Retirement Plans Newsletter

January 31, 2018

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Claiming Abandoned Assets Can Be Profitable, But How Can Sponsors Protect Participants?
Begins on page 8. "While there are good reasons to believe that assets in ERISA plans are protected from escheatment, many states' unclaimed property laws are quite broad and include employee benefit plans as covered entities.... One of the cases in which qualified assets may be vulnerable is plan termination.... Once escheated, funds lose their qualified status. In addition, states often keep any interest earned by the funds."
Plan Sponsor Council of America [PSCA]

[Advert.]

Navigating the Compliance Challenges of Missing Participants

Sponsored by Pension Benefit Information, Inc.

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Court of Appeals Answers More Questions on Church Plan Exemption
"The first question decided by the Court: is the entity that offered the plan a tax-exempt organization that is associated with a church? ... The second issue decided by the Court: is the entity's retirement plan maintained by an organization whose principal purpose is administering or funding a retirement plan for entity employees? ... The third issue: is principal-purpose organization itself associated with a church? ... Finally, the Court rejected the claim that the church plan exemption violates the Establishment Clause." [Medina v. Catholic Health Initiatives, No. 16-1005 (10th Cir. Dec. 19, 2017)]
Hodgson Russ LLP

Are Advisors Becoming Fee Litigation Defendants? What to Do About It
"Understand that the advisor hasn't assumed all responsibility.... If you are a company fiduciary, ask questions ... If you are an advisor, keep and share written records ... Make sure your plan benchmark is an appropriate one.... Make sure that the different alternatives available to the plan are evaluated and discussed, ... Make sure that there are good Minutes ... Make sure that the committee members know how to analyze fees.... [R]eview your advisor's performance and benchmark your advisor's fees on a regular basis."
Cohen & Buckmann, P.C.

403(b) Vendor Selection Tips
"Higher education and other 403(b) plans were typically established with a different goal than 401(k) plans. Therefore, 403(b) plan sponsors may want to step back and reevaluate why they're offering a retirement plan, what are the goals for the plan, what are the different recordkeeping structures available, and how this all aligns with their institution's goals. A traditional vendor vetting process would then follow with a special emphasis on the features and services that can most make a difference in their specific situation."
Westminster Consulting

America's Retirement Score: In Fair Shape, Moving Closer to Green (PDF)
"America's Retirement Score for the typical American household is 80, which falls into the yellow 'Fair' zone, meaning the typical saver is on target to have 80 percent of the income Fidelity estimates they will need to cover retirement costs ... Based on the Retirement Scores, 50% of American households are at risk of not being able to cover essential expenses in retirement.... Overall 61% of households believe they will have enough money to maintain the lifestyle they want in retirement."
Fidelity

[Advert.]

Tools & Techniques of Employee Benefit and Retirement Planning

Sponsored by The National Underwriter Company

Practical analysis of the entire range of employee benefit planning. 15th Edition includes updated information on the new DOL fiduciary rule, Form 5500 filings, QSEHRAs and more. Use code BENLINK for 10% discount.


Opt-Outs Running High in OregonSaves Program
"As of Dec. 1, after five months of the pilot phase, the combined savings of 1,162 participating workers was $255,721.99.... However, as of Jan. 24, about 20% of employees had opted out of opening an IRA ... That's better than the earlier results; the program's first wave (11 employers) saw an opt-out rate of 25%, and the second -- comprised of 43 employers (and about 2,500 eligible workers -- experienced a 30% opt-out rate as of Dec. 4[.]"
American Society of Pension Professionals & Actuaries [ASPPA]

[Opinion]

Alicia Munnell Explains the Social Security Fix No One Wants
"Policymakers should fix Social Security by raising taxes. Money doesn't come from heaven. It's going to have to come from someplace, and it should be done on the revenue side. We need to maintain benefits. People don't have anything else other than 401(k)s, and a significant portion of the population doesn't even have those."
ThinkAdvisor

[Opinion]

The Pension 'Hail Mary' That Should Never Have Happened
"A little over a decade ago, corporate and governmental pensions chose to wildly gamble in secretive, opaque, illiquid, toxic investments that carried excessive and hidden fees and expenses, were impossible to accurately monitor or value, had no prior tracks records of performance and carried very high and unacceptably large risk of losses -- hedge and private equity fund of funds. That's the allegation in an unprecedented lawsuit recently filed on behalf of state taxpayers and the Kentucky Retirement Systems' pension plans, reportedly the worst-funded pension system in the nation."
Edward Siedle, in Forbes

Benefits in General

Nearly One in Five Workers Had Access to Financial Planning Benefits in 2017
"In 2017, about one-fifth of private industry workers were offered free or subsidized financial planning services from their employers. These services help employees make decisions about savings, borrowing, investing, home buying, education expenses, or retirement. While union and nonunion workers had similar rates of access to financial planning services, access varied based on size of establishment, wage level, and industry."
U.S. Bureau of Labor Statistics [BLS]

Employment Cost Index Summary, December 2017
"Compensation costs for civilian workers increased 0.6 percent, seasonally adjusted, for the 3-month period ending in December 2017 ... Wages and salaries (which make up about 70 percent of compensation costs) increased 0.5 percent, and benefits (which make up the remaining 30 percent of compensation) increased 0.5 percent."
U.S. Bureau of Labor Statistics [BLS]

Selected Discussions
on the BenefitsLink Message Boards

Counting Comp Paid in Year After Employment Termination
Participant terminates in December. He has a final paycheck payable in the first few weeks of 2018, for services performed in 2017. The plan document states that the compensation paid during the first few weeks of the next plan year is excluded. Would that final paycheck be excluded from both 2017 and 2018 compensation for testing purposes? If so, what if the participant deferred something from that paycheck. Would that deferral be excluded for testing purposes as well?
BenefitsLink Message Boards

Employee Terminated on Last Workday of Year but December 31, 2017 Was a Sunday
Person terminated on last workday of 2017, which was Friday, December 29, 2017. Eligibility for the profit sharing allocation requires that a participant be there on the last day of the year (12/31). That's not possible for this plan sponsor because it's closed on weekends. Is the person deemed to have been there on the last day, so as to qualify for the allocation? How does this last day is Sunday impact coverage (and other) testing?
BenefitsLink Message Boards

Employee Becomes Agency Temp Mid-Year, Is He 'Employed' on Last Day of Plan Year?
A plan has last day requirement for discretionary nonelective. If an employee becomes an agency temp midyear, is he employed on the last day?
BenefitsLink Message Boards

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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 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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