Retirement Plans Newsletter

November 14, 2017 logo logo
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in OH

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Webcasts, Conferences

WEB Atlanta Annual Holiday Social
December 7, 2017 in GA
Worldwide Employee Benefits Network [WEB] - Atlanta Chapter

Just for ERPAs Workshop
February 6, 2018 in FL
FIS Relius Education

Advanced Pension Conference
February 7, 2018 in FL
FIS Relius Education

First Quarter 2018 Washington Update
February 8, 2018 WEBCAST
ASPPA [American Society of Pension Professionals & Actuaries]

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[Official Guidance]

Text of IRS Rev. Rul. 2017-22: Covered Compensation Tables for 2018 (PDF)
"This revenue ruling provides tables of covered compensation under Section 401(l)(5)(E) of the Internal Revenue Code and the Income Tax Regulations thereunder, for the 2018 plan year.... For purposes of determining covered compensation for the 2018 year, the taxable wage base is $128,700."
Internal Revenue Service [IRS]


Registration Open -- Unique Conference for Apprenticeship Training

Sponsored by International Foundation of Employee Benefit Plans [IFEBP]

The Institute for Apprenticeship, Training and Education Programs provides best practices and ways to create effective apprenticeship programs. Register to discuss topics from recruitment and retention to adult learning and fiduciary responsibility.

[Official Guidance]

Text of PBGC Interest Rate Update for Benefits Payable in Terminated Single-Employer Plans, December 2017
"The December 2017 interest assumptions under the benefit payments regulation will be 0.75 percent for the period during which a benefit is in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. In comparison with the interest assumptions in effect for November 2017, these assumptions are unchanged."
Pension Benefit Guaranty Corporation [PBGC]

[Guidance Overview]

Puerto Rico Governor Authorizes Rules for Retirement Plan and IRA Distributions in Wake of Recent Natural Disasters
"Under EO 2017-067, the PR Treasury must create: [1] Tax rules applicable to distributions from qualified retirement plans and [IRAs] that are disbursed following Hurricane Maria or any disaster declared by executive order ... [2] Rules on responsibilities imposed to trustees, administrators and service providers of retirement plans and IRAs in connection with compliance with their tax withholding responsibilities ... [3] Rules applicable to loans taken from participants in a retirement plan.... [4] Preferential tax rates for Puerto Rico residents who make Eligible Distributions from retirement plans and IRAs."

2018 Planning for ERISA Single-Employer DB Plan Operations
"Adjustments to funding policy in light of the eventual phasing out of funding relief, management of escalating PBGC premiums, preparation for changes to mortality tables used to determine funding requirements, and consideration of alternatives for measuring accounting pension cost should be on your checklist for serious discussions with your plan's actuary.... [Other items include:] Implement benefit restrictions if funding shortfall or top-25 highly compensated employees rules apply.... Identify lost participants with vested benefits.... Address foreign asset reporting obligations.... Evaluate the need for plan amendments -- and deadlines."

Are You Up to Date on Qualified Plan Beneficiary Rules?
"Many different rules impact the administration of paying a deceased participant's benefit to the correct beneficiary. These include knowing your plan document, required minimum distribution (RMD) regulations for beneficiary options, spousal consent issues, properly completed beneficiary designation forms, and having iron-clad procedures for paying beneficiaries. Keeping up to date with these rules can save you time, money and aggravation."


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Fiduciary Standard Quandary: First Avoid 'Harm'onization
"Reliance on disclosure may be viewed as a loophole.... Reliance on more disclosure as a remedy will water down the standard and provide weak consumer protection ... The very term 'harmonization' implies compromise.... All the voices for harmonizing are coming from the brokerage industry seeking to effectively eliminate the 1940 Act and the Conflict-of-Interest Rule. Though rarely mentioned, the 1940 Act and suitability standards have already been substantially harmonized, de facto, regarding conflicts in enforcement."
Fiduciary News

Connecticut Pushes Back Implementation Date for State-Run Auto-IRA Program
"The [Connecticut Retirement Security Authority (CRSA)] is responsible for the design and implementation of a Connecticut Retirement Security Exchange for the state's private sector employers and their employees. The CRSA Board of Directors voted to defer the statutory Jan. 1, 2018 implementation date of the Exchange.... 'There appears to be misinformation that employers must purchase retirement savings products for their employees by Jan. 1, 2018,' [Labor Commissioner Scott D. Jackson] said. 'However, we want employers to be aware that this is inaccurate information.' "
National Association of Plan Advisors [NAPA]

GE and Other $20 Billion Club Members Are Making Some Serious Pension Contributions
"General Electric just announced one of the largest pension contributions on record -- a $6 billion, voluntary debt-funded contribution to be paid in 2018. GE's peers from the $20 billion club (... the 19 U.S. listed corporations with the largest pension liabilities) have been following a similar game plan in 2017."
Russell Investments

Debt in Retirement Affects Confidence
"Only half of retirees with debt are confident they will be able to live the lifestyle they want, but 70% of retirees without debt are confident.... Sixty-six percent of Americans view a mortgage held during one's working years as 'good' debt, but only 40% think this is true for those in retirement. Two-thirds (66%) of Americans do not think it is a good idea for people to carry mortgage debt into retirement."


