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[Official Guidance]

Text of IRS Chief Counsel Memo 201742022: Application of Rule Prohibiting Loans to the Employer from a Section 403(b)(9) Retirement Income Account (PDF)
"A direct loan from the plan to the employer results in a loan or other extension of credit from assets in a participant's retirement income account to the employer. In the case of an indirect loan, such as is described in Situation 1 and Situation 2, an arrangement has been structured so that the employer receives a substantially similar loan or other extension of credit using the assets of the retirement income account as it would have under a direct loan. Accordingly, for purposes of Section 1.403(b)-9(a)(2)(i)(C), both direct and indirect loans are loans or other extensions of credit from assets in a participant's retirement income account to the employer, which cause assets in the retirement income account to be treated as diverted to the employer, violating the exclusive benefit requirement of Section 1.403(b)-9(a)(2)(i)(C)."
Internal Revenue Service [IRS]


A simple, illustrative guide for pension plan sponsors.

Sponsored by Russell Investments

This practical overview for corporate plan fiduciaries is not only a great reference work -- it's a high level guide that makes an excellent training tool for new board and investment committee members.

[Guidance Overview]

What's the Impact of 2018 IRS Retirement Plan Limits?
"Highly-paid participants will now have more of their compensation 'counted' towards qualified plan benefits and less towards non-qualified plans. This could also help plans' nondiscrimination testing if the ratio of benefits to compensation decreases.... This is the fourth year in a row that the HCE compensation limit has been stuck at $120,000.... [E]mployers may find that more of their employees become classified as HCEs.... Plans may see marginally worse nondiscrimination testing results (including ADP results) if more employees with large deferrals or benefits become HCEs. It could make a big difference for plans that were previously close to failing the tests.... [I]ndividuals who have very large DB benefits (say, shareholders in a professional firm cash balance plan) could see a deduction increase if their benefits were previously constrained by the 415 dollar limit."
Van Iwaarden Associates

DOL Proposes 90-Day Delay of Disability Claims Procedures Rules
"Some retirement plans may consider making amendments to avoid having to comply with the special rules for disability claims procedures altogether. Where a plan provides a benefit conditioned on an independent disability finding made by a party other than the plan, such as the Social Security Administration or the employer's long-term disability plan, the claim is not treated as a disability claim. As such, the plan would not have to comply with special disability claims procedure rules."
Michael Best

Liability-Driven Investment Portfolios: Keep Them Bundled
"[P]lan sponsors must decide whether their credit and government allocations will be combined in bundled LDI portfolios or managed separately in unbundled LDI portfolios. Once we consider how an unbundled approach may create opportunity costs as well as challenges related to rebalancing and diminished excess return potential, [the authors] believe the bundled approach offers the better long-term solution."

IRS Work Plan Provides Focus for Examination of Multiemployer Plans
"The work plan states that for multiemployer plans the IRS will 'continue to examine plans that failed to properly calculate retirement benefits affecting service crediting and/or allocation/accruals, failed to make required minimum distributions, and/or failed to adjust benefits when retirement is delayed beyond the Normal Retirement Age' ... Late retirements pose several complex issues, the resolution of which depends on the plan's provisions and the age at which a participant retires."


Join the Pension Rights Center's Celebration of Superheroes!

Sponsored by Pension Rights Center

Join the Pension Rights Center in celebrating 41 years of protecting and promoting retirement security for American workers, retirees, and their families at its Annual Superhero Celebration on Tuesday, November 7, 2017 in Washington DC. Learn more.

Multiemployer Pension Funded Status Improved in First Six Months of 2017 (PDF)
"Multiemployer plan funding as of June 30, 2017, is nearing its best position since the market collapse of 2008. The aggregate funded percentage for multiemployer plans is estimated to have improved to 81% as of June 30, 2017, compared with 77% as of December 31, 2016, reducing the system's shortfall by $21 billion. The estimated investment return for our simplified portfolio for the first six months of 2017 was about 7.6%, far outpacing plans' investment return assumptions. The gap between the funded percentages of critical versus noncritical plans continues to widen."

