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DC Plan Administrator
Pelion Benefits, Inc.
in NC

Quality Control Specialist
My Benefits, LLC
in GA, Telecommute

DC Plan Administrator
The Benefit Advantage

401(k) Plan Administrator
Retirement Planners
in VA, Telecommute

401(k) Administrator
Blue Ridge ESOP Associates
in VA, Telecommute

ESOP Administrator
Blue Ridge ESOP Associates
in VA, Telecommute

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[Official Guidance]

Text of OPM Final Regs: Federal Employees' Retirement System; Government Costs
"The Office of Personnel Management amends this rule to clarify the manner OPM uses for determining a supplemental liability under the Federal Employees' Retirement System (FERS), and to clarify the process by which the U.S. Postal Service (USPS) and the U.S. Department of the Treasury may request reconsideration of OPM's valuation of the supplemental liability. The rule also clarifies the employee categories OPM uses to compute the FERS normal cost percentages. The rule also amends the definitions of actuary, present value factor, and actuarial present value to ensure these definitions are uniform and appropriate."
Office of Personnel Management

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[Guidance Overview]

IRS Issues Final Rule on Mortality Tables for Defined Benefit Plans
"The updated mortality tables reflect improvements in mortality since the last issuance of the tables in 2008 and, thus, may increase minimum funding obligations for sponsors of defined benefit plans. Increased longevity built into the updated tables would also boost lump sum payouts for most defined benefits plans, causing larger cash outflows from the plans. The final rule is generally applicable for plan years beginning on or after January 1, 2018. However, in certain circumstances the final rule provides a limited one-year transition period until January 1, 2019."
Nixon Peabody LLP

Xerox Nixes Challenge to Robo-Adviser Fees in Ford 401(k) Plans
"Xerox HR Solutions LLC escaped a lawsuit by participants in three Ford Motor Co. 401(k) plans challenging the allegedly excessive fees charged for investment advice provided by robo-adviser Financial Engines Advisors LLC. Xerox -- which provided administrative and record-keeping services to the Ford plans -- didn't act as an [ERISA] fiduciary with respect to the compensation it received from Financial Engines ... Xerox had no discretion over the amount of its own compensation as it relates to the participants and thus wasn't acting as a fiduciary in collecting fees from Financial Engines, Cleland held." [Chendes v. Xerox HR Solutions, No. 16-13980 (E.D. Mich. Oct. 19, 2017)]
Bloomberg BNA

Supreme Court Broadly Interprets Scope of ERISA's Church Plan Exemption (PDF)
"As the Court itself noted, the decision does not address other issues raised by the employees, such as whether the hospitals even 'have the needed [degree of] association with a church' to invoke application of the exemption at all. Instead, technically, the decision only resolves the question of whether those hospitals can rely on the exemption regardless of who established their pension plans in the first place." [Advocate Health Care Network v. Stapleton, No. 16-74 (U.S. June 5, 2017)]
The Wagner Law Group, via Plan Consultant

401(k) Employee Contributions Above $2,400, a Possible Rothification Threshold (PDF)
"[Pending release of a major study of the projected impact of certain tax reform changes on retirement income adequacy, EBRI is] providing our most-current information on the percentage of 401(k) contributors who would likely be impacted by the $2,400 threshold and the percent age of 401(k) employee contributions that would be above $2,400 and thus subject to mandatory Rothification.... [T]his information [is provided] with breakouts by salary and age."
Employee Benefit Research Institute [EBRI]


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.

Retirement Pros Reveal Worst Fears Regarding Tax Reform
"[L]owering or removing tax-deductibility of a majority of contributions hurts the very people who can least afford it -- those who don't make enough to overcome the loss of the incentive yet who make too much to avail themselves of government assistance programs.... Any public policy change that discourages retirement savers will alter the current trend among some to attain the financial self-sufficiency needed to offset expected reductions in Social Security.... The most cynical fear Congress might make changes retroactive, effectively removing tax advantages from decisions made years ago."
Fiduciary News

