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January 8, 2018 logo logo
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Benefits Administrator
in AZ

Pension Administrator Assistant
Benefit Equity, Inc.
in CA

DB Specialist
AimPoint Pension

Client Implementation Specialist
AimPoint Pension

Employee Benefits Consultant
Plante Moran
in MI

Plan Compliance Consultant
T. Rowe Price
in CO, MD

Retirement Plan Compliance Analyst QKA
Newport Group
in AL, AZ, CA, FL, IA, IL, IN, KS, MA, MN, NC, NY, OH, TX, VA, WA, WI, Telecommute

Enrolled Actuary or Experienced DB Plan Admin
United Benefit Pensions Inc.
in NY

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[Official Guidance]

Text of 2018 PBGC Premium Payment Instructions (PDF)
65 pages. "The filing requirements for 2018 are almost identical to the filing requirements for 2017. Here are the key changes to note for 2018: [1] Changes in single-employer premium rates... [2] We expanded the examples in the section about how to determine premiums in a year when a plan is involved with a Spinoff, Merger or Consolidation. [3] We expanded the section about short plan years to provide additional information for plans expecting to distribute assets during the 2018 plan year pursuant to a standard termination. [4]We added a list of common filing errors and provided details about those errors in a new Appendix."
Pension Benefit Guaranty Corporation [PBGC]


Online Learning Course: 401(k) Plan Structure

Sponsored by International Foundation of Employee Benefit Plans [IFEBP]

Review considerations for structuring a 401(k) plan. Topics include salary deferral limits and catch-up contributions, matching and profit-sharing contributions, nondiscrimination testing and safe harbors.

[Official Guidance]

Text of IRS Rev. Rul. 2018-04: Covered Compensation Tables (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. These tables of covered compensation reflect a revision to the taxable wage base for 2018 that was announced by the Social Security Administration on November 27, 2017, and apply in lieu of the tables that were provided in Revenue Ruling 2017-22[.]"
Internal Revenue Service [IRS]

[Official Guidance]

Text of 2017 IRS Form 5329: Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts (PDF)
"If you only owe the additional 10% tax on early distributions, you may be able to report this tax directly on Form 1040, line 59, or Form 1040NR, line 57, without filing Form 5329."
Internal Revenue Service [IRS]

Final PBGC Rule for Locating Missing Participants Gives Terminating DC Plans More Options
"The PBGC will pay out benefits with interest when participants are found, and allow the terminated DC plans to stop establishing [IRAs] for the balances owed to participants who can't be located ... The changes also should make it easier for participants to search for missing benefits accrued in a newly terminated plan and to claim them, although it will be several months before new missing-participant names are added to the existing online directory[.]"
HR Daily Advisor

Pre-Approved Plan Eligibility Checklist
"Use this checklist to determine which retirement plans can use pre-approved plan documents to satisfy the requirements for preferential tax treatment under the Internal Revenue Code[.]"
Venable LLP


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401(k) Trends for 2018
"[1] Inclusion of HSA information in 401k employee education sessions ... [2] Addition of [socially responsible investing] information/investments ... [3] Understanding your fiduciary responsibilities ... [4] Incorporation of behavioral economics/finance elements in plan design ... [5] Addition of annual re-enrollment ... [6] Stretching matching contributions ... [7] New limitations on loans ... [8] Selection of the right QDIA ... [9] Addition of participant investment advice ... [10] Use of specialized 401k investment advisers ... [11] Continuing emphasis on financial wellness education."
Lawton Retirement Plan Consultants

New Tax Law Has Minimal Impact on Retirement Plans
"[The only] change directly affecting corporate retirement plans is an amendment of the rollover rules to allow an individual until their tax return due date (with extensions) to roll over the balance of a loan that is unpaid as of separation from service or plan termination.... [I]ncreases in investment returns, stimulated by the corporate tax cut, will increase the retirement savings tax benefit ... [This article] consider[s] some key elements of the bill bearing on retirement savings tax policy."
BMO Retirement Services

Tax Law's Pass-Through Provision Could Harm 401(k) Plans
"The alarm stems from a new tax mismatch created by the rules on pass-through entities ... This lower rate provides a disincentive for small-business owners to stash pre-tax money in a 401(k) plan, observers argue. Their logic: Why save money in a 401(k) now and likely pay a higher rate later upon withdrawal, when the owner can pay a lower tax rate now?"
Pensions & Investments


Retirement Industry Trends to Watch in 2018 (PDF)
"[In-plan] retirement income solutions will continue to evolve this year with a goal of providing retirement plan participants with more flexibility.... Guaranteed and non-guaranteed de-accumulation products and strategies should grow this year ... [H]elpful fiduciary guidance by the Departments of Labor and Treasury regarding annuities and other income products will help plan sponsors add retirement income strategies to their retirement plans.... For consultants, the rule and the integration of the SEC could bring further changes to business models and a continuation of the merger activity we saw in 2017"
Institutional Retirement Income Council

