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April 20, 2018 logo logo
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ERISA Compliance Associate
Slevin & Hart, P.C.
in DC

Defined Contribution Account Manager
Nova 401(k) Associates
in AZ, ID, NV, UT, Telecommute

Employee Benefits Associate
Wiggin and Dana LLP
in CT

Retirement Plan Specialist
FranFund, Inc.
in TX

Director of Retirement Plan Services
Planning Solutions Group
in MD

Senior Benefits Analyst
in MI

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SEC Adds Fuel to the Best-Interest Fire
"The SEC rule diverges from the [DOL's] in three key ways: [1] The SEC rule does not rely on lawsuits as an enforcement mechanism, which allows much more certainty in firms' compliance plans. [2] The SEC rule would apply to both retirement and nonretirement accounts, although it would not regulate some kinds of advice that are subject to state regulation, particularly very small investment advisers and certain insurance products, such as single-premium annuities. [3] The SEC rule is much more focused on mitigating conflicts of interest than avoiding them all together."
Morningstar Advisor


Evaluating Your Third-Party Administrator: Are You Getting What You're Paying For?

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SEC's Fiduciary Rule Could Erase Question of DOL Appeal
" 'The SEC has critical expertise in this area, and the Department is encouraged that the SEC is undertaking this effort,' a DOL spokesman [said] ... Having an SEC proposal on the table that includes investor protections could take some pressure off the DOL if the agency was considering an appeal of the Fifth Circuit decision, George Michael Gerstein, counsel with Stradley Ronon [said].... Gerstein doesn't think it's likely the DOL will appeal the Fifth Circuit's ruling and the new SEC rule could provide the DOL with 'some cover for not doing so.' "
Bloomberg BNA

Reporting Delinquent Contribution of Elective Deferrals
"[T]here are two different ways to compute the late deferrals to report as prohibited transactions, depending on whether you are completing the Form 5330 (Return of Excise Taxes Related to Employee Benefit Plans) or answering the questions on Form 5500, Schedule H, and its related supplementary schedule.... Form 5330 Purposes: Plan sponsors report only the interest on late deferrals for purposes of considering the amount of the prohibited transaction subject to excise taxes. [Form 5500, Schedule H:] Plan sponsors report the entire deferral amount that was deposited late as the prohibited transaction."
Belfint Lyons Shuman

Keep Track of 401(k) Participants So They Don't Go Missing
"As records grow stale quickly, implement a periodic program to update mailing addresses. Before annual statements are sent out, for example, do an address scrub of all participants to get the best address.... Before required planned distributions, conduct a rigorous search. For instance, contact participants turning 70 this year, because starting at age 70 and a half, 401(k) funds must be paid out through required minimum distributions."
Society for Human Resource Management [SHRM]

2018 Expanded Reporting and Disclosure Requirements Calendar for Single Employer Pension Plans Under ERISA (PDF)
16-page Reporting and Disclosure Requirements Calendar provides who, what, when and where reporting and disclosure information for single-employer pension plans under ERISA.
Willis Towers Watson


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Mortality by Career-Average Earnings Level (PDF)
33 pages. "In general, we observe lower death rates for retired-worker beneficiaries with higher-than-average [average indexed monthly earnings (AIME)] levels, and higher death rates for retired-worker beneficiaries with lower-than-average AIME levels. At older ages, the differences in death rates across AIME levels diminish.... The trends from 1995 to 2015 show the spread in death rates among the AIME levels remaining fairly steady." [Actuarial Study No. 124]
Office of the Chief Actuary, U.S. Social Security Administration [SSA]

AARP Wants Great-West's 401(k) Victory Reversed
"The industry group representing Americans 50 and older wants the U.S. Court of Appeals for the Tenth Circuit to revive a class action by 270,000 people who invested in Great-West's guaranteed investment annuity contracts. Investors say that because Great-West kept the difference between the rate of return they received and the returns actually earned by the investment, the company essentially set its own compensation.... In its brief, the AARP argued that Great-West could be liable as an ERISA fiduciary because it exercised discretion over the guaranteed investment's crediting rate, which in turn affected both investors' returns and Great-West's compensation." [Teets v. Great-West Life & Annuity Ins. Co., No. 18-1019 (10th Cir. amicus brief filed Apr. 18, 2018)]
Bloomberg BNA

2018 Corporate Pension Funding Study (PDF)
11 pages. "[D]uring 2017 the private single-employer defined benefit plans of the Milliman 100 companies made significant funding improvements. The Milliman 100 funded ratio settled at 86.0%, an improvement from the year- end 2016 funded ratio of 81.1%. The funding deficit dropped by a noteworthy $72 billion, ending the year at $252 billion."

Benefits in General

Paying for Parental Leave with Future Social Security Benefits
"A recent proposal would allow new parents to trade future Social Security benefits for a few months of paid leave. Projections ... show that providing a progressive, 12-week leave benefit averaging about half pay ... would require raising the Social Security full retirement age for leave program participants about 25 weeks. This increase would permanently reduce participants' monthly Social Security retirement benefits about 3 percent. The proposed program would raise Social Security's annual costs, net of benefit offsets, about 1 percent, worsening the program's financing shortfall."
Urban Institute

Retirement and Health Plan Provisions in the Bipartisan Budget Act of 2018
"[1] A congressional committee is created to address the long-term solvency of multiemployer pension plans and the PBGC. [2] 401(k) plan participants will have expanded ability to take hardship distributions. [3]The coverage gap ('donut hole') in the Medicare Part D prescription drug program will close faster resulting in lower out-of-pocket costs for retirees. [4] There are additional increases in the amount that certain high-income Medicare beneficiaries will have to pay for their Part D and Part B premiums."
Segal Consulting

Executive Compensation
and Nonqualified Plans

New Target of 'Shareholder' Strike Suit Litigation
"Now that the Tax Cuts and Jobs Act of 2017 has eliminated the performance-based compensation exception to Code Section 162(m), a plaintiffs law firm has announced that it was shocked, shocked by the fact that a company was using a 162(m) umbrella plan to qualify its compensation as performance-based."
Winston & Strawn LLP

Just Because Your Company Is Privately Held Doesn't Mean the SEC Isn't Watching
"Private companies should [1] develop written policies and procedures dealing with equity-based compensation to ensure their compliance with Rule 701 limits.... [2] develop written policies and procedures that address how financial disclosures are to be disseminated so as to safeguard the confidentiality of the financial information while still complying with Rule 701.... [3] put into place processes and procedures that ensure as appropriate that timely reporting and disclosures are provided to employees before the Rule 701 $5M threshold is triggered in any 12-month period."
Holifield Janich Rachal & Ferrera, PLLC

Selected Discussions
on the BenefitsLink Message Boards

402(g) Roth Failure -- Correction After April 15?
A participant contributed $15,000 Roth deferrals to plan A and $10,000 Roth deferrals to plan B. Participant is not catch up eligible and the plans are unrelated. Participant informed the plan sponsor today of the excess. My understanding is that the excess cannot returned after after April 15. However, the bundled recordkeeper (one of the large ones) says they will refund the excess anytime. This does not not seem right to me.
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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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