Retirement Plans Newsletter

November 20, 2017

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Jobs

Retirement Plan Administrator
Steidle Pension Solutions, LLC
in NJ

Retirement Plan Administrator
Bronfman Rothschild
in MN, WI

Retirement Plan Documents Consultant
Alliance Benefit Group of Houston, Inc.
in TX

Benefit Plan Reporting Specialist
Plante Moran
in MI

401(k) Operations Manager
Nadler Financial Group, Inc.
in IL

Executive Director
North Dakota Public Employees' Retirement System
in ND

►See 154 Jobs

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[Official Guidance]

Cash or Deferred Arrangement LRM and Information Package, October 2017 (PDF)
43 pages. Oct. 2017, published online Nov. 2017. "This information package contains samples of plan provisions that satisfy certain specific requirements of the Internal Revenue Code... Note that these CODA LRMs assume the plan will permit catch-up contributions (defined in Code Section 414(v)) for participants age 50 and over and Roth Elective Deferrals (defined in Section 402A)." [Also online: 45-page red-lined version showing changes from the previous (October 2011) version.]
Internal Revenue Service [IRS]

[Advert.]

Register Early and Save -- March Certificate Series Program

Sponsored by International Foundation of Employee Benefit Plans [IFEBP]

The Certificate in Retirement Plans provides an overview of defined benefit and defined contribution plans, Social Security, basic investment principles, qualified plans, and 401(k) plans and the legal and regulatory environment surrounding plans.


Comparing Small Law Firm 401(k) Plans: Fees, Matching, and the Best States to Work In
"Here's key information, broken down by state, of small firm 401(k) plans ... D.C.'s $9K average employer contribution [far exceeds] even the nearest competition (Montana and Oregon). Coincidentally, Small Law employees in D.C., Montana, and Oregon also have the highest average contributions overall suggesting -- as one would expect -- that a good matching program encourages employees to contribute too."
Above the Law

What Free Lunch? The Costs of Overdiversification
"At some point, diversification among a set of diversified portfolios may exceed what is prudent, or required by fiduciaries. [This article examines] the negative effects of excess diversification in one asset class--equities.... [The authors] introduce a framework that illustrates how accurate active managers must be at various risk levels in order to hit their return objectives."
CFA Institute

Latest SOA Analysis Shows Year Over Year Increase in Mortality
"Reflecting this change, SOA stated that 'most 2017 pension obligations calculated using Scale MP-2017 (with a discount rate of 4.0%) are anticipated to be approximately 0.7% to 1.0% lower than those calculated using Scale MP-2016.'... IRS said it intends to (more or less) annually review applicable mortality improvement assumptions as they are revised by the SOA. It seems unlikely -- notwithstanding that the new 2017 SOA scale has been published now (in 2017), before the IRS regulation's 2018 effective date -- that IRS will update its rules for 2018."
October Three Consulting

Multiemployer Pension Plan Funding Nears Peak Since 2008 Crash
"The interim update by Milliman compared changes in estimated funding levels at U.S. multiemployer defined benefit (DB) plans from December 31, 2016, to June 30, 2017. The aggregate funded percentage for all plans is estimated to have improved to 81% as of June 30 from 77% at the end of 2016, with a multiemployer plan system shortfall reduced by $21 billion."
HR Daily Advisor

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Multiemployer Plan Pension Rescue Bill Proposed
"The bill creates a new agency within the Department of the Treasury called the Pension Rehabilitation Administration (PRA) to make loans to plans and to receive loan payments. The PRA would receive funding from government bonds.... A plan would receive the loan and be required to either purchase an annuity contract for benefits in pay status, or establish a bond portfolio that would match the anticipated payment stream for benefits in pay status. The plan would make interest payments on the loan until maturity."
Cheiron

Five Ideas for Fixing Unionized Workers' Pension Crisis
"[T]he Multiemployer Pension Reform Act was intended to fix the troubled pension system, but it hasn't quite done the job. Lawmakers, as well as major employers such as United Parcel Service, have thrown out proposals for fixing the pension system. Almost all of the proposals call for some sort of loan program for the plans."
Bloomberg BNA

First Bankers Trust Settles Three ERISA Suits
"According to DOL allegations, FBTS violated [ERISA] when it approved stock purchases by three employee stock ownership plans (ESOPs). As part of the agreements, FBTS will pay $15.75 million to the plans and reform its procedures for handling ESOP transactions."
planadviser

Younger Workers Expect to Mostly Fund Their Own Retirement
"[W]orkers aged 25 to 37 expect that 65% of their retirement income will come from their own savings and other personal sources, as opposed to just Social Security. Older generations, meanwhile, continue to be more reliant on those benefits ... [T]hat 65% figure ... is pretty on-target, assuming Social Security doesn't face sizable cuts in the future."
Fox Business

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Impact of Borrowing from Your Retirement Plan
"This calculator can help you make a more informed decision about whether a loan is the right approach for your financial situation."
Smart About Money

[Opinion]

Don't Dismantle Public Pensions Because They Aren't 100 Percent Funded (PDF)
"In the last decade or so, state and local policymakers ... have been slowly dismantling public pensions. Why? Because, they argue, pension plans are underfunded and cannot be sustained.... Ability to pay depends on whether an entity can meet its cash flow needs and whether the total assets of the entity -- the public employer -- are a reasonable fraction of its total liabilities."
National Conference on Public Employee Retirement Systems [NCPERS]

Executive Compensation
and Nonqualified Plans

Proposed Tax Reform Bills of Senate and House Now Aligned on Key Compensation and Benefits-Related Tax Provisions
"[B]oth the House and Senate proposals leave the current law regarding the taxation of stock options and restricted stock units (RSUs) largely intact, stepping away from the initial proposals to tax such awards at vesting.... The proposed amendments would eliminate a publicly traded company's ability to deduct compensation above $1 million that it pays in any year to any covered employees... [W]ith the proposed 20 percent corporate tax rate, the lost tax deduction will be smaller than under current law."
Wilson Sonsini Goodrich & Rosati

Section 162(m) FAQs Under the House and Senate Tax Bills
"What big changes are in store for Section 162(m) in the current tax bills? ... What performance-based awards are affected? ... When would the changes kick in? ... How would the changes affect old awards and deferrals that result in compensation in future years? ... Should a company accelerate payouts of 2017 annual incentive, to pay before year end?"
Steven Hall & Partners

Discussions
on the BenefitsLink Message Boards

Must Have 500 Hours During a 6-Month Period in Order to Participate?
If a plan has a six-month service requirement for participation, can it also have a minimum hours requirement (e.g., 500 hours in six months)? I thought that if you had less than 1 Year of Service for eligibility then you couldn't have an Hours of Service requirement, but a volume submitter plan document seems to allow it under the eligibility section. I had a client years back that had six consecutive month for eligibility and as a result of an IRS audit was required to allow certain employees to participate even though we thought were excludable. The IRS cited the service spanning rules.
BenefitsLink Message Boards

Must Plan Sponsor Provide Copy of Adoption Agreement upon Participant's Request?
A participant is demanding a copy of the Adoption Agreement. She was provided will all the other required notices. Does the employer have discretion as to whether to provide the Adoption Agreement?
BenefitsLink Message Boards

Reliance on Technical Release 2011-03R for Delivery of Disclosures
Is anyone relying on Technical Release 2011-03R to deliver annual fee disclosures or any other disclosures? I don't see any advantage to using that release over the safe harbor in the regulations that covers consent to electronic delivery. Are there any?
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David Rhett Baker, J.D., Editor and Publisher  davebaker@benefitslink.com
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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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