How Much Will Borrowing from your 401(k) Cost You?
"The NCPA's 401(k) Borrowing Calculator can help you determine how much a 401(k) loan will cost in terms of lost savings and investment opportunities. The calculator will: [1] Make annual comparisons of your projected 401(k) balance, with and without a loan, from the year you borrow until the year you retire. [2] Compare your monthly income when you retire, with and without a loan, based on a 30-year fixed annuity."
National Center for Policy Analysis [NCPA]

What Does Consistent Participation in 401(k) Plans Generate? Changes in 401(k) Plan Account Balances, 2010-2015 (PDF)
24 pages. "The average 401(k) plan account balance for consistent participants rose each year from 2010 through year-end 2015. Overall, the average account balance increased at a compound annual average growth rate of 13.9 percent from 2010 to 2015, to $143,436 at year-end 2015. The median 401(k) plan account balance for consistent participants increased at a compound annual average growth rate of 17.9 percent over the period, to $66,412 at year-end 2015. The growth in account balances for consistent participants greatly exceeded the growth rate for all participants in the EBRI/ICI 401(k) database."
Employee Benefit Research Institute [EBRI]

Your Employer Is Tricking You Into Rescuing Your Retirement
"Actually, it's more like a good deed, as more 401(k) plans make your inertia work for you instead of against you.... 68 percent of large U.S. companies now automatically enroll employees in 401(k) plans, up from 58 percent two years ago ... Three-quarters of those employers bump up worker savings rates automatically every year, and many continue until savings rates hit 10 percent and beyond -- or until, presumably, the employee screams. That may seem a little heavy-handed, but a retirement plan that's largely on autopilot can make inertia work for, rather than against, savers."


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Employers Should Reach Out to 403(b) Participants Who Maintain Outside Businesses
"Notifying 403(b) plan participants of annual additions limit rules under Internal Revenue Code Section 415(c) may not be just a best practice -- it may be an affirmative obligation in the employer's 403(b) plan document.... [If] a 403(b) participant also has a controlling interest ... in an outside business, the participant's 403(b) account and the account under that outside business' defined contribution plan ... must individually, and on an aggregated basis, satisfy the 415(c) annual additions limit.... [T]he IRS has noted that 'many of the healthcare doctors and the university professors maintain a practice outside of the entity that is the general 403(b) plan sponsor.' "
National Tax-Deferred Savings Association [NTSA]

How to Undertake an ESOP Repurchase Obligation Study (PDF)
"[T]he prospect of 'doing a repurchase obligation study' can be daunting ... [S]everal underlying assumptions must be developed, the calculations are complicated, and making sense of the results can be challenging.... [T]he process of performing a study should include ... Defining the issues ... Gathering data ... Developing assumption ... Modeling a 'base case' forecast ... Analyzing results ... Modeling additional scenarios ... Developing conclusions and presenting result."
ESOP Economics

Funded Status Improves for Defined Benefit Plans
"The most notable survey finding this year is the increase in over-funded plans, with nearly one in five (19%) respondents reporting a funded status of more than 101%. This is a 10% increase from 2016, making it the highest funded status since the survey's inaugural year in 2011. Of these plans, 65% invest in alternatives and 55% use liability-driven investment strategies, with a majority of users implementing with derivatives."

Teamsters Pension Plan Warns Thousands of Beneficiaries That the Checks May Get Smaller
"The Western Pennsylvania Teamsters fund -- which has about 48 cents for every $1 in benefits it owes to retirees and workers -- notified participants in April that it is considering cutting benefits in order to insure that the fund doesn't become insolvent. The plan is expected to pay out nearly $129 million in benefits this year but will collect only about $54 million in contributions. If the current level of benefits is maintained, the fund is projected to run out of money in 2028."
Pittsburgh Post-Gazette

Loans by Federal Government to Multiemployer Plans Could Cost $7 Billion
"Advocates for multiemployer plans are putting the finishing touches on various federal proposals that would offer low-interest financing for struggling plans.... 55 pension funds designated as critical and declining with a combined $28 billion in net assets at the end of 2015 would be eligible for credit assistance. Under one proposal, the gross loan disbursement would be $23.3 billion payable over five years, with the favorable loan terms costing taxpayers $7.2 billion, without factoring in default risk, the researchers said; a one-third default rate on those loans would cost $10.9 billion."
Pensions & Investments


