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[Official Guidance]
Text of IRS Notice 2017-64: 2018 Limitations, Adjusted as Provided in Section 415(d), etc. (PDF)
"Effective January 1, 2018, the limitation on the annual benefit under a [DB] plan ... is increased from $215,000 to $220,000.... The limitation for [DC] plans ... is increased in 2018 from $54,000 to $55,000.... The limitation ... on the exclusion for elective deferrals described in Section 402(g)(3) is increased from $18,000 to $18,500. The annual compensation limit ... is increased from $270,000 to $275,000. The dollar limitation ... concerning the definition of 'key employee' in a top- heavy plan remains unchanged at $175,000... The limitation used in the definition of 'highly compensated employee' ... remains unchanged at $120,000.... The limitation on deferrals under Section 457(e)(15) concerning deferred compensation plans of state and local governments and tax-exempt organizations is increased from $18,000 to $18,500."
Internal Revenue Service [IRS]
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New IRS Mortality Tables for 2018 Bring Host of Concerns for DB Plan Sponsors
"Plans with primarily white-collar populations with longer average longevity may understate their liabilities ... while medium and small plans that have generally lower life expectancy among participants may be locked in to rates that, on average, overstate their plan liabilities.... In order to delay use of the new tables for 1 year, a plan sponsor must conclude that for 2018 use of the new tables would be administratively impracticable or would result in an adverse business impact that is 'greater than de minimis,' and it must notify the plan's actuary of its intent to use the prior mortality tables."
HR Daily Advisor
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District Court Halts Some Portions of Challenge to MIT DC Plan
"[P]laintiffs allege breaches of the ERISA duties of loyalty and prudence arising out of the plan's inclusion of retail class options instead of institutional class options in the funds provided by Fidelity Investments. In addition, plaintiffs allege that Fidelity was paid excessive compensation for its recordkeeping services and that MIT never engaged in a competitive bidding process for those services.... The district court decision spells out a number of key caveats impacting this type of ERISA litigation, explaining why it is dismissing some aspects of the various claims while permitting others to go to a full trial." [Tracey v. Mass. Inst. of Technology, No. 16-11620 (D. Mass. Oct. 4, 2017)]
planadviser
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The IRS Employee Plans Work Plan for 2018: A 'Compliance Checklist' for Plan Sponsors
"With the knowledge the Work Plan provides, plan sponsors and their service providers can work to ward off potential problems likely to draw the attention of the IRS.... These are means the IRS will be using to find problems and to ultimately pursue correction and impose taxes and penalties for noncompliance.... These are the ways the IRS has found to work smarter in 2018: Continuing IRS effort to make plan sponsors smarter & reduce non-compliance.... Making the Voluntary Compliance Program (VCP) more efficient.... Data driven approaches to plan examinations are being refined.... Reliance on referrals continues."
Fiduciary Plan Governance, LLC
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GAO Report on the Nation's Retirement System: A Comprehensive Re-Evaluation Is Needed to Better Promote Future Retirement Security
"The U.S. retirement system, and the workers and retirees it was designed to help, face major challenges. Traditional pensions have become much less common, and individuals are increasingly responsible for planning and managing their own retirement savings accounts, such as 401(k) plans. Yet research shows that many households are ill-equipped for this task and have little or no retirement savings. In this special report, GAO examines these challenges, drawing from prior work and others' research, as well as insights from a panel of retirement experts on how to better ensure a secure and adequate retirement, with dignity, for all." [The special report is GAO-18-111SP, Oct 18, 2017 (173 pages). See also a video entitled 'Retirement Security Challenges']
U.S. Government Accountability Office [GAO]
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Saving for the Future: Profiles of Current Business Practices (PDF)
18 pages. "66% of American workers had access to a retirement plan from their employer ... in 2016.... [O]nly 48% of American workers were offered a retirement plan in 1999.... 62% of employees (more than 95 million participants) were eligible to participate in [DC] plans in 2016.... [A]mong employers that made both profit-sharing and 401(k) contributions, the average employer contribution was 5.5% of employee pay. [DB] plans are also still prevalent among workers, with over 41 million private sector participants in the U.S."
