Retirement Plans Newsletter

February 16, 2018

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EBSA Private Pension Plan Bulletin: Abstract of 2015 Form 5500 Annual Reports (PDF)
68 pages; February 2018. "The total number of pension plans grew again in 2015 to approximately 694,000 plans, a 1.3 percent increase over 2014.... [T]he number of DB plans increased in 2015 by 1.8 percent.... The number of 401(k) type plans increased yet again in 2015 by 2.5 percent, from 534,000 to 547,000. There were 65.3 million active participants in 401(k) type plans.... [T]he total amount of assets held by pension plans decreased for the first time since 2008, by 1.8 percent from $8.3 trillion to $8.2 trillion."
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

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What Delayed Retirement Means for Your Health and Well-Being Programs
"79% of employees trust their current employer to give sound advice on planning, saving and investment for retirement.... [B]usiness leaders ... see savings as the most important factor for a financially secure retirement, with health ranked fifth. Participants ranked health as the number one priority in retirement by far, followed by close relationships and having enough income for basic necessities."
Mercer

How to Respond to DOL Pension Plan Investigatory Findings
"[T]he DOL has provided no generally applicable guidance on the fiduciary responsibility to maintain pristine records or outline the scope of a fiduciary's obligations to resolve discrepancies. Instead, the DOL now appears to be using the threat of enforcement action, based on ad hoc, unarticulated, and conclusory standards, to coerce individual plan administrators to adopt procedures -- and most likely, achieve results -- that are subjectively satisfactory to the DOL."
Morgan Lewis

How to Think About Your 401(k) Vesting Schedule
"Your plan's vesting schedule provides another way to tailor employee benefits to produce the combination of incentives and rewards that best fit your business.... If you are competing heavily for workers, you may want to consider your employer contribution as a hiring incentive and your vesting schedule as an incentive to remain with the company."
ForUsAll

Class Certified in ERISA Lawsuit Targeting NYU Retirement Plan
"[The seven named plaintiffs] will represent a putative class of at least 20,000 individuals ... The decision goes into some detail when considering the defendants' arguments that the plaintiffs here do not 'adequately' represent the class they have successfully established." [Sacerdote v. New York Univ., No. 16-6284 (S.D.N.Y. Feb. 13, 2018)]
planadviser

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Prior to Distribution, ESOP Lacked 'Actual Knowledge' of Participant's Developmental Disability
"An ESOP plan administrator did not violate plan terms when it distributed about $80,000 to a developmentally disabled former employee who had been adjudged in state court to be legally incompetent ... Delivery of conservatorship papers regarding the employee's incompetency to the grocery store where he worked was insufficient to provide the plan administrator with the 'actual knowledge' of the worker's legal incompetency required by the plan." [Bauman v. Publix Super Markets, Inc. Employee Stock Ownership Plan, No. 17-11709 (11th Cir. Oct. 10, 2017)]
Wolters Kluwer Law & Business

Bipartisan Multiemployer Hybrid Plan Bill Introduced in House
"Reps. Phil Roe, R-Tenn., and Donald Norcross, D-N.J., introduced H.R. 4997, the Give Retirement Options to Workers (GROW) Act, that would allow sponsors to create the composite plans. The idea is part of an effort in Congress to address struggling multiemployer plans, including proposals to create a federal loan program. The legislation is based on a proposal developed with the National Coordinating Committee for Multiemployer Plans."
Pensions & Investments

Few Prepare for Retiree Health Needs/Expenses
"Few employers offer retiree health coverage. Fewer still provide any employer financial support. In the 54th annual PSCA survey, reflecting 2010 data, only 8.5% of employers confirmed that they offered access to a retiree health plan. [The] just-released 60th annual PSCA survey shows that percentage continues to decline -- now only 4.8%."
Plan Sponsor Council of America [PSCA]

Post-Retirement Risks and Related Decisions (PDF)
10 pages. "This report is the introduction to a series of reports that will offer highlights and key findings from the 20 years of Committee research and related SOA work, together with guidance about where to find more information. This introductory report focuses on understanding the risks and the related key decisions, and introduces the SOA's research."
Society of Actuaries

Massachusetts Agency Files Fiduciary Rule-Related Complaint
"The Massachusetts Securities Division has filed charges against a firm for knowingly violating its internal policies regarding implementation of the DOL fiduciary rule ... Commonwealth Secretary William Galvin ... has charged Scottrade with 'dishonest and unethical activity and failure to supervise' for conducting sales contests that violated the DOL's impartial conduct standards."
American Society of Pension Professionals & Actuaries [ASPPA]

Benefits in General

[Guidance Overview]

Going Up But Never Down: 2018 ERISA Penalties
"The [DOL] announced increased penalties for employee benefit plans under ERISA. The increases generally apply to penalties that involve employee benefit reporting and disclosure failings if the penalty is assessed after January 2, 2018, and if the violation occurred after November 2, 2015. [A chart outlines] the ERISA penalty amounts assessed for violations on or before January 2, 2018, and those amounts assessed after January 2."
McDermott Will & Emery

Selected Discussions
on the BenefitsLink Message Boards

Roth Buy-Back to Restore Forfeitures; What is Roth 'Start Year'?
An employee deferred Roth to a 401k. He also had pre-tax monies. Terminated employment and rolled Roth dollars to a Roth IRA. Rolled pretax dollars to IRA. $15k in forfeitures at time of distributions. Employee wants to restore his account to get the forfeitures back. What are your thoughts on Roth buy-back? Specifically, the Roth start year. I see how one can't roll a Roth IRA to a 401k. But we aren't talking about a rolling back. The Roth start year starts over when Roth from 401k goes to Roth IRA, which probably is why one can't roll Roth IRA to 401k. How would you handle the Roth start year situation?
BenefitsLink Message Boards

Is a Retirement Plan TPA a 'Professional Services Firm' Under the New Tax Law?
Does anybody have a good grasp how tax reform may affect our industry? I'd be interested in your thoughts on whether your typical TPA is a "Professional Services Firm." It would be nice to take advantage of the 20% deduction on pass-through income :)
BenefitsLink Message Boards

In-Service Alternative Rollover?
An investment management company and another company are offering to "certify" advisors to walk clients through the process of an "In-Service Alternative Rollover" (or "ISAR), involving an attorney who would facilitate an in-service distribution of 100% of assets with no adverse tax consequence and continued participation in the plan while employed. Must be married and is a one-time event. According to their marketing material, "This additional legislation expanded the ERISA recognition of a plan participant's marital estate and made the ISAR transaction possible. The ISAR has technically been allowed since 1984 for plans subject to ERISA, and was first used successfully in California in the mid-1980's." Has anyone heard of this or have experience with it?
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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