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April 16, 2018 logo logo
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Retirement Plan Advisor
Carlson Capital Management
in MN

Segal Group
in CT, DC, GA, MA, TX

Onboarding Specialist 401K
Alliance Benefit Group WI
in WI

Assistant Director - Payroll / WFA / Benefits Operations
University of California Office of the President
in CA

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[Guidance Overview]

Budget Act Brings Much Needed Hardship Relief (PDF)
"The Bipartisan Budget Act of 2018 brings important relief for plan sponsors and recordkeepers for tax-qualified retirement plans. This relief includes [1] relaxed hardship withdrawal rules, [2] expanded rollover for improper federal tax levies, [3] California wildfire relief for plan distributions, and [4] a special Congressional committee to address the major funding concerns for multiemployer plans."
Groom Law Group, via TAXES the Tax Magazine


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Protect Your Qualified Plan from RMD Failures
"To help protect a plan from RMD failures and the administrative cost and hassle that follows, a plan sponsor should adopt an internal system to [1] monitor ages of participants (including former employee participants), [2] contact those who are approaching Normal Retirement Age (and at the latest age 70-1/2) to start the benefit payment process, and [3] document efforts made to locate missing participants, following the IRS guidelines."
Watkins Ross

Duke Employees Get Class Status in College Retirement Challenge
"A federal judge in North Carolina granted class status to about 40,000 current and former Duke employees who say the school's retirement plan carried high fees and offered bad investment options.... Duke said class status wasn't warranted in part because some of the employees may have read plan communications that put them on notice of the alleged problems outside of the relevant statute of limitations." [Clark v. Duke Univ., No. 16-1044 (M.D.N.C. Apr. 13, 2018)]
Bloomberg BNA

What Keeps a Head of Cybersecurity Up at Night?
"Rachel Wilson, head of cybersecurity for Morgan Stanley's Wealth Management unit ... identified advisors as 'the weakest link' in the financial services chain ... Wilson emphasized the importance of keeping all mission-critical software up to date by installing vendors' updates -- 'patches' -- immediately.... Phishing emails ... are now informed by hacked personal information, ... making them more authentic and much more different to identify as fraudulent.... Call centers have also emerged as a top target of cybersecurity fraud[.]"
National Association of Plan Advisors [NAPA]

Signs of a Successful 401(k) Plan
"[1] Reasonable cost ... [2] A lot of employees have account balances ... [3] A high percentage of employees contribute ... [4] New employees roll money into the plan, departing employees leave their balances ... [5] Employees understand the plan ... [6] The fund lineup has a home for everyone ... [7] The leaders in your company talk about your plan."
Lawton Retirement Plan Consultants


Tools & Techniques of Employee Benefit and Retirement Planning

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Fiduciary Rule Reform: SEC Developments
"Earlier this month, SEC Chairman Jay Clayton reportedly said, 'the sooner the better' as to when the SEC will release its fiduciary proposal. With a full set of commissioners since the January 11 swearing in of Robert Jackson Jr. and Hester Peirce, the SEC may now be prepared to act."
K&L Gates

CalPERS Faces Steep Climb to Rebuild Its Funding
"Last year was one of the best ever for the CalPERS investment fund, a gain of $47 billion that boosted the total to $350 billion. But pension funding only increased from 68 to 71 percent of the projected assets needed to pay future costs.... That a $47 billion investment gain only makes a small change in pension funding shows the difficulty CalPERS still faces in recovering from a $100 billion investment loss a decade ago, when the funding level nosedived from 101 percent to 61 percent."

Sheet Metal Workers Local Pension Fund (OH) Application for Approval of Suspension of Benefits under MPRA
458 pages. "The Trustees of the Plan propose to make the suspension effective after the application has been approved and the result of the participant vote has been determined, on the first day of the next Plan Year beginning after the approval, May 1, 2019.... The application proposes that there shall be a reduction in monthly benefits such that the revised monthly amount is based on a level accrual rate of $48.00, multiplied by years of service earned through April 30, 2019. Participants whose 'current level accrual rate' under the Plan (i.e. prior to suspension) is less than the $48.00 post-suspension level accrual rate will not have their benefits reduced."
U.S. Department of the Treasury

Text of New Jersey Proposed Legislation to Require Teacher Retirement Plan Fee Disclosure
"This bill requires persons who administer certain supplemental annuity retirement plans for teachers, offered by a local school board, to disclose to each plan participant the [1] fee ratio and return, net of fees, for each investment under the plan and [2] fees paid to any person who, for compensation, provides investment advice to participants directly or through publications or writings. The plan administrator must make the disclosures upon a participant's enrollment and annually thereafter."
218th Legislature, State of New Jersey