Benefits in General

[Official Guidance]

Text of EBSA News Release Announcing April 1, 2018 Applicability Date for Final Rule Amending Claims Procedure for Disability Benefit Plans
"[The DOL] announced [on January 5] its decision for April 1, 2018, as the applicability date for employee benefit plans to comply with a final rule under [ERISA] that will give America's workers new procedural protections when dealing with plan fiduciaries and insurance providers who deny their claims for disability benefits.... The Department received approximately 200 comment letters ... The information provided in the comments did not establish that the final rule imposes unnecessary regulatory burdens or significantly impairs workers' access to disability insurance benefits."
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

Executive Compensation
and Nonqualified Plans

[Guidance Overview]

2018 Tax Reform: Executive Compensation Changes for Publicly Held Entities
"[Publicly traded] employers will no longer be constrained by strict requirements ... in setting and approving performance goals and can make adjustments to performance goals at the conclusion of a performance period that increase compensation payable where appropriate.... [Employers will] need to reevaluate their performance metrics to take into account the impact of the reduction of the corporate tax rate to 21%. In some cases, performance metrics affected by this reduction may be permitted or required to be adjusted."
Jackson Lewis P.C.

[Guidance Overview]

Impact of Tax Reform on Some Private Company Equity Awards: Limited Income Tax Deferral Opportunities for Employees
"Additional guidance is needed to clarify, among other things, [1] the scope of the term 'transferable' in the context of transferability to employer corporations (including whether an exception will apply for customary provisions, such as an employer's right to repurchase an employee's stock after his or her employment relationship is terminated); [2] under what circumstances the provision requiring immediate income inclusion upon an individual's qualified stock becoming 'transferable' applies in light of the provision deferring income inclusion for five years after the first date on which the rights of the individual in the qualified stock become 'transferable'; and [3] when the holding period for qualified stock begins if a Section 83(i) election is made."
Perkins Coie LLP

Initial Tax Disclosures Regarding 162(m) in Proxy Statements
"[T]he Section 162(m) deduction limit for performance-based compensation has been repealed ... effective for taxable years beginning after December 31, 2017 ... This leaves the question about what to say about Section 162(m) during the upcoming proxy season. [This article provides] some examples from recent proxy statements[.]"

With Participation Rates Flat, Some NQDC Plan Sponsors to Make Changes
"The overall rate of companies offering nonqualified deferred compensation plans (NQDCPs) increased to 85% in 2017 from a survey low of 77.2% in 2015 ... 87% of respondents don't plan on making any changes to their NQDCPs.... Average participation rates were relatively flat at 47% ... Participation rates were notably higher in plans offering matching contributions (60%), while plans not offering a company contribution had an average participation rate of 37%."

Selected Discussions
on the BenefitsLink Message Boards

Terminated PBGC-Covered Plan; Deciding Date for Full-Funding Contribution
We administer an 18-participant DB plan covered by PBGC. Going through a standard termination. Sponsor will fund any difference between assets and liabilities. Participants likely will be paid their benefits in late March 2018. Exactly when should the contribution be made? Also, given the plan termination, are there any restrictions on what year the contribution deduction can be taken? Must it be 2018, or could it be 2017 if the sponsor obtains an extension of time to file?
BenefitsLink Message Boards

Impact of the Tax Cut and Jobs Act on Safe Harbor Hardship Distribution for a Casualty Loss
The Tax Cut and Jobs Act seems to amend IRC Section 165 (effective after December 31, 2017) to state that casualty losses are only deductible to the extent it is attributable to a federally declared disaster. This would mean that participants would only be able to take a hardship distribution for a casualty loss situation if they live in a federally declared disaster area, which would appear to dramatically reduce the number of participants that could take hardship distributions due to a repair of principal residence. So, in 2018, if my house burns down due to an accident and isn't covered by insurance, and the fire is unrelated to a federally declared disaster, then I can't get a safe harbor hardship distribution?
BenefitsLink Message Boards

Coverage Failed; How to Allocate QNECs?
It was discovered that coverage testing has been done incorrectly for over five years. Plan fails coverage. No fail-safe language in the plan document. We're proposing an 11(g) amendment and filing a correction under VCP. The TPA's suggestion is to allocate a QNEC contributions to the lowest paid participants sufficient to pass the AVB. While QNEC for ADP testing needs to be limited to no more than 5% or twice the representative rate, there doesn't appear to be any limitations for purposes of the QNEC for ABT. Treas. Reg. section 1.401(a)(4)-11(g)(vii) states that the QNEC should be equal to the NHCE's compensation multiplied by the ADP and/or the ACP, so I'm afraid that allocating a QNEC contribution to the lowest paid employees might be considered discriminatory by the IRS. It doesn't appear they would pass the reasonable classification test. Is it permissible to target the QNEC allocation? Any IRS guidance on how to allocate the QNEC?
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BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2018, 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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