ESOPs: An Alternative Exit Strategy for Family-Owned Businesses
"Employee stock ownership plans (ESOPs) can be an attractive and tax-favored alternative for a family-owned business looking for an exit strategy. For the owner of a C corporation, proceeds on the gain from the sale of stock to the ESOP can be tax-deferred by reinvesting them in the securities (including both stocks and bonds) of other domestic companies, subject to certain requirements. If such replacement securities are not sold prior to the owner's death, no capital gains tax is ever due on the gain recognized by the sale of the company stock to the ESOP."
Family Business Advocates

Alaska Ironworkers Pension Trust Withdraws Application fo MPRA Benefit Suspension (PDF)
"[T]he Plan hereby withdraws its Application filed on March 30, 2017 for approval of benefit suspension under [MPRA]. The Plan fully intends to file with the Treasury Department a new application for approval of suspension of benefits under the MPRA on or before December 29, 2017."
U.S. Department of the Treasury

Extreme Loss Aversion Is Not a Retirement Strategy
"Someone who is risk averse should be in favor of investments that guarantee a lifetime income. Annuities offer this.... [R]etirees should learn about the various types of investments ... and the various vehicles ... and what the purpose is of each.... Extremely risk averse retirees should avoid companies they don't recognize.... Buy some short-term corporate bonds of companies they are familiar with.... Let them see successes.... Having a road map to the future can alleviate many of the unknowns."

Benefits in General

Employee Benefits Cases in the Supreme Court Since ERISA's Enactment
32 pages. "[In] the Court's last 42 terms [since ERISA's 1975 effective date] ... the Court has issued merits opinions in 125 argued cases and one unargued case directly involving employee benefit arrangements including IRAs, and two additional argued cases substantially implicating these arrangements ... for an astonishing total of 128 decisions.... [T]he Court has been concerned with who can bring claims involving employee benefits, what kind of claims can they bring, what kind of remedies can they seek ... and whether State laws implicating employee benefits will be enforced, as frequently as it has considered substantive issues affecting employee benefits."
Eversheds Sutherland

ERISA Preempts State Law Revoking Beneficiary Designation Upon Divorce
"The court determined that the state law at issue here 'related to' an ERISA plan in that it required the plan administrator to look to state law to determine the recipient of plan payments, rather than to the plan itself. The court concluded that the state law implicates an area of core ERISA concern by abrogating ERISA's requirements that a plan must specify the basis on which payments are to be made, and that plan fiduciaries must make payments to beneficiaries designated by participants or by the terms of the plan." [Jackson v. Parks, No. 17-14 (D. Mont. Sept. 14, 2017)]
Thomson Reuters / EBIA

Workers Willing to Compromise on Salary for the Right Benefits, Culture, and Growth Opportunities
"Benefits are almost as important as culture when considering a job offer, with a signing bonus and financial support for training topping the 'most wanted' list. Employers who offer health and dental, 401k contributions, and paid vacation time are probably not standing out from the crowd. Three-quarters of employers offer health and dental and two-thirds offer 401k and 3+ weeks of paid vacation."
HR Daily Advisor

Executive Compensation
and Nonqualified Plans


Update on Clawback Policy Issues
"[Some practitioners] believe that executives will rebel at attempts to impose a too-strong clawback policy, and that it would not be fair to give the board too much power and discretion over compensation paid out or promised. Clearly, the process of crafting a policy that allows a compensation clawback or forfeiture under appropriate circumstances, while being fair to executives, requires careful deliberation and drafting."
Winston & Strawn LLP

on the BenefitsLink Message Boards

Employer Corrective Contribution Counts Towards $18,000 Limit?
Employer did not use the plan definition of compensation correctly and excluded bonus payments for 2 now-former employees. Sef-correction is being performed after severance from employment. Would the 50% employer corrective contribution count towards the employee's $18,000 annual contribution limit for 2017?
BenefitsLink Message Boards

Looking for Educational Resources on SIMPLE IRAs, SEPs, and Solo 401(k) Plans
I work for a Wealth Management firm, and I have dealt a bit with SIMPLE IRA's, SEP's, and Solo 401(k)'s. I have read alot of the IRS materials on these plans and have executed these plans, but I would like some formal education/guidance on these plans. Are there any educational webinars or exams I could take that would deepen my knowledge?
BenefitsLink Message Boards

Counting Alternate Payees for Purposes of Form 5500 Schedule SB
Line 7 of the Instructions to Form 5500 says: "For pension benefit plans, 'alternate payees' entitled to benefits under a qualified domestic relations order are not to be counted as participants for this line" (emphasis added). But see also Line 3 Column [1] of Schedule SB: "Funding Target/Participant Count Breakdown -- Enter the number of participants, including beneficiaries of deceased participants, who are or who will be entitled to benefits under the plan." There are no mention of alternate payees here. Should they be included?
BenefitsLink Message Boards

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David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager

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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