Collecting Taxes on 401(k) Deferrals: The Wrong Policy at the Wrong Time
"Congress is looking for ways to pay for a reduction in corporate tax rates, and the money has to come from somewhere. So why not collect the tax on 401k contributions now? This short-term gimmick eliminates individual choice and risks thwarting the long-term goal of increasing retirement savings. What can we do to convince our elected officials this is a bad idea?"
Carol Buckmann, J.D., via PenChecks


The 'Pension Crisis' Is a Myth, Part 6
"The National Institute on Retirement Security (NIRS) calculates that the national average is that for every dollar invested in a pension fund, $2.21 is generated. This money goes directly into local economies through the spending of retirees. Cities and states are actually getting back more money than they spend on public pensions.... The reality is that funding public pensions does not 'crowd out' spending in other areas."
National Public Pension Coalition


'Rothification' Would Be Likely to Reduce Retirement Saving
"As part of tax reform, Congress considered changes to 401(k)s that would require most new contributions to go to a Roth, rather than a traditional, account. This budget gimmick would help pay for tax cuts because Roths are taxed up-front, rather than in retirement. Such a change, however, could also affect how much people save. Some could save more by keeping their contribution steady. Some may save the same by reducing their contribution to maintain their take-home pay. But many, especially those who have lower incomes or are cash-strapped, may overreact and save much less. Rather than risk disrupting the retirement savings system, a better idea is to focus on actions to boost saving and expand access to workplace retirement plans."
Alicia H. Munnell and Gal Wettstein, Via Center for Retirement Research at Boston College

Benefits in General

AICPA's Progress Toward Improving Employee Benefit Plan Audits
"An enhanced peer review program was created with subject matter experts specific to employee benefit plan audits to review these engagements. The enhanced peer review program identified the following two trends: [1] 20% of engagements had material nonconformity related to improper utilization of SOC reports and certifications; and [2] More than 50% of engagements had material nonconformity related to inadequate or no documentation."
Schneider Downs

A Look at the House Ways and Means Committee Revisions and the Senate Mark of Tax Cuts and Jobs Act (PDF)
"The Senate Mark also introduced a five percent Federal income tax withholding obligation on compensation paid to independent contractors and included other differences to the final House bill impacting [1] compensation-related deductions, [2] employer-provided fringe benefits, [and] [3] retirement plans ... [T]he House bill and Senate Mark are aligned on changes to section 162(m), including the proposed elimination of the performance-based compensation exception to the $1 million limit on the deductibility of covered employee compensation"
Baker McKenzie

Deadlines Loom for Retirement, Health & Welfare Plans
"If it is true that change is the only constant in life, it is equally true that knowledge is the great equalizer. Irrespective of the uncertainty relating to potential Income Tax Reform legislation, employers should be aware of important year-end deadlines and considerations related to their retirement and health and welfare plans."
Husch Blackwell

Executive Compensation
and Nonqualified Plans

Executive Comp Programs Still on the Chopping Block in Senate Version of Tax Reform (PDF)
"[The proposed Code section 409B would exclude] from the definition of non-qualified deferred compensation death, disability, sick leave, compensatory time and vacation leave programs. Unfortunately, the Senate proposal specifically prohibits the IRS from creating an exception from these rules for any type of severance pay plan, which means employers would no longer be able to provide for multiyear severance pay or benefits.... However, the Senate proposal states that it would not apply to section 83 property or amounts contributed to a Code section 402(b) nonqualified employee trust."
Trucker Huss

House and Senate Have Their Sights on Deferred Compensation in Proposed Tax Bills
"The key changes that the Ways and Means Committee made to the bill include ... [1] Code Section 409B was withdrawn from the bill, meaning that Code Sections 409A and 457(b), and all other current guidance for nonqualified plans, should remain in place.... [2] New Code Section 83(i) was added, which would allow certain privately held company employees to defer recognition of income related to stock options."
Porter Wright Morris & Arthur LLP

on the BenefitsLink Message Boards

Multiple Employer Plan: Testing Owner's Compensation
I have 2 companies that have a multiple employer plan. My question has to do with the compensation for the owner. I have an owner who owns 100% of Company A and 50% of Company B. This owner receives W-2 compensation from both companies. How do I test the plan? Do I have this owner in both companies' separate testings and give them an allocation in both? (They want to do the maximum.) Or am I allowed to aggregate the compensation and only have the owner in one company's testing? I am leaning toward the first way because they do need to be tested under each employer. I know that the 415 limit is based on the compensation the owner receives from both employers.
BenefitsLink Message Boards

ADP/ACP Refund: Calculation of Earnings
Formula for determining earnings on refunds is earnings multiplied by excess divided by the sum of the beginning balance plus contributions for the plan year. What does contributions for the plan year mean? Does it have to recognize all contributions including receivables? If not, why not?
BenefitsLink Message Boards

Press Releases

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Centre for Fiduciary Excellence [CEFEX]

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David Rhett Baker, J.D., Editor and Publisher
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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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