Retirement Plans Newsletter

February 23, 2018

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Jobs

Internal 401(k) Sales Consultant -Level 2
July Business Services
in TX

Retirement Plan Administrator
Guidant Financial
in WA, Telecommute

Health Savings Account (HSA) Specialist
BPAS
in MA, NY, PA, TX, Telecommute

Senior Health Benefits Analyst
The Segal Group
in CA

Retirement Plan Conversion Specialist
The Finway Group
in IA, Telecommute

►See 118 Jobs

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Webcasts, Conferences

Hardship Distributions
March 1, 2018 in FL
ASPPA Benefits Council [ABC] of Central Florida

The New ERISA Regulations for Disability Claims and Appeals
March 22, 2018 WEBCAST
Jackson Lewis LLP

►See 172 Upcoming Webcasts and Conferences

►See 1377 Recorded Webcasts


Discussions

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[Guidance Overview]

Tax and Budget Bills Include Tax Qualified Retirement Plan Provisions
"Plan sponsors may implement any of these changes operationally immediately or, in the case of the changes to the hardship withdrawal rules, beginning in 2019. The deadlines for adopting amendments reflecting any operational changes may vary ... Because the tax and budget bills exempt disaster-related distributions from the 10 percent early distribution excise tax and 20 percent mandatory withholding, it appears that plan sponsors will need to adjust their reporting of disaster-related distributions and withholding for those distributions."
K&L Gates

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Budget Bill Retirement Plan Provisions
"Is there any immediate action required by plan sponsors? ... Many plans have a requirement that all available loans must be taken prior to eligibility for a hardship distribution, in order to satisfy the regulatory safe harbor. Should plans remove this requirement? ... Must plans permit participants to repay IRS levies? Sounds counterintuitive to the purpose of a levy to me! And does this apply to other reductions of a participant's account balance, such as a return of excess?"
Cammack Retirement Group

Tax Law Changes Lead Some Employers to Raise 401(k) Matches
"As of early February, Cigna, Visa, Honeywell, Aflac, AutoNation, Nationwide Insurance, SunTrust Banks, Peoples Bank & Trust, and Western Alliance Bancorp were among about 25 companies that said they would either increase their match for participants' 401(k) deferred contributions or would make one-time contributions to these accounts ... Of 333 large and midsize employers polled, 49% said they were mulling making a benefits change as a result of the new tax law[.]"
HR Daily Advisor

Massachusetts Heats Up DOL Rule (PDF)
"While this is hardly the first case regarding a broker-dealer's use of incentives, it is the first enforcement action -- of any kind -- to incorporate the [DOL's] fiduciary rule. In light of the approach now demonstrated by a prominent securities regulator, financial firms should reassess existing controls and their compliance with internal procedures."
Winstead PC, via The Texas Lawbook

Fiduciary Conduct Is Good for Business
"The focus on compliance obscures the compelling business case that fiduciary conduct [1] is what clients want, [2] is operationally efficient and reliable, [3] strengthens client-adviser relationships and makes them more enduring, [4] provides the adviser with greater pricing power, and [5] enhances the advisory firm's brand and market valuation."
InvestmentNews

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Kentucky Pension Reform Bill Would Move Future Teachers Into Cash Balance Plan
"[T]eachers hired after Jan. 1, 2019, would be enrolled in a cash balance plan instead of the existing defined benefit plan ... Cash balance plans would be maintained for other current and future employees ... [C]urrent and future non-hazardous employees, excluding teachers, would have the option of participating in a new 401(a) defined contribution plan. Under the 401(a) plan, employers would contribute 4%."
Pensions & Investments

Will Australia's Advisor Competency Standards Come to the US?
"[M]uch like Australia served as an indicator for what regulation was to come [for financial advisors in the US] (with a fiduciary rule that took effect 5+ years ahead of the US), Australia's new adoption of competency standards for financial advisors may be a good indication of where the regulatory focus will be next in a post-fiduciary world in the US."
Nerd's Eye View

Unraveling Retirement Strategies: Variable Spending from a Volatile Portfolio
"We have two basic choices in portfolio-drawdown strategies: spend a predictable amount annually and risk depleting our portfolio or spend an unpredictable, possibly painful, amount annually to avoid portfolio depletion.... Regardless of which of these strategies you choose, you will spend the amount you need to spend after retiring.... There are many variable spending strategies."
The Retirement Cafe

