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[Advert.]
Fundamentals of Qualified Retirement Plans for 2018, Part 4
It's not too late to join for Part 4 or the entire series (recorded parts 1, 2, & 3). In this class, John Griffin, L.D., LL.M., will cover the following topics: Participant Loans, QDROs, Death Benefits, Plan Termination, Fiduciary Responsibilities and Prohibited Transactions. Register Now!
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Yale University Must Defend Challenge to Retirement Plan Fees
"A federal judge ... refused to dismiss most claims against the school, including claims challenging the retirement plan's administrative and investment fees. The Yale workers who filed suit are also moving forward with claims challenging the 'locked-in' nature of the plan's record-keeping services, which the judge said may have prevented the school from properly monitoring the plan's investments and record-keeping fees." [Vellali v. Yale Univ., No. 16-1345 (D. Conn. Mar. 30, 2018)]
Bloomberg BNA
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New York State Creates Voluntary Retirement Savings Program
"The New York State Secure Choice Savings Program is contained in the state's $168.3 billion fiscal year 2019 budget ... The program is designed for New Yorkers who currently don't have access to an employer-provided retirement plan. Employers will not be responsible for creating and sponsoring their own retirement plans. Participation is voluntary for businesses and employees."
Pensions & Investments
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Rising Interest Rates: What Retirement Plan Sponsors Need to Know
"[M]any retirement plan committee members are facing a rising-rate environment for the first time in their careers. It will be important for them to understand this reversal in economic conditions and its broad impacts as they navigate this new environment and help participants do the same.... 60 percent of plan sponsors surveyed [recently] listed target date funds as the investment option they are most worried about during a period of rising rates."
CAPTRUST Financial Advisors
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Puerto Rico Governor Rejects Board's Pension Benefit Cuts
"In a letter Sunday to Jose B. Carrion III, chairman of the Financial Oversight and Management Board, [Governor] Rossello said he opposes pension benefit cuts because they would represent a disproportionate burden on workers and retirees. He also said any pension benefit changes require legislative and executive action."
Pensions & Investments
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How Financial Pros Teach Their Own Kids About Money
"Newborn babies keep their parents up all night. Knowing your adult child has a sizeable nest egg means being able to sleep soundly. And chances are you'll spend your waking hours with less stress, too. Teaching your children to save early for retirement can achieve this healthy (and wealthy) goal. There's no reason why financial professionals should be the only parents who know this little secret."
Fiduciary News
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A Targeted Minimum Benefit Plan: A New Proposal to Reduce Poverty Among Older Social Security Recipients
"[The authors] propose an effective and relatively inexpensive targeted program to provide a minimally adequate floor to old-age income through the program. This minimum benefit plan would provide a cost-effective method for reducing elder poverty to low levels. A key element is that the benefit would not count toward other social programs' income eligibility thresholds. Other aspects include an income-tested benefit that would bring beneficiaries to the poverty threshold; application by filing of a 1040 income tax return; and setting of benefit levels and distribution through the Social Security Administration."
Urban Institute
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The Pension Benefit Guaranty Corporation: A Primer (PDF)
24 pages. "In FY2017, PBGC insured nearly 24,000 DB pension plans covering about 40 million people. It paid or owed benefits to 1.5 million people. PBGC is the trustee of 4,845 single-employer plans. PBGC provided financial assistance to 72 multiemployer pensions. PBGC pays a maximum benefit to plan participants. Most workers in single-employer plans taken over by PBGC and multiemploy er plans that receive financial assistance from PBGC receive the full pension benefit that they earned." [Report 7-5700, Mar. 20, 2018]
Congressional Research Service [CRS]
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Benefits in General
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[Guidance Overview]
New DOL Disability Claims Regs Now Effective
"[M]ost notable ... is the DOL's new 'deemed exhausted' rule, under which a claimant is deemed to have exhausted the administrative remedies available under a plan -- and is therefore permitted to proceed immediately to litigation -- if a plan fails to strictly adhere to any of the claims procedures[.]"
Robinson & Cole LLP
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DOL Replaces Guidance on Employee Classification
"The 2014 guidance has been replaced by guidance from 2008. The 2008 guidance does not contain the statement that 'most workers are employees.' However, this guidance does include the same 'economic realities' test present in the 2014 guidance, under which determination of employee status is made by considering [specified] factors[.]"
QBI
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Executive Compensation and Nonqualified Plans
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Stock Options Are Not as Flexible as You May Think
"Many employers also choose to place limits on how long employees are permitted to exercise options following termination of employment in order to: [1] limit the upside benefit to terminated employees as a result of subsequent appreciation in the value of the awards and/or [2] help employees preserve the tax-favored status of their ISOs ... If the options are NSOs (or were originally intended to be ISOs, but no longer qualify) that are structured to be exempt from Code Section 409A ... then the term may only be extended in limited circumstances without adverse tax consequences[.]
Foley & Lardner LLP
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Another Good Reason to Make Sure Your Severance Plan Is Subject to ERISA
"Former employees who had accepted an offer under the first severance program sued for the better benefit to which they could have been entitled under the second program. The lawsuit alleged a violation of the Delaware Wage Payment and Collection Act (which also extended the time limit for filing their claims). If the plans had been made subject to ERISA, this state law claim most likely would have been preempted." [Giradot v. The Chemours Company, No. N17C-10-148 (Del. Mar. 26, 2018)]
Winston & Strawn LLP
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Selected Discussions on the BenefitsLink Message Boards
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Missed Deferrals Less Than 3 months
A client missed starting an employee's deferrals and discovered the error less than 3 months later. The plan has a match. I understand that, being 3 months or less, no QNEC is needed, but what about the match? Does anything need to be done about the missed match?
BenefitsLink Message Boards
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Earnings for a Missed Deferral Election -- Always Use DOL Calculator?
If we miss an increase in deferral, we put in a QNEC for the missed deferral plus a QNEC for earnings. My question is about calculating the earnings. We've always used the DOL calculator. Is that what everyone else does? Are there any times when actual investment returns are required? How about if the market drops? Are we allowed to put in zero earnings if the actual investment return was negative?
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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