Retirement Plans Newsletter

February 2, 2018

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Jobs

Enrolled Actuary
Red Bank Pension Services, Inc.
in NJ

Pension Analyst / Administrator
Red Bank Pension Services, Inc.
in NJ

Contract RASC Benefits Analyst 3
University of California Office of the President
in CA

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2018 Leadership Summits
March 14, 2018 in TX
National Alliance of Healthcare Purchaser Coalitions

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Give Plan Participants What They Need to Boost Retirement Confidence
"[A]ctions sponsors can undertake to better address participant needs and wants: [1] Improve investment education efforts ... [2] Do not make assumptions about what employees need to hear.... [3] Improve saving behavior with automatic enrollment and features.... [4] Offer access to financial advice and tools to gauge whether they are saving enough.... [5] [P]eriodically survey employees to gauge their benefit expectations and use this insight to develop better plans."
PlanPILOT

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The Plan Committee: Common Problems
"Not reporting up to the board (the failure to oversee).... Committee collapse.... Failure to fully utilize the plan adviser and other experts.... Not keeping track of required plan amendments.... The committee does not control its meetings.... Not enough staff work done before the meeting."
Fiduciary Plan Governance, LLC

2017 NCPERS Public Retirement Systems Study (PDF)
39 pages. "The market value of fund assets now exceed the actuarial value of assets for the 2017 respondents ... [A]ll responding funds report the total cost of administering their funds and paying investment managers is 55 basis points.... [F]unds that participated in both 2016 and 2017 show a drop to 52 basis points.... The average investment assumption is 7.5 percent.... [E]mployer contribution rates have risen from 18 percent of fund income in 2016 to 22 percent of fund income."
National Conference on Public Employee Retirement Systems [NCPERS]

Pension Finance Update, January 2018
"2018 started out with a bang for pension sponsors, with both stock markets and interest rates moving higher, producing the best month for pension finance in almost three years. Both model pension plans ... were up last month: Plan A gained 5%, while Plan B gained more than 1%:"
October Three Consulting

CalPERS Raises Pensionable Compensation Caps for 2018
"The compensation limit for classic members for the 2018 calendar year is $275,000; raised from $270,000 in 2017. The compensation limit for new members for the 2018 calendar year is $121,388 for Social Security Participants and $145,666 for Non-Social Security Participants.... Employees with membership dates prior to July 1, 1996, are not impacted by these limits."
Liebert Cassidy Whitmore

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Retirement Savings Plans and Tax Reform: How Will It Affect You?

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Estimates of the Financial Effects on Social Security of H.R. 4584, the 'Student Security Act of 2017' (PDF)
"H.R. 4584 specifies that for every $550 (in 2018 dollars) in student loan balance that a person chooses to have forgiven, his or her [earliest eligibility age] and [normal retirement age] would be increased by one month.... [These] estimates [assume] that one-half of eligible student loan amounts would be forgiven with this offer.... [T]he long-range OASDI actuarial deficit would decrease from 2.83 percent of payroll under current law to 2.52 percent of payroll assuming enactment of the Bill."
U.S. Social Security Administration [SSA]

Selected Discussions
on the BenefitsLink Message Boards

Excluding a Nonhighly Compensated Employee from a Safe Harbor Match
Takeover plan excludes HCEs from the safe harbor match because it has non-physician professionals who are highly paid and the owner-physician doesn't want them to get a match. One of them made just less than $120,000 in 2017 and so we started up the pay period SH match for 2018 and the owner is not happy about it. Of course the plan cannot be amended at this point for 2018. Looking ahead though, if the plan were amended for 2019 to exclude this class of employees from the SH match (instead of excluding HCEs), my concern would be testing. There would be an exclusion of, say, 4 HCEs including the owner and maybe one NHCE professional. How would ADP testing be done on this excluded/disaggregated part of the plan? The plan is not top-heavy at this time -- thankfully!
BenefitsLink Message Boards

In-Kind Contribution to a Defined Benefit Plan
We have a takeover DB plan for 2017. We're working on 2017 now. The client made a $220K contribution in September 2017, for 2016. $20K was needed for minimum funding purposes for 2016. The previous actuary prepared a Schedule SB detailing this contribution. While balancing the trust, we discover that the client contributed shares of stock to the plan -- not cash. Now what? I believe the client has a prohibited transaction that needs to be fixed (by selling the shares that were contributed in September 2017) and excise taxes to be paid for 2017 and 2018. Does the client still get a deduction for 2016? Does our actuary need to amend the 2016 SB? Any other issues that I'm missing?
BenefitsLink Message Boards

Timing of Loan Payments After Employment Termination
Participant terminated employment in 2015. Employer allowed him to make personal payments on his 401k loan. The last payment was in January 2017. According to the recordkeeper's amortization schedule, that payment paid up the loan to April 2018. Now he wants to make another payment. Can he still do that because it's been over a year? I thought payments must be made at least quarterly.
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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