American Academy of Actuaries Letter to Missouri State Retirement Board on Terminated-Vested Member Buyout Program (PDF)
"We appreciate the need to manage the cost of [Missouri State Employees' Retirement System (MOSERS)], and recognize that offering members lump sums that are lower than the present value of their annuity benefits has the potential to benefit both the system and the members. We are concerned, however, that MOSERS members may not understand that the methodology used under the buyout program results in lump sums that are substantially lower than would be needed to purchase the forsaken annuity benefits in the private market."
American Academy of Actuaries


Why Congress's Plan to Slash 401(k) Limits Was Never a Good Idea
"If removing the tax-preferred status of much of the country's retirement savings contributions leads to widespread conversion to Roth 401(k)s, where after-tax dollars are contributed but withdrawals are tax-free, the government could face a sharp drop-off in tax receipts when these workers hit retirement."
NBC News

Benefits in General

DOL Proposes 90-Day Delay of Disability Claims Regs
"[T]he 2016 final claims regulations might be delayed, modified or even withdrawn altogether. Given the uncertainty, employers that provide disability benefits impacted by the 2016 claims regulations ... should consider delaying the implementation of any changes until the DOL's plan with respect to these rules becomes clearer."
Willis Towers Watson

4 in 10 Retirees Encounter Higher Than Expected Health Care Expenses in Retirement
"[M]ore than 40 percent of retirees find their health care and long-term care costs in retirement are higher than they planned or estimated. This is true across all demographics, income and asset levels. About a quarter experienced higher than anticipated basic living expenses, and 23 percent had higher than planned discretionary expenses. Additionally, 15 percent of retirees who had higher than expected basic living expenses also gave health care cost as their reason for having higher than expected basic living expenses."

Executive Compensation
and Nonqualified Plans

Executive Comp Nuggets from the Annual NASPP Conference
"[1] Prepare for impact of accounting rules changes on financial performance measures.... [2] Don't overlook death and disability benefits in the payments upon termination of employment or change in control.... [3] Ensure that the summary of key provisions of your incentive plan in your proxy statement matches the plan language exactly.... [4] Consider automatic exercise of in-the-money stock options.... [5] Verify that all plans and agreements provide for clawback and the clawback policy will work.... [6] Verify that your tax withholding on equity awards is updated ... [7] Be sure your equity incentive plan has a meaningful limit on directors equity awards and total compensation.... [8] Consider whether your compensation risk assessment efforts have been thorough and red flags addressed."
Winston & Strawn LLP

on the BenefitsLink Message Boards

Currently Using a Model SEP Arrangement, Want to Start a Cash Balance Plan
Company has an IRS Model SEP and wants to start a new CB plan. Can they start the CB plan for 2017? Does it matter if any SEP contributions have been made yet for 2017? If they cannot start the CB plan under the current situation, can they terminate the SEP before year end and then adopt the CB plan before 12/31/17? Is there any way that they can start the CB plan for 2017 and be in compliance? I've been under the impression that if an IRS Model SEP existed at any time during 2017 then they could not start a qualified plan.
BenefitsLink Message Boards

Model Portfolio Rates of Return

Told an advisor that I would ask around about software that people are using to be able to provide their clients with rates of return on their model portfolios. I assume there must be software out there where this can be tracked? Tracked on the basis of $1,000 invested (for example) without adjustment for any participant activity (xfers in/out, etc.). Just how well did the funds the RIA picked perform?

BenefitsLink Message Boards

Handling a Tiny Amount of Forfeitures
Total forfeitures at end of year = $99.13 (WOW!) ... which might be used for plan expenses or allocated as Match or PS (no QNEC allowed). Issues: [1] There are no plan expenses. [2] Match: No prior match for ACP. Match allocation does not exclude HCEs therefore ACP would fail and HCE refund of <$6 would occur (fee for refund is $100). [3] PS: Two participants who otherwise do not have accounts would each receive an allocation of $2. Any suggestions for how to otherwise dispose of the $99.13 in forfeitures?
BenefitsLink Message Boards

Safe Harbor Plan's Nonelective Contribution Required If Nobody Actually Defers?
If Adoption Agreement has 3% SH NEC to all participants checked, and no one defers -- not HCE or NHCEs, must the sponsor still pay the 3% SH NEC?
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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