Retirement Plans Newsletter

November 1, 2017

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Retirement Plan Administrator
Christian Financial Services Firm
in FL

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Benefit Consultants
in OH

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Cleveland Area Financial / TPA Firm
in OH, Telecommute

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Webcasts, Conferences

ARA Washington Update: House Tax Reform
November 3, 2017 WEBCAST
ASPPA [American Society of Pension Professionals & Actuaries]

Ethical Considerations for the Employee Benefits Practitioner
December 5, 2017 WEBCAST
American Bar Association Joint Committee on Employee Benefits [JCEB]

Deeper Dive on 403(b) and 457 Plans for Not-For-Profit, Governmental and Religious Organizations Part II
December 19, 2017 WEBCAST
American Bar Association Joint Committee on Employee Benefits [JCEB]

2018 Communicating Employee Benefits Symposium: Maximizing the Impact of Total Rewards
February 1, 2018 in NY
The Conference Board

►See 119 Upcoming Webcasts and Conferences

►See 1324 Recorded Webcasts


Discussions

New Topics on the BenefitsLink Message Boards

New Comments and Topics

All Topics, Grouped by Forum


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[Official Guidance]

Text of IRS PLR 201743002: Section 457 Plan May Include Auto-Enrollment (PDF)
"Maintaining an [eligible automatic contribution arrangement (EACA)] (within the meaning of section 414(w)(3)) through the Plan, under which the participant is treated as having elected to have the employer make contributions in an amount equal to a uniform percentage of compensation provided under the Plan until the participant specifically elects not to have contributions made (or specifically elects to have contributions made at a different percentage), does not cause the Plan to fail to satisfy section 457(b)(4) and section 1.457-4(b)."
Internal Revenue Service [IRS]

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House Tax Chief Says No Plans to Reduce 401(k) Pretax Limits
"House Ways and Means Chairman Kevin Brady says he doesn't plan to reduce the pretax contributions American workers can make to 401(k) retirement plans -- 'unless there's broad agreement' among investment advisers that a different system would lead workers to save more. 'It will either be strengthened or enlarged or left pretty much as is,' Brady told reporters[.]"
Bloomberg

DOL and SEC Uniform Advice Standard May Not Be Far Off
"[T]he SEC has received a small library's worth of fresh investing industry commentary on the multifarious issue of identifying and preventing advisory industry conflicts of interest. Many of the comments mention serious discomfort with the DOL's strengthening and expansion of its fiduciary standard, voicing a whole host of now-familiar concerns that a stricter DOL conflict of interest paradigm may unnecessarily jeopardize well-established compensation practices that have only recently become the object of scrutiny and are not in themselves problematic."
planadviser

A Three-Step Guide for Employers to Select and Monitor 401(k) Index Funds
"As an employer, you can't just randomly choose index funds for your 401(k) to meet prudent standards. You need a process for selecting and monitoring a basket of funds to meet investment-related fiduciary responsibilities for requiring diversification and ongoing monitoring.... [1] Establish a basic investment policy ... [2] Select funds that meet your policy ... [by considering] Diversification ... Market Returns ... Efficiency ... [and] [3] Ongoing monitoring."
Employee Fiduciary

Should You Hoard Records If Benefit Claims Live Forever?
"[W]ould you be safe if you kept records until the end of the year when a plan's assets are completely liquidated and for seven years afterward? Alas, no. Imagine that you terminated a 401(k) plan and distributed all of its assets in 2010, then kept records until December 31, 2017. A possibility exists that participants will claim, in 2018 or later, that they never received their distributions. Defending such a claim without records would be a challenge."
Miles & Stockbridge

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Establishing and Maintaining a 401(k) Plan: A Guide for New Plan Sponsors
"[1] Exercise care when choosing the 401(k) plan vendor.... [2] Get well-considered advice when designing the plan's key features.... [3] Timely sign and date the plan document, and keep copies.... [4] Always keep in mind that the plan must be operated in strict accordance with its written terms.... [5] Filing Form 5500 annual reports.... [6] Conducting annual nondiscrimination testing and performing any required corrections.... [7] A special problem: is the plan top-heavy ... [8] Timely remittance of salary deferral contributions to the 401(k) plan's trust.... [9] When things go wrong: IRS and DOL correction programs.... [10] Terminating the Plan."
Fenwick & West LLP

OregonSaves: New Path or Dead End?
"Employers that already offer a qualified retirement plan to their employees are not off the hook entirely. Under Oregon law, an employer must certify (prior to the applicable date [which depends on the size of the employer, being Nov. 15, 2017 for employers of 100 or more employees]) that it offers an employer-sponsored retirement plan to obtain an exemption from participating in OregonSaves. Under Oregon law, employers must renew the exemption every three years. Employers that fail to file for and obtain a valid exemption are subject to the rules established under Oregon law."
Graydon

Pension Finance Update, October 2017
"The big story for pension sponsors in 2017 so far is the remarkably steady increases in stocks, which have gained ground every month this year, overcoming interest rates that continue to flirt with historic lows. October saw a continuation of this pattern, improving the funded status for both model ... Traditional Plan A improved 1% last month and is now up more than 4% for the year, while the more conservative Plan B improved a fraction of 1% in October and is now ahead 1%-2% through the first ten months of 2017."
October Three Consulting