Speaker Ryan Announces Appointees to Joint Select Committee on the Solvency of Multiemployer Pension Plans
"Speaker Ryan has named the following lawmakers to this select committee, which is charged with improving the solvency of multiemployer pension plans and the [PBGC]: [1] Rep. Virginia Foxx (R-NC), chairwoman of the House Education and the Workforce Committee; [2] Rep. Phil Roe (R-TN), House Education and the Workforce Committee; [3] Rep. Vern Buchanan (R-FL), House Ways and Means Committee; [4] Rep. David Schweikert (R-AZ), House Ways and Means Committee."
Speaker Paul Ryan, U.S. House of Representative

[Opinion]

SPARK Institute Comment Letter to IRS on Elimination of Reduced VCP Fees (PDF)
"[SPARK is] concerned that the elimination of the alternative fees for VCP submissions involving failures to timely adopt amendments, to satisfy the required minimum distribution rules, or to correct plan loan failures could deter plan sponsors from submitting such issues for correction, resulting in more frequent adverse tax consequences for affected participants. We therefore ask that the Service reinstate the alternative VCP user fees for submissions regarding [these] failures, and allow such issues to be fully resolved through the Self Correction Program (SCP)."
The SPARK Institute

Benefits in General

[Guidance Overview]

New Claims Procedures for Disability Benefit Claims Take Effect
"The new rules intend to offer additional procedural protections and safeguards to claimants seeking disability benefits under an ERISA plan.... [C]laimants must receive an opportunity to review and respond to new evidence or rationales developed by the plan while an appeal is pending.... [D]isability benefit denial notices must contain a 'discussion of the decision' when the plan does not follow a Social Security Administration disability determination or otherwise contradicts the views of the treating professionals."
Latham & Watkins

Executive Compensation
and Nonqualified Plans

[Guidance Overview]

Tax-Exempt Organizations Face New Tax Penalty on Excess Compensation: Due Diligence and Minimization
"There are a number of ways that affected organizations can minimize the new tax penalty. For example: [1] Maximize benefits under tax-qualified retirement plans.... [2] Consider alternative methods of deferring compensation, such as a Code section 457(f) plan or a split-dollar life arrangement.... [3] [T]he proposed Code section 457(f) regulations ... now provide several methods that can be used to spread these payments out over time, which could enable the organization to avoid accruing post-termination payments in excess of $1,000,000."
Trucker Huss

CEO Pay Ratios Highest at Large Multinationals
"Mega-cap companies have an average CEO pay ratio of 243:1, while small-cap companies (based on Equilar's definition of $700 million to $3 billion) have a much lower pay ratio of 72:1, according to the survey of 356 companies. Similarly, companies with the largest employee base have the highest CEO-median worker pay ratios: firms employing more than 43,000 employees have a median ratio of 318:1 and those employing fewer than 2,300 employees have a ratio of 45:1."
Corporate Secretary

Selected Discussions
on the BenefitsLink Message Boards

SH Plan Merging Mid-Year with Non-SH Plan
Two unrelated entities are merging into a new entity (a type A or C reorg; accountants are working out the details). They wish to merge their retirement plans. Both are calendar year plans. Plan A is a safe harbor 3% QNEC, Plan B is not safe harbor and has a matching contribution. Their goal is to merge the plans as soon as possible (in mid-year) with the new resulting entity becoming the sponsor of the resulting plan. They also want the merged plan to be a safe harbor (3%) plan. Can the merged plan be treated as "new" and adopt SH provisions? Do we need to wait until 2019, etc.?
BenefitsLink Message Boards

3(21) and 3(38) Fiduciary Services: Over-hyped?
Is it just me or is this the most over-hyped "thing" in the last 5 to 10 years? I can't have a conversation with a recordkeeper or advisor without someone blurting out "3(21) and 3(38)" (and usually having no idea what they are saying). It seems that any real protection is from participant lawsuits - in the small plan market, that is simply not a threat. Is the DOL going after anyone for having "bad" investments? And...I know these services are inexpensive or "free" but it seems to me that to the extent there are costs, they are borne by the participants, but trustees and advisors are the ones being protected. How wrong is that?!
BenefitsLink Message Boards

MWBE 403(b) Recordkeeping and Administration Firms
We are helping a client search for a 403(b) Recordkeeping and Administration Services provider and they are interested in including companies that are MWBEs (Minority and Women Business Enterprises) in their bidding process. Is anyone aware of any MWBE companies that provide Recordkeeping and Administration Services for 403(b) Plans?
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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