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Mitigating Factors in Calculating a 403(b) Plan's Maximum Payment Amount Under EPCRS Closing Agreement
"[For a 403(b) plan]: [1] There is no tax exempt trust ... [2] The employer is a tax-exempt entity.... [3] The individual will suffer taxation, the amount of which should be included in the [minimum payment amount (MPA) calculated by the IRS agent]. But ... [b]ecause most 403(b) annuity contracts will qualify as annuities for 'inside buildup' purposes -- even if they fail 403(b) treatment -- the earnings should be excluded from the MPA.... [and] the MPA should only include the tax on portion of the excess in the account of the affected individual."
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Has Your 401(k) Plan Had Its Annual Check-Up?
"While a number of variables contribute to how well a 401(k) works for its participants, four factors are critical to plan health -- but ... are not typically reviewed by the average 401(k) advisor. A positive report on all of them is required for a truly healthy 401(k). These four measures of health are widespread participation, high savings rates, adequate investment diversification and compliance with nondiscrimination rules."

Is Keeping Former Employees in Your Plan a Good Idea?
"[F]ormer employees with balances of $5,000 or less may actually cause the plan to incur an unnecessary audit fee, adding administrative difficulty, and potentially increasing fees per participant paid to the custodian and third-party administrator.... [O]ther issues to consider regarding potentially lost participants include how up-to-date are the addresses of the former employees in the plan? Are they still living the United States or even alive? What are the escheatment laws in your state? At what point does the account become abandoned?"
Belfint Lyons & Shuman, CPAs

Employer Retirement Plans Comparison for Small Businesses, 2018 Plan Year
"This table provides a comparison of the features and benefits that apply to retirement plans that can be sponsored/adopted by small business owners. Focus on the areas that are important o the business owner, so as to help ensure that the plan that is chosen is the plan that is most suitable for the business."
Appleby's IRA Publications

Average 401(k) and IRA Balances Climb, Hitting Record Levels
"Retirement account balances reached all-time highs for the fourth consecutive quarter. Helped by strong stock market performance, the average 401(k) and IRA balances increased 10 percent over the last year and continued to hit record levels. The average 401(k) balance rose to $99,900, while the average IRA balance climbed to $103,500."


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Potential Impact of Tax Reform on Qualified Retirement Plans
"The retirement plan proposals that made it into the first draft of the legislation include: [1] Permanent 'closed plan' nondiscrimination testing.... [2] In-service withdrawals from defined benefit plans.... [3] Hardship withdrawals from individual account plans.... [4] Extended rollover period for plan loans."
Kilpatrick Townsend

FBI Raids TPA's Office Amid Allegations of Missing Retirement Funds
"The FBI has raided the offices of a downtown Dallas financial business amid concerns that money may be missing from retirement accounts the company manages. The company, Vantage Benefits Administrators, declined to comment, according to its in-house lawyer, Laura Mercer. The company's website is down, and employees reached by The Dallas Morning News said they could not comment. Vantage specializes in managing retirement plans such as 401(k)s for other companies."
The Dallas Morning News

The Continuing Downward Spiral and Death Knell of the Multi-Employer Defined Benefit Plan
"In 2012, the Fund amended the Rehabilitation Plan to include a provision stating that an employer withdrawing from the Fund was required to pay a portion of the Fund's accumulated funding deficiency in addition to the statutorily mandated withdrawal liability.... Westrock sought relief from that amendment ... declaration that the amendment violated ERISA. The district court never addressed the merits of the action but rather dismissed the complaint ... stating that Westrock lacked standing. The Eleventh Circuit, acknowledging that this was a case of first impression which turned on statutory interpretation, affirmed the district court. In doing so, it opined that civil actions under ERISA were limited only to those parties and actions which Congress specifically enumerated." [Westrock RKT Co. v. Pace Industry Union-Management Pension Fund, No. 16-16443 (11th Cir. May 16, 2017)]
Jackson Lewis P.C.