U.S. Chamber of Commerce
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Workers Want Lifetime Income But Aren't Sure How to Get It
"When it comes to retirement income, 62 percent of Americans say they would pick $2,700 a month for the rest of their lives and 30 percent say they would prefer $500,000 all at once... [O]nly 16 percent say they're very familiar with annuities and 51 percent say they're not familiar with them.... Employers offering retirement plans should be aware of this disparity and try to use it to inform how they talk about saving for retirement and spending money in retirement[.]"
Bloomberg BNA
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Five Important Ages for Retirement Planning
"At age 50, your employees will become eligible to save more the standard amount in their 401(k) and IRA accounts ... By waiting until the age of 59-1/2 to take a withdrawal, your employees will get to keep an additional 10% of their money.... Your employees will be able to sign up for Medicare during a seven-month period starting three months prior to their 65th birthday.... Baby boomers born between 1943 and 1954 will be eligible to begin claiming the full Social Security benefit they've earned at age 66.... Whether it's needed or not, they'll be required to take distributions from their traditional IRAs, traditional 401(k)s and Roth 401(k)s after age 70-1/2."
Voya
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Kentucky Pension Crisis: Governor's Proposal Would Move Workers to 401(k) Plans
"The plan protects the benefits of current retirees ... But it cuts benefits of current employees and teachers in some ways. And many leaders of employee and retiree groups raised the prospect that if the changes become law they would be challenged in court -- particularly over a plan that would move current teachers and most public employees into 401(k)-type plans after 27 years of service."
The Courier-Journal
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Financial Literacy among U.S. Hispanics (PDF)
20 pages. "Financial literacy programs that separately address U.S.-born and foreign-born Hispanics are likely to experience better results for both groups. As growth in the U.S. Hispanic population is increasingly driven by births, the gap in Hispanic financial literacy relative to the general population will likely decrease.... [E]qualization at a higher overall level of financial literacy for all should be the objective."
TIAA Institute
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[Opinion]
Pension Rights Center Comments to IRS on 2017 Instructions for Form 8955-SSA (PDF)
"[T]he requirement that plans furnish a single statement to vested participants leaving employment that includes all of the information required by IRC Section 6057(a) is a vitally important protection that helps ensure that participants receive the benefits they have earned. For this reason the Pension Rights Center recommends that Question 21 of the Form 8955-SSA FAQs be withdrawn and that the instructions to the Form 8955-SSA be modified to inform plan administrators about this change."
Pension Rights Center
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Benefits in General
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Top Technology Takeaways for Benefit Pros
"Tools to help employees answer the question 'What benefits does someone like me need?' are becoming increasingly crucial to making sure employees aren't exposed to more risk than they can handle.... [Y]ou have an opportunity to use new technologies to take a more strategic approach to benefits.... [D]ata visualization and smart reporting tools are so important, because you can't spend your entire day poring over spreadsheets trying to figure out what's going on. You need clear, immediate answers."
Benefitfocus
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Terminating a Safe Harbor Plan in Mid-Year
"If a Safe Harbor plan is terminated mid-year, what are the ramifications? Does testing (ADP, ACP, and Top Heavy) have to be done for a Safe Harbor plan that terminated mid-year? Also, does it matter what the reason is for termination? For instance, does it matter if the plan simply terminated or if it terminated due to a merger into another plan?"
BenefitsLink Message Boards
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What Is 'Base Salary' for 409A Purposes?
"Is there a regulation that defines 'base salary' for purposes of a 409A elective account balance plan? I typically use a definition in my plan docs that describes what is versus what is not considered base salary, but I'm working with a takeover plan where the document does not define base salary. The client continues to have fluctuations in contribution amounts due to PTO donations. They have always considered PTO as part of base salary. Is there any 409A standard definition or some other basis for me to look to?"
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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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