Retirement Plans Newsletter

October 27, 2017

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Jobs

Jr. Plan Document Associate
Professional Capital Services
in PA

DB / DC Plan Administrator (3+yrs Cash Balance exp)
Ingham Retirement Group
in FL, Telecommute

Retirement Plan Consultant
MHM Retirement Plan Solutions
in KS, MO

Team Lead / 401(k) Pension Administrator
Nicholas Pension Consultants
in CA

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Employer Withdrawal Liability: Something to Consider Before Signing a CBA
"The CBA will likely not refer to withdrawal liability and the union is under no legal obligation to disclose this potential liability to you prior to signing the CBA.... Does the CBA require contributions to be made to one or more defined benefit pension plan(s)? If so, what is the funding status of the pension plans for which you would be obligated to contribute to under the CBA? ... Does the plan provide for a free look period? ... Will the union provide any indemnification for withdrawal liability?"
Graydon

[Advert.]

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Watchdog Group Sues DOL to See Records for Fiduciary Rule Rewrite
"The independent watchdog group American Oversight filed a lawsuit ... to force the [DOL] to release records about revisions to the fiduciary rule now being considered.... The group submitted Freedom of Information Act requests on July 21, seeking communications and documents regarding proposed changes to these two rules, but said that the DOL 'failed to adequately respond' within the required time frame."
Pensions & Investments

The 401(k) Millionaire Next Door
"The proof of the success of the 401(k) or TSP has been the ability of an increasing number of participants to reach a high milestone. The TSP had 16,475 millionaires as of August of this year. There were 2,675 millionaires in the same month in 2014. TSP millionaires are a small group relative to the 5.1 million participants, but it's clearly growing. As of year-end 2014, Fidelity Investments said that 72,000 of its 401(k) accounts held more than $1 million. This is up from 59,000 in 2013 and 21,000 in 2009."
The Washington Post; subscription may be required

Few Workers React Negatively to 'Pushing the Envelope' on Default Savings Rates
"Erring on the high side when choosing a 401(k) savings default-contribution rate won't likely discourage employees from participating in the plan, new research suggests. Plan sponsors' experiences seem to back up this finding.... Suggesting rates between 7 percent and 10 percent did not result in lower enrollment when compared to a 6 percent control rate. The highest rate suggested -- 11 percent -- resulted in only a slight drop in enrollment."
Society for Human Resource Management [SHRM]

QPAM Clock Is Ticking for Five Banks That Handle Retirement Money
"Deutsche Bank AG, Citigroup Inc., UBS Assets Management, JPMorgan Chase & Co., and Barclays Capital Inc. will all need the [DOL's] approval by early next year to keep operating as 'qualified professional asset managers.' The five banks ... [provide] services to millions of retirement savers and [manage] billions of dollars in plan assets. The [DOL] a year ago granted temporary exemptions allowing the five banks to continue operating as QPAMs, and those waivers are about to run out."
Bloomberg BNA

[Advert.]

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Nov. 9 webinar. Entities responsible for identifying, selecting, and monitoring their TPA will learn how to track performance and assess results, as well as identify opportunities to create additional value in collaboration with their TPA. BenefitsLink discount.


Is Your Retirement Portfolio Truly Diversified?
"Most retirees hold a mix of stocks and bonds, assuming that their bonds will not only generate income but also cushion the fall if stocks crash.... [S]ome analysts and money managers are warning that the correlation between stocks and bonds is headed higher -- meaning they're more likely to rise and fall in sync. At the same time, many bond funds that form the core of retirees' portfolios have sought juicier income in bond-market sectors, such as high yield, that behave even more like stocks."
Fidelity

Changes to CBO's Long-Term Social Security Projections Since 2016
"This report explains the changes to CBO's long-term Social Security projections since last year. Compared with those made in July 2016, CBO's latest projections indicate a slight improvement in the financial outlook for Social Security."
Congressional Budget Office [CBO]

[Opinion]

How the Republican Tax Plan Would Hurt Retirement Savings
"[C]hanging the way 401(k) contributions are taxed today frees up a significant amount of money to use to lower the overall tax rate.... If Congress lowers the cap on 401(k) contributions, they get more money now, which helps them pass their massive tax cuts. It doesn't matter that the federal government will collect less money in the future; those losses will occur outside the ten year budget window."
National Public Pension Coalition

[Opinion]

Congress Might Take Away the 401(k) for the Wrong Reason
"The 401(k) is hardly a perfect retirement savings vehicle. It was originally designed in the 1980s to be a supplement to pensions plans, not the main way Americans save for retirement.... About everyone agrees that Congress -- and corporations -- need to find ways to spur people to save more. But the current proposal being tossed around by the GOP would do the opposite[.]"
The Washington Post; subscription may be required

Benefits in General

[Guidance Overview]

Puerto Rico Agencies Issue Employee-Related Guidance, Tax Relief in Wake of Hurricanes
"[L]ocal government agencies have issued the following measures and guidance related to employers concerning their employees. [1] Income tax exemption for assistance to employees... [2] [G]uidance on payment of salary for days not worked in the wake of Hurricanes Irma and Marķa. PR-DOL Opinion 2017-001 cites the Fair Labor Standards Act and its interpretative regulations in summarizing payment obligations for exempt and non-exempt employees due to natural disasters and recovery.
Jackson Lewis P.C.

Discussions
on the BenefitsLink Message Boards

Loan Repayment More Than 5 Years After Deemed Distribution
If a loan has been treated as a deemed distribution (because of missed payments) and the 1099-R issued, can the participant make repayments on the loan beyond the 5-year maximum repayment period? It seems the consequence of violating the maximum repayment period requirement is a deemed distribution, which has already occurred. Hence, after the deemed distribution, repayments beyond the 5-year period would seem to have no consequence. The only example given in the regulations involves repayments within the 5-year period, so it doesn't really address this question. Help?
BenefitsLink Message Boards

IRA Partial Rollover to Qualified Plan
Client maintains a PSP, needs money for mortgage, wife's PSP balance is about $50K. Plan allows for rollovers from IRAs. Can she rollover to the PSP and then take a loan on 50% of the total account, including the IRA rollover? I don't think so. Doesn't the IRA still remain an IRA as far as IRA restrictions, i.e., no borrowing allowed?
BenefitsLink Message Boards

Determining 'Separate Lines of Business' -- Who Should Provide an Opinion?
Who would be best to make the determination whether or not we could test two plans of a controlled group under a separate lines of business (same ownership, but separate companies located 150 miles apart) -- an ERISA attorney or the client's CPA? Does that allow you to have one Safe Harbor plan and one that is not a Safe Harbor plan, and what testing would have to be combined?
BenefitsLink Message Boards

Loans and Leave of Absence
Participant had an accident and out on unpaid medical leave. He wants a 5 year loan. Plan doesn't allow hardships and employer is only willing to allow payroll loan repayments. Can he take out a loan now with no repayments until returning (before a year) and then have the loan "reamortized?" In other words, do you have to already have a loan in place before you can take advantage of loan repayment forgiveness for leave of absences?
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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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