Retirement Plans Newsletter

October 25, 2017

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Webcasts, Conferences

2017 Farewell (Or, What Am I Forgetting This Year-End?)
November 3, 2017 WEBCAST
McDermott Will & Emery LLP

Funding Policies – Standard Recommendations and Special Cases
December 6, 2017 WEBCAST
Conference of Consulting Actuaries

Negotiating and Drafting Successful Executive Employment Agreements
RECORDED
American Law Institute Continuing Legal Education Group [ALI CLE]

►See 134 Upcoming Webcasts and Conferences

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[Official Guidance]

Text of PBGC Disaster Relief Announcement 17-18 in Response to Tropical Storm Harvey in Louisiana
"[PBGC] is waiving certain penalties and extending certain deadlines in response to Tropical Storm Harvey that began on August 27, 2017, in Louisiana... The relief generally extends from August 27, 2017 through January 31, 2018. The disaster area consists of Acadia, Allen, Assumption, Beauregard, Calcasieu, Cameron, DeSoto, Iberia, Jefferson Davis, Lafayette, Lafourche, Natchitoches, Plaquemines, Rapides, Red River, Sabine, St. Charles, St. Mary, Vermilion and Vernon Parishes."
Pension Benefit Guaranty Corporation [PBGC]

[Advert.]

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[Official Guidance]

Text of PBGC Disaster Relief Announcement 17-19 in Response to Hurricane Irma in South Carolina
"[PBGC] is waiving certain penalties and extending certain deadlines in response to Hurricane Irma that began on September 6, 2017, in South Carolina....The relief generally extends from September 6, 2017 through January 31, 2018. The disaster area consists of Allendale, Anderson, Bamberg, Barnwell, Beaufort, Berkeley, Charleston, Colleton, Dorchester, Edgefield, Georgetown, Hampton, Jasper, McCormick, Oconee, and Pickens Counties."
Pension Benefit Guaranty Corporation [PBGC]

[Guidance Overview]

IRS Finalizes Mortality Table Guidance for 2018
"The regulations generally track IRS's December 2016 proposal, but they do include some important transition rules not in the proposal.... Also new in the final regulations: [1] Special rules for multiple employer plans. [2] The ability to determine credibility of experience (to qualify a substitute mortality table) based combined data for both genders (from which gender-specific tables would then be constructed). [3] Special rules for continued approval (under the new rules) of substitute tables approved under the old rules."
October Three Consulting

Mortality Improvement Scale MP-2017
"The Retirement Plans Experience Committee of the Society of Actuaries (RPEC) is pleased to present this annual update to the RPEC_2014 model and its corresponding mortality improvement scales. This new version of the model reflects historical U.S. population mortality experience through 2015. For clarity, the updated mortality improvement scale based on this 2017 version of the model is called Scale MP-2017.... Also [included] is a new version of the RPEC_2014 model, entitled RPEC_2014_v2017. This Excel-based implementation tool can be used to generate alternate improvement scales using the RPEC_2014 methodology."
Society of Actuaries

Bob Kaufman Retires After 20 Years of Writing Railroad Retirement Benefits Q&A Column
"Since December 1, 1997, I have posted more than 1,000 Q&A's in my Q&A column on BenefitsLink, and an estimated 5,000 questions I've answered by direct e-mail. Times have changed, and the Railroad Retirement Board has developed an excellent web site, which you can use to find answers to questions about the Railroad Retirement System. I just turned 78. I think it's time to enjoy my retirement and my six grandchildren!" [Send Bob a note of thanks or congratulations! -- Editor]
Robert S. Kaufman on BenefitsLink

[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.


401(k) Enrollment: How to Get More Employees Saving
"While enrollment rates have improved in recent years, there are still plenty of employees who fail to enroll in the company 401(k). When asked about the reasons for not saving into the plan, 28% of plan sponsors reported that a 'lack of awareness or understanding' was the primary reason employees did not participate in their plans."
ForUsAll

Oregon Rolls Out OregonSaves for Workers without Retirement Plan Coverage
"The state of Oregon is rolling out its new retirement savings program, with registration slated to begin on November 15 for employers with 100 or more employees. Under OregonSaves, Oregon employers that do not offer a retirement savings program must facilitate employee payroll deductions, which are then contributed to personal Roth IRAs. Four other states -- California, Connecticut, Illinois and Maryland -- have adopted similar programs."
Willis Towers Watson

DB Plans of Healthcare Organizations Playing Catch-Up with LDI Adoption
"Healthcare organizations with defined benefit pension plans have not been as quick as their corporate counterparts to adopt liability driven investment (LDI) strategies, but they should fall in line as their funded statuses improve and the interest rate environment recovers ... The number of [healthcare DB plans] considering LDI dropped to 9% from 21% this year, while the corporate plans considering LDI solutions rose to 12% from 4%[.]"
NEPC

Decumulation in Defined Contribution: The Second Act
16 pages. "As a burgeoning number of older Americans shift from retirement saving to retirement spending, the central financial question of 'How can I create lasting income in retirement' is gaining urgency. There are few readily available answers for retirees.... So far, employer-based [DC] plans have not been seen as a serious response to this question. Yet, DC plans can deliver on the top reason that plan participants save for retirement -- maintaining consistent spending in retirement -- while providing a seamless transition from the savings phase."
BlackRock Retirement Institute