Colorado Governor Proposes Increase in Required Employee Contributions to State Pensions, Cap on COLAs
"[E]mployees would contribute an additional 2% of their salary, totaling 10% for most workers, starting in January 2019, and annual cost-of-living adjustments would be capped at 1.25%, from 2% now for most retirees ... Employer contribution levels would not change."
Pensions & Investments

Oregon Task Force Identifies Measures to Reduce Unfunded Pension Liabilities by About $5 Billion
"An Oregon state task force is recommending a number of measures including harvesting some of the state's timberland, selling state-owned real estate and privatizing state universities that could result in a combined $4.2 billion to $6.4 billion to reduce the $74.9 billion Oregon Public Employees Retirement Fund's unfunded actuarial liability ... Another idea is to transfer surplus capital held by Oregon's hybrid workers' compensation system above what it needs to pay estimated claims to workers to the pension plan."
Pensions & Investments

Benefits in General

House Tax Reform Bill Unveiled (PDF)
"In addition to proposing reductions in individual and corporate tax rates, the House Bill proposes far-reaching changes to the taxation of executive and nonqualified deferred compensation and relatively minor changes to IRA and qualified retirement plan rules, clarifies that unrelated business income tax (UBIT) applies to state and local government plans, and changes the tax rules that apply to various types of fringe benefits provided to employees. Notably, the House Bill does not contain changes to the tax incentives for retirement savings."
Groom Law Group

Tax Reform Contemplates Changes to Employee Benefits
"Elimination of certain income tax exclusions ... Loosen[ed] restrictions on hardship distributions from 401(k) plans ... Reduction in minimum age for in-service distributions from 457(b) plans and [DB] plans ... Extended rollover period for plan loan offset amounts ... Modified nondiscrimination testing rules for frozen legacy plans ... Additional limitations on archer medical savings accounts (Archer MSAs)."
Proskauer's ERISA Practice Center

Tax Cuts and Jobs Act: Good News for 401(k) Plans, Bad News for Nonqualified Deferred Compensation
"While there were no adjustments to contributions to 401(k) plans under the Act, that does not mean that the final version of the bill will not include some form of Rothification.... The Act liberalizes certain rules relating to hardship distributions.... This proposal would eliminate many standard forms of deferred compensation, such as 401(k) mirror plans. It also removes from the Code, with respect to services performed after December 31, 2017, Sections 409A, 457(b) (for tax exempt employers), 457(f), and 457A ... The exclusions for adoption assistance, dependent care, qualified moving expenses, and employee achievement awards are repealed."
The Wagner Law Group

Executive Compensation
and Nonqualified Plans

Proposed Tax Law Would Doom Nonqualified Deferred Compensation as You Know It
"Amounts will be considered subject to a substantial risk of forfeiture only if the service provider's right to the compensation is contingent on the future performance of substantial services, which is far narrower than the Section 409A definition.... This broad language would appear to include stock options, stock appreciation rights, phantom equity and other equity-based compensation arrangements; however, the inclusion of incentive stock options as deferred compensation is not entirely clear ... Section 457 plans maintained by tax-exempt employers are not excluded from the Bill's definition of nonqualified deferred compensation and would also be subject to its requirements."
Paul Hastings LLP

U.S. Tax Reform: Death to Nonqualified Deferred Compensation?
"An employee will no longer be permitted to electively defer compensation out of salary or bonus.... [T]axes may be incurred on account of accruals of benefits under an nonqualified 'excess plan' that wraps around a tax-qualified plan. In addition, the new law would extend to stock options and stock appreciation rights, and also would seem to apply to things like profits interests.... This approach to taxation of nonqualified deferred compensation is currently the rule for tax-exempt organizations under Code Section 457(f)."
Squire Patton Boggs

on the BenefitsLink Message Boards

Excess Deferrals Refunded Before Year-End
We prepared a preliminary ADP test for a client because the test failed last year. Based on this test, the HCE has contributed about $4,000 too much. Can this amount be sent back to the employer then have the HCE's pay corrected on the payroll side of things? (Can you tell that I work for a payroll company?)
BenefitsLink Message Boards

Family Attribution in Potential Controlled Group Situation
I am not an expert in the controlled group world and would appreciate any input on whether this scenario falls under a brother-sister controlled group. [1] Company A -- sole proprietor -- Dave 100%; [2] Company B -- S-Corp -- Dave is an employee -- Dad owns 100%; [3] Company C -- Dave owns 15%, Dad owns 50% and various family members own 35%. None of the companies are related or have any business relations with each other. Because the family attribution rules apply, I am not sure if Company A and Company B constitute a controlled group.
BenefitsLink Message Boards

ESOP NUA Tax rules
To take advantage of the Net Unrealized Appreciation (NUA) tax rules for shares distributed from an ESOP, the IRS requires a Lump Sum distribution from all of the employer's qualified plans of the same type (that is, all pension plans, all profit-sharing plans, or all stock bonus plans). If the employer has a 401k plan and a separate ESOP, do employees have to take a Lump Sum distribution of both the 401k and the ESOP to take advantage of the NUA? I've read different opinions on this.
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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