF)
"Code section 107(2) provides that a minister may exclude from his or her taxable income 'the rental allowance paid to him as part of his compensation ...' Historically, the IRS has interpreted this to apply to deferred compensation as well, so this could have impact on church retirement plans." [Gaylor v. Mnuchin, No. 16-215 (W.D. Wisc. Oct. 6, 2017)]
Groom Law Group

on the BenefitsLink Message Boards

Employment Contract Prohibits Physician-Employee from Participating in 401(k) Plan
"A client let it slip today that the employment contract for two of their new employees prohibits them from participating in their safe harbor match 401(k) plan. At their request, the plan (effective 1/1/16) has immediate eligibility and no excluded employees. So, both employees are participants. Both are non-owner doctors hired late enough in 2017 year that they will be NCHEs for both 2017 and 2018. I'm trying to sort though potential problems. So far, I have: 1.401(k)-3(c)(6)(i) says it's not a safe harbor match if there are restrictions on NHCE deferrals other than those listed. This doesn't fit any of the allowed restrictions, so I read it as goodbye safe harbor. I haven't seen the employment contract, but I will be shocked if it contains a one-time irrevocable election under 1.401(k)-1(a)(3)(v). Besides, the plan does not allow such an election. So, it appears we either have an operational failure or the employment contract provision is a CODA. Does anyone see anything I missed, or have any additional comments?"
BenefitsLink Message Boards

What 1099-R Code for Rolling Over Qualified Plan Assets Into a Roth IRA?
"What code is used on Form 1099-R when rolling over pre-tax qualified plan assets to a Roth IRA? I could not locate any reference in the 1099-R Instructions."
BenefitsLink Message Boards

ESOP: Allocation of Dividends on Basis Other Than Share Balance?
"Does anyone have an ESOP client (unleveraged) that allocates dividends on any basis other than share balance (e.g. comp or hybrid). If so, has the client survived an IRS/DOL examination without challenge? We have one takeover client that allocates dividends based on comp (and am anecdotally aware of others that do so). While the client negotiated the allocation language with the IRS and was issued a favorable DL, the plan hasn't been subject to a more rigorous audit/examination. Grateful for any insights and comments!"
BenefitsLink Message Boards

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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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