Spousal Rollover Rules for Inherited Roth and Traditional IRAs
"Ultimately, the good news is that spousal beneficiaries have the option to make either choice, and even have flexibility about the timing -- allowing a decision to maintain an inherited stretch IRA for the spouse initially, and completing a spousal rollover later (after he/she turns age 59-1/2). Nonetheless, it's important to carefully consider the choices and trade-offs... especially since a spousal rollover, once completed, is irrevocable and cannot be undone after the fact!"
Nerd's Eye View

Interesting Angles on the DOL's Fiduciary Rule, Part 67
"It now seems certain that the DOL will extend the applicability date of the final exemptions to July 1, 2019, or thereabouts.... [T]he transition rules will continue until the applicability of revised final exemptions. The extended time will be used for the DOL and the [SEC] to cooperate in the development of new fiduciary rules by the SEC (and perhaps changes to the DOL's fiduciary regulation) and for revised exemptions to be issued by the DOL for BICE and 84-24. However, that coordination will probably not produce rules as favorable as some expect nor as unfavorable as others anticipate."
FredReish.com

[Opinion]

Even If Trump Spares 401(k)s, Saving for Retirement Is Still Broken
"[T]he current strategy of encouraging retirement savings through tax incentives such as 401(k) plans is not one that 'works.' According to a recent estimate from researchers at the Census Bureau, fewer than one-third of American workers participate in 401(k) plans and other workplace retirement accounts, and the failure of 401(k) plans to cover broad swaths of the population is a major cause of the country's retirement-savings shortfall."
The Atlantic

[Opinion]

Fiduciary Fallout: Identifying the Problem and Finding a Solution
"At its core, the Fiduciary Rule relies on a set of untrue assumptions. First and foremost, it discriminates against the brokerage model of investment, which has served investors well for decades. As the Chamber and others have warned, the rule is likely to force more customers into fee-based accounts which may be more costly and unnecessary for many investors."
U.S. Chamber of Commerce

Benefits in General

[Official Guidance]

Text of IRS Disaster Relief Announcement SC-2017-01, for Victims of Hurricane Irma in South Carolina
"Victims of Hurricane Irma that took place beginning on Sept. 6, 2017 in parts of South Carolina may qualify for tax relief ... Individuals who reside or have a business in Allendale, Anderson, Bamberg, Barnwell, Beaufort, Berkeley, Charleston, Colleton, Dorchester, Edgefield, Georgetown, Hampton, Jasper, McCormick, Oconee, and Pickens Counties may qualify for tax relief."
Internal Revenue Service [IRS]

[Official Guidance]

Text of IRS Disaster Relief Announcement LA-2017-03, for Victims of Tropical Storm Harvey in Louisiana
"Victims of Tropical Storm Harvey that took place beginning on Aug. 27, 2017 in parts of Louisiana may qualify for tax relief ... Individuals who reside or have a business in Acadia, Allen, Assumption, Beauregard, Calcasieu, Cameron, DeSoto, Iberia, Jefferson Davis, Lafayette, Lafourche, Natchitoches, Plaquemines, Rapides, Red River, Sabine, St. Charles, St. Mary, Vermilion and Vernon Parishes may qualify for tax relief."
Internal Revenue Service [IRS]

Executive Compensation
and Nonqualified Plans

Proxy Advisors and Investors Announce How They Will Use CEO Pay Ratios in 2018
"CEO pay ratios will not have any impact on ISS's analysis or vote recommendations in 2018. However, ISS will include the information in its reports.... Glass Lewis confirmed that it does not intend to incorporate the pay ratio into its assessment and analysis of Say on Pay proposals in 2018, but also will include pay ratios in its reports."
Meridian Compensation Partners, LLC

Discussions
on the BenefitsLink Message Boards

May a Retirement Plan's Auditor Act as the Plan's Representative Before the IRS in a Correction Procedure?
Situation: an independent qualified public accountant, in its audit of a retirement plan's financial statements, discovers an operational error -- one that, if not corrected, could result in the plan's tax disqualification. May the same accounting firm act as the plan sponsor's representative before the IRS for a correction procedure? (Assume the firm desires to continue as the IQPA auditor.) Is there an independence problem? Are there conditions under which there would not be an independence problem?
BenefitsLink Message Boards

Applying the One-IRA-Rollover-Per-Year Rule
If an individual takes multiple distributions from a single IRA within a 12-month period and redeposits all the funds back into the IRA within the 60-day deadline, can he or she designate which redeposited funds are treated as an IRA rollover and which funds are considered excess contributions to be withdrawn? My initial response is that the funds redeposited first are treated as a rollover, and that each subsequent deposit is treated as an excess contribution. What if the individual doesn't designate the first deposit as a rollover but rather designates the largest deposit as a rollover?
BenefitsLink Message Boards

Seeking Suggestions for Pension Payroll Tracking System
I'm looking for a method to track pension payroll information for multiple plans. The desired system would not make the payments, but would produce an output file for another system that makes the payments. The desired system would also be modifiable to create other types of output, such as annual or monthly summaries. I've reviewed Excel and Access templates and found nothing that seems appropriate. Any suggestions?
BenefitsLink Message Boards

Document Needed in Addition to Executive's Employment Agreement?
Employment agreement plainly says "Executive gets $50,000 a year for 5 years credited to a book account with no money actually set aside. The Executive only gets the money if he is actively employed all the way through the 5 year anniversary date and is paid immediately thereafter." So neither 409A nor 457(f) applies because there is no deferral of income beyond when the substantial risk of forfeiture lapses. Do I need any documentation other than the employment agreement? I guess I need a top-hat filing to avoid a 5500 filing requirement. Anything else?
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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