Retirement Plans Newsletter

November 2, 2017

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[Official Guidance]

Text of 2018 PBGC Update to Present Value of PBGC Maximum Guarantee
"The values [in this table] apply to benefits with annuity starting dates in 2018.... The 2018 table was developed using the 417(e) segment rates for August 2017 (1.93%, 3.57% and 4.36% respectively) for plan years beginning in 2018 and the 417(e) applicable mortality table for 2018."
Pension Benefit Guaranty Corporation [PBGC]

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Chairman Brady Introduces the Tax Cuts and Jobs Act
"For individuals and families, the Tax Cuts and Jobs Act: ... Retains popular retirement savings options such as 401(k)s and Individual Retirement Accounts so Americans can continue to save for their future.... Lowers the corporate tax rate to 20% ... Reduces the tax rate on the hard-earned business income of Main Street job creators to no more than 25%[.]" Also released: [1] Full legislative text of the Tax Cuts and Jobs Act; [2] Section-by-section summary; [3] Policy highlights; and [4] Examples of how the Tax Cuts and Jobs Act will help Americans of all walks of life.
Committee on Ways and Means, U.S. House of Representatives

Text of GAO Report on IRS Update of Mortality Tables for Determining Present Value Under Defined Benefit Pension Plans
"This final rule was published in the Federal Register on October 5, 2017. It was received October 4, 2017, and has a stated effective date of October 5, 2017. Therefore, the final rule does not have the required 60-day delay in its effective date. However, IRS stated that the final rule applies to plan calendar years starting on January 1, 2018, and later.... With the exception of the 60-day delay in effective date requirement, our review of the procedural steps taken indicates that IRS complied with the applicable requirements." [B-329474, Oct. 13, 2017]
U.S. Government Accountability Office [GAO]

No Standing to Pursue Fiduciary Breach Claim Where DB Plan Became Overfunded During Litigation
"Plaintiffs brought suit after the plan lost $1.1 billion, which plaintiffs claimed arose from imprudent investments and caused the plan to go from being significantly overfunded to being 84% funded. During the course of the litigation, the plan recovered from the losses and returned to an overfunded status.... The Eighth Circuit ... held that 'when a plan is overfunded, a participant in a defined benefit plan no longer falls within the class of plaintiffs authorized under [ERISA] to bring suit claiming liability ... for alleged breaches of fiduciary duties.' " [Thole v. U.S. Bank, N.A., No. 16-1928, (8th Cir. Oct. 12, 2017)]
Proskauer's ERISA Practice Center

Plan Sponsor Fee Litigation Cases on the Rise (PDF)
"[This article provides a] summary of recent fee lawsuits and implications for your plan.... This year has been an active year for excessive fee cases as more than 30 cases have been filed across almost every circuit in the country. In comparison, over the past decade, there were only about 80 ERISA excessive-fee cases filed across the country."
Groom Law Group, via Plan Sponsor Council of America [PSCA]

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18-Month DOL Rule Delay One Step Closer
"The laborious process to delay the [DOL] fiduciary rule until July 1, 2019, inched closer to conclusion Wednesday with the Office of Management and Budget receiving the final rule delay documents. The delay becomes official when the final rule is published in the Federal Register, which often happens quickly. The key is whether the DOL made any changes from the tentative to final delay documents, a source said, which isn't likely."
InsuranceNewsNet.com

Cybersecurity as It Relates to Retirement Plan Data (PDF)
"[C]ourts have found that plan data is an asset of the plan under ERISA.... [As] it becomes prevalent for other ERISA fiduciaries to use procedures to secure online plan data from cyberattacks, as a matter of prudence, an ERISA fiduciary should also implement such procedures."
Groom Law Group, via Bloomberg BNA Pension & Benefits Daily

Watch Out for What Your Plans Say -- or Don't Say -- About Transfers
"Few plans are drafted to deal with what happens when a collectively bargained employee (covered under one plan) transfers to an unrepresented position (or another facility) that is covered by a different plan.... [Issues] which your plan documents may not properly address: [1] Whether positions covered under other plans are 'excluded.' ... [2] Exactly when and how a transferred employee becomes eligible for and actually begins participation in a new plan.... [3] Whether your plan documents are consistent with relevant [memoranda of understanding (MOUs)] and/or employment agreements.... [4] Situations where, to make your plan 'work,' you end up treating 'transfers' as 'termination/re-hires.' "
Best Best & Krieger LLP

2017 Public Pension Funding Study (PDF)
"As of June 30, 2017, the aggregate funded ratio is estimated to be 70.7%, as assets experienced healthy growth. One-third of the plans reduced the interest rate assumptions they use for determining contribution amounts. The difference between the median sponsor-reported discount rate (7.50%) and [Milliman's] independently determined assumption (6.71%) continues to widen, indicating that further reductions in interest rate assumptions are likely."
Milliman

Benefits in General

ERISA's Six-Year Statute of Repose for Fiduciary Breach Claims Can Be Tolled
"The Eleventh Circuit held that ERISA's six-year statute of repose is not jurisdictional because ERISA does not contain the clear textual indication required to characterize the limitation as such. The Court also explained that, contrary to the trustee's argument, there is well-established precedent holding that statutes of repose are subject to express waiver, particularly when the statute setting forth the limitation period does not contain a categorical rule prohibiting waiver." [Sec'y, U.S. Dept of Labor v. Preston, No. 17-10833 (11th Cir. Oct. 12, 2017)]
Proskauer's ERISA Practice Center

Benefit Plans: Upcoming Compliance Deadlines and End of Year Planning
"[This article provides] a non-exhaustive list of quickly approaching employee benefits deadlines for 401(k) plans and health and welfare plans in the fall of 2017 and early 2018. The deadlines [listed] are generally for calendar year plans, unless otherwise specified."
Holland & Hart LLP

Executive Compensation
and Nonqualified Plans

Nonqualified Deferred Compensation Planning Affected by 2018 Contribution Limits for Qualified Retirement Plans
"[T]he contribution limits of qualified plans form the major reason for the existence of nonqualified plans ... The changes in limits from 2017 to 2018 are slight. If you have already maxed out your qualified plan contributions for 2017, you will probably do the same in 2018, so you will need to rely on NQDC plans to defer any salary and bonus increases you expect in 2018."
myStockOptions.com

Discussions
on the BenefitsLink Message Boards

PBGC Notice of Intent to Terminate: Required for a Totally Offset Participant?
A defined benefit plan that is part of an offset arrangement with a profit sharing plan. The defined benefit plan is terminating. In the case of participants in the defined benefit plan who are totally offset as of the plan termination date, is the plan administrator required to provide a copy of the Notice of Intent to Terminate to these individuals that are totally offset and will not have a benefit payable from the defined benefit plan?
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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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