CalPERS Identifies Income Sources of Public Employee Pensions
"The CalPERS Pension Buck illustrates the sources of income that fund public employee pensions. Based on data over the past 20 years ending June 30, 2017, for every dollar CalPERS pays in pensions, 61 cents comes from investment earnings, 26 cents from employer contributions, and 13 cents from employee contributions. In other words, 74 cents out of every public employee pension dollar is funded by CalPERS' own investment earnings and member contributions."
CalPERS

FAS87 ASC715 Discount Rates and Moody's Rates, Updated October 2017
Includes an unofficial monthly report as of Oct. 31, 2017 of Moody's Daily Long-term Corporate Bond Yield Averages and Moody's Daily Treasury Yield Averages, which are used as benchmarks by some corporate pension plans.
David Rigby, via BenefitsLink Message Boards

[Opinion]

PSCA Encourages Plan Sponsors to Raise Their Voices About Tax Reform
"PSCA's recent survey of plan sponsors on the impact of tax reform ... found 90% are strongly or somewhat opposed the reduction of tax incentives for retirement savings."
Plan Sponsor Council of America [PSCA]

Benefits in General

[Official Guidance]

Text of Revised IRS Notice 2017-64: 2018 Limitations Adjusted As Provided in Section 415(d), etc. (PDF)
"For a participant who separated from service before January 1, 2018, the participant's limitation under a defined benefit plan under Section 415(b)(1)(B) is computed by multiplying the participant's compensation limitation, as adjusted through 2017, by 1.0197." [Explanation from an IRS email distributed on Oct. 31: "This document provides a revised factor for adjusting a participant's high-3 compensation limitation under Internal Revenue Code section 415(b)(1)(B) for plan years beginning on or after January 1, 2018. The revision is necessary due to the [BLS] adjustment of the Consumer Price Index for All Urban Consumers (CPI-U) for the months of July and August 2016, which are used in the calculation of the factor. After taking into consideration the adjustments made by the BLS, the factor is 1.0197."]
Internal Revenue Service [IRS]

Treasury Announces 2017-2018 Regulatory Agenda for Employee Benefits
"The IRS Business Plan includes six new initiatives, 18 pending items addressing retirement benefits, and 17 pending items addressing executive compensation, health care and other benefits." [A chart describes each item.]
Eversheds Sutherland

A Buyer's Post-Closing To-Do List for Employment and Benefits Issues
"Detailed employment and benefits diligence likely identified numerous potential liabilities and differences between the buyer and the target company, and it is now time to integrate the acquisition into the buyer's established business or portfolio.... Where is a buyer to begin, and what post-closing employment and benefits issues should be prioritized?"
Fisher Phillips

Executive Compensation
and Nonqualified Plans

[Guidance Overview]

A Question and Answer Guide to Internal Revenue Code Section 409A (PDF)
14 pages; 33 Q&As. "This guide provides, in question-and-answer format, a digest of the major features of Internal Revenue Code Section 409A that clients and nontax lawyers may need to know. (This guide has been updated as of October 2017 to reflect guidance issued to date.)"
Sullivan & Worcester

[Guidance Overview]

Trigger Question on the Rebuttable Presumption for Executive Compensation
"Form 990, Part VI, line 15 asks how an organization determines compensation for its various executives. These questions are based on the rules establishing the rebuttable presumption as outlined in [Treasury] Regulation Section 53.4958-6. If these rules are followed, a compensation arrangement is presumed to be at fair market value. The burden of proof that a compensation arrangement isn't at fair market value is then moved from the taxpayer to the IRS."
Schneider Downs

Supplemental Benefit Planning for Tax-Exempt Employers (PDF)
"Tax-exempt employers face a matrix of tax and disclosure issues in designing an appropriate supplement retirement program. [This] article aims to be a resource to that design activity by examining the income tax, payroll tax, and Form 990 reporting aspects of the major plans currently available to tax-exempt employers and then examines those major plans from the reference point of several major design considerations."
McDermott Will & Emery, via Employee Benefit Plan Review

Discussions
on the BenefitsLink Message Boards

Spouse of Deceased Participant Has Left the Country; No Waiver on File
Husband left for his home country more than 10 years ago. Wife-Participant passed away last month. Her adult children want to make a claim for their mother's 401(k) plan assets. How to handle?
BenefitsLink Message Boards

Lump Sum from Cash Balance Plan
Generally, a small defined benefit plan must be at least 110% funded after a lump sum distribution is paid to an HCE. Is this also the case for a cash balance plan?
BenefitsLink Message Boards

Explaining to Clients the Meaning of 'Affiliated Service Group'
Does anyone have a good way to explain the terms "service organization" and "regularly associated with an FSO in providing services to third parties" to someone who just doesn't want to believe an ASG exists? I have a physician client who is preparing to sell his "practice" to an organization that will take all of his employees off of his hands, leaving just the physician in his "practice." I inquired as to whether the organization is a service organization and if the physician and the organization will work together to provide health services to patients and the answer given was "[Name of organization redacted] does not provide healthcare services, but rather administrative and support services to the doctors." Well, if the employees who were moved to the organization include nurses who will draw blood, insert IV's, etc., how is that NOT considered providing a healthcare service? I guess I'm looking for the Sesame Street version of explaining an A-Org ASG.
BenefitsLink Message Boards

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David Rhett Baker, J.D., Editor and Publisher  davebaker@benefitslink.com
Holly Horton, Business Manager  hollyhorton@benefitslink.com

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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