American Retirement Association Announces E-Delivery Initiative
"The ARA's proposal would essentially flip the current orientation of the [DOL's] regulations, which emphasize providing paper disclosures ... to plan participants but include a safe harbor permitting electronic delivery to certain types of participants with online access.... Late last year, bipartisan legislation that would allow for e-delivery of pension and retirement plan information was introduced in the U.S. House of Representatives by Rep. Jared Polis (D-CO) and Rep. Phil Roe (R-TN), along with 26 cosponsors."
National Association of Plan Advisors [NAPA]

Benefits in General

Financial Conflict of Interest in the Eighth Circuit: Trigger of a Less Deferential Standard of Review or Mere Factor in Determining Plan Administrator Abuse of Discretion?
"The [Eighth Circuit] noted that ... a financial conflict of interest is merely a factor that a court should consider in determining whether a plan administrator has abused its discretion -- not a basis for applying a less deferential standard of review. The Court explained that -- although apparently substantially similar -- a less deferential standard of review versus consideration of financial conflict of interest in conjunction with an abuse of discretion standard of review were distinct concepts." [Boyd v. ConAgra Foods, Inc., No. 16-1763 (8th Cir. Jan. 5, 2018)]
Jackson Lewis P.C.

Employers and Employees Embrace Automation But Fear Loss of Workplace Humanity
"More than half (56 percent) of employers have a positive view of automation technologies that can help companies do human jobs, compared with 20 percent who are pessimistic ... On the employee side, nearly half (49 percent) are optimistic, while only a quarter (24 percent) are pessimistic.... Still, both employers and their workers have trouble reconciling their optimism around automation with their desire for human connection. About half of both groups (46 percent of employees, and 51 percent of employers) worry the workplace is becoming less human."

Executive Compensation
and Nonqualified Plans

California (Re)Introduces Pay Ratio Corporate Tax Bill with Unique Calculation
"California Senate Bill 1398, introduced by Democrat State Senator Nancy Skinner, would increase corporate taxes for public companies from the base rate of 8.84 percent to a high of 13 percent for companies with pay ratios exceeding 300. Significantly, the tax rate would increase by an additional 50 percent if a company reduces its U.S. full-time workforce by 10 percent or more during the [previous tax] year."
HR Policy Association

Stock Awards Behind Most CEO Pay Hikes
"More CEOs at large money managers or banks with large asset management units received total compensation increases in 2017 compared with the previous year, and most increases came via stock awards -- a practice that sources said would continue as managers tie chief executive pay to long-term performance."
Pensions & Investments

Selected Discussions
on the BenefitsLink Message Boards

How Do You Decide Which Topics to Omit from a Plan Design Discussion?
The time available for a plan design discussion might be limited -- whether by a client's availability or attention span, a client's choice to limit a practitioner's time billed, or a practitioner's choice to limit time to sustain profitability for a fixed fee or an assumed cost. If time is limited so it's not feasible to discuss all plan design choices, how does a practitioner leading the discussion decide which topics should get little or no attention (and instead fall into some presumed norm)?
BenefitsLink Message Boards

Off-Calendar Year End Plan, Catch-Up Contributions
7-31-17 year-end plan. Participant over age 50 has maximum DC plan limit profit sharing contribution made during the plan year plus $8,000 in salary deferrals during the plan year. Per calendar year his deferrals are below the calendar year catch-up limit each year, but during the plan year they are as stated above. Because he exceeded the 415 limit instead of the 402(g) limit, must I limit his catch-up to $6,000 for the plan year? Or may I assign the "catch-up" contributions to the year they were deferred (thus, allowing all of his contributions for the plan year)? Most threads I have seen regarding fiscal year catch-up are tied to 402(g) limits and ADP corrections.
BenefitsLink Message Boards

RMD to Surviving Spouse of 76-Year-Old Participant
A participant in a 401k who is 76 years old died in 2018. The spouse was the primary beneficiary. She wants to rol lover the funds into her own 401k plan and treat it as her own. Because she is the spouse, I believe she can do that. But does is a Required Minimum Distribution needed from the 401k before the rollover?
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Press Releases

CalPERS Names Elisabeth Bourqui Chief Operating Investment Officer
CalPERS [California Public Employees' Retirement System]

NAPA Welcomes Jeffery Acheson as President
National Association of Plan Advisors [NAPA]

Cindy Hounsell Receives PSCA Lifetime Achievement Award
PSCA [Plan Sponsor Council of America]

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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, 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, 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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