Retirement Plans Newsletter

January 15, 2018

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Webcasts, Conferences

ESOP Litigation Update and Evolving Trends in ESOP Valuations
February 23, 2018 WEBCAST
American Bar Association Joint Committee on Employee Benefits [JCEB]

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[Guidance Overview]

New User Fees for Retirement Plan Corrections
"[T]he cost of correcting plan loan errors, late amendments, or missed minimum distributions will increase for most employers.... [A] large employer (plan greater than $10M in net assets) who made errors in administering a dozen or fewer plan loans could have corrected all of these loans for a $300 fee. Now the fee will increase to $3,500. For this reason, there will be more incentive to correct all errors in a single filing when possible."
Nelson Mullins

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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.


Text of Ninth Circuit Dismissal of Hewlett-Packard Stock Drop Fiduciary Breach Claim (PDF)
"[Plaintiff Mike Laffen] also contends that pursuant to Defendants-Appellees' duty of prudence, Defendants-Appellees should have at least prevented the Plan from making new investments in HP Common Stock Fund and/or made public disclosures about HP stock's risks following the whistleblower's allegations.... Because Laffen has not plausibly alleged an alternative action Defendants-Appellees could have taken that was consistent with securities laws and that a similarly situated prudent fiduciary would not have viewed as more likely to harm than help the Plan, Laffen fails to plead a claim for breach of the duty of prudence." [Laffen V. Hewlett-Packard Co., No. 15-16380 (9th Cir. Jan. 9, 2018; unpub.)]
U.S. Court of Appeals for the Ninth Circuit

Some Millennials Are Saving for Retirement
"Whatever you believe about their financial habits, some millennials at least are sitting on six-figure retirement accounts. In a Fidelity Investments analysis of 59,000 millennials -- those born between 1981 and 1997 -- who have participated in their company's 401(k) plan for 10 years, the average balance was $109,400 at the end of June 2017.... [T]he common thread -- and secret to a fat 401(k) -- is consistency."
Business Insider

Legislation to Promote Retirement Plan Lifetime Income Options Introduced in the House
"Reps. Tim Walberg (R-MI) and Lisa Rochester (D-DE) have introduced the Increasing Access to a Secure Retirement Act (H.R. 4604), which is legislation intended to clarify and simplify rules under which retirement plan sponsors may offer certain lifetime income investments to their plans' participants.... H.R. 4604 has been referred to the House Committee on Education and the Workforce."
Ascensus

New Jersey Senator Introduces Bill Requiring Advisers to State They Are Not Fiduciaries
"The bill requires non-fiduciary investment advisers to make a plain language disclosure to clients orally and in writing at the outset of the relationship that ensures that individual investors are aware of the potential conflicts of interest ... The bill requires confirmation by clients that they understand the nature of the non-fiduciary relationship[.]"
Pensions & Investments

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What the Tax Cuts and Jobs Act Means for Retirement Benefits
"For Roth IRA conversions in 2018 and later, there will be no option to recharacterize the conversion; all Roth conversions will be irrevocable. What's not clear yet is how the law impacts 2017 conversions."
Morningstar

Executive Compensation
and Nonqualified Plans

[Guidance Overview]

Tax-Exempt Organizations Face New Executive Compensation Rules Under Tax Reform
"The excise tax applies not only to pay exceeding $1 million in a given year, but also to any 'excess parachute payment'.... [which] is any payment contingent on the employees separation from employment to the extent the separation payments exceed three times the employees average pay over the preceding five years. Excess parachute payments do not have to reach $1 million before becoming subject to the excise tax[.]
Kaufman & Canoles, P.C.

[Guidance Overview]

Executive Compensation Changes Under Tax Reform: An Update for Plan Sponsors (PDF)
"While the transition rule may seem straightforward, employers should exercise caution before modifying existing contracts if they wish to preserve the grandfathered status of those arrangements.... [If] qualified stock is transferred to a qualified employee and the employee timely makes a Section 83(i) election, the employee recognizes income with respect to that stock in the tax year that includes the five-year anniversary of the date the employee's rights in the stock vest, subject to earlier inclusion if certain events occur."
Drinker Biddle

Selected Discussions
on the BenefitsLink Message Boards

IRS Notice 2017-60: Meaning of "Adverse Business Impact Greater Than De Minimis"
Does anyone know of how the "would result in an adverse business impact that is greater than de minimis" exception should be interpreted by plan sponsors who want to hold off the mortality table change for this year? I represent a company that has $3 billion in revenue each year and postponement of mortality table change would only yield a savings of around $10 million. I'm thinking this isn't sufficient to meet the requirement of the Notice. What say you?
BenefitsLink Message Boards

Payment by Plan A of Plan B's Expenses
Employer sponsors more than one plan. Each plan has a plan expense account (excess revenue account held within the trust). Can the plan expense account from Plan A be used to offset reasonable administrative expenses for Plan B? Any guidance would be greatly appreciated!
BenefitsLink Message Boards

Post-Termination Amendment to Allow Partial Distributions from Defined Contribution Plan?
Any reason a DC plan that didn't allow partial distributions at termination date (12/31/2017) can't be amended to allow them now? Final distributions won't be available for quite some time, but the plan sponsor wants participants to be able to receive some money now. I seem to recall some post-termination amendment issues with DB plans, though.
BenefitsLink Message Boards

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BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2018 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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