Retirement Plans Newsletter

May 10, 2018

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Webcasts, Conferences

Communications that Engage and Persuade Your Audience
May 22, 2018 in TX
Worldwide Employee Benefits Network [WEB] - Dallas Chapter

Best Practices for Managing Retirement Benefits in Higher Education
May 23, 2018 WEBCAST
Multnomah Group

Protecting the C-Suite: Insurance, Indemnification and Investigation Trends, Risk Management and Finance
May 24, 2018 in OH
Worldwide Employee Benefits Network [WEB] - Cleveland Chapter

Communicating Financials and Valuation to Your Participants
June 5, 2018 WEBCAST
National Center for Employee Ownership [NCEO]

Rethinking Your ESOP Plan Design and Operations
June 19, 2018 WEBCAST
National Center for Employee Ownership [NCEO]

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[Official Guidance]

Text of PBGC Regulatory Agenda, Spring 2018

Proposed Rules include: [1] Valuation Assumptions and Methods: Interest and Mortality Assumptions for Asset Allocation in Single-Employer Plans and Mass Withdrawal Liability Determination in Multi-Employer Plans; [2] Owner-Participant Benefits; [3] Benefit Payments; [4] Methods for Computing Withdrawal Liability; [5] Terminated and Insolvent Multiemployer Plans and Duties of Plan Sponsors; and [6] PBGC-Approved Arbitration Procedures -- Multiemployer Plans.
Final Rules: [1] Mergers and Transfers Between Multiemployer Plans; and [2] Adjustment of Civil Penalties.
Pension Benefit Guaranty Corporation [PBGC]

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[Official Guidance]

Text of PBGC Disaster Relief 18-05, in Response to Tornado and Severe Storms in North Carolina

"[PBGC] is waiving certain penalties and extending certain deadlines in response to severe storms and flooding that began on April 15, 2018 in North Carolina.... The relief generally extends from April 15, 2018 through August 15, 2018. The disaster area consists of Guilford and Rockingham counties."
Pension Benefit Guaranty Corporation [PBGC]

[Guidance Overview]

90-Day Comment Period Begins for SEC Proposed Investment Advice Guidance

"[On May 9, the SEC] published in the Federal Register its proposed regulations intended to govern relationships between investment professionals and the investors they serve. Also published is a proposed disclosure to be used by broker-dealers and registered investment advisers (RIAs) in defining the scope of their relationships with clients, and a standard-of-conduct for RIAs."
Ascensus

[Guidance Overview]

Recent Legislation Includes Hardship Withdrawal Provisions

"[It] is unlikely that 401(k) suspensions could be maintained following the effective date of the new legislation without violating either the nondiscriminatory coverage or nondiscriminatory benefit requirement, or both.... [A] participant's voluntary cessation of deferrals would be a favorable factor in satisfying the financial need requirement under the facts and circumstances test."
Trucker Huss

Did Someone Try to Hack My Retirement Account? A Personal Cybersecurity Story

"Apparently, verification code forwarding attacks are a thing. While the issuance of [the author's] verification code does not appear to be malicious, it could have been.... While it is tempting to make login credentials the same for retirement and other financial accounts, don't do it! ... Frequently monitoring account statements for suspicious activity and reporting anything unusual (such as a verification code that wasn't received) to the recordkeeper and the appropriate party at an organization can help protect retirement plan accounts."
Cammack Retirement Group

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The Unintended Consequence of Rising Interest Rates: Overfunded Defined Benefit Plans

"Rising interest rates lower the lump sum value of most pension benefits, and thereby increase their level of funding. However the answer is not so simple for employers of well-funded plans that are structured to favor owners and key employees. Higher interest rates only serves to decrease the value of the pensions promised to the individuals that the plan was designed to favor."
Fox Rothschild LLP

Replacing Plan Funds

"The performances of funds in plans' lineups vary over time and new investment options emerge. Developing a process for reviewing and replacing plan funds is an important practice from multiple perspectives, including the performance of fiduciary duties.... You can evaluate a fund's performance and suitability across multiple qualitative and quantitative dimensions, such as management tenure, cost and risk-adjusted performance, among other factors."
WealthManagement.com

Wells Fargo Improperly Kept a Pension Fund's Fee Rebates

"The bank owned up to the problem in late April after the Chattanooga Fire & Police Pension Fund had spent months questioning Wells Fargo officials about fee practices in its institutional retirement and trust unit, according to the correspondence. The bank said in the correspondence that the improperly retained fee rebates resulted from 'a system set-up error.' "
The Wall Street Journal; subscription may be required

CalSTRS Discusses Collaborative Investing Model with Other Asset Owners

"Officials at the $222.5 billion California State Teachers' Retirement System, West Sacramento, expect to spend the fiscal year studying alternative investment models, including what the collaborative model means for each asset class, the challenges of embarking on a collaborative, direct investment approach and the opportunities[.]"
Pensions & Investments

Progress on Two ESOP Bills in Congress

"With bipartisan support, H.R. 5236 would make it easier for ESOPs to obtain stock acquisition loans from the Small Business Administration (SBA). ESOP stock acquisition loans could also be made under the SBA's preferred lender program.... [S1538 includes] an SBA program to appoint an individual to serve as the Service Core of Retired Executives (SCORE) Employee Ownership Director."
Butterfield Schechter LLP

Multiemployer Pension Funded Status Improves During 2017 (PDF)

"The estimated 2017 calendar year investment return for our simplified portfolio was about 16%, more than double the investment return assumption of most plans. The aggregate market value funded percentage improved from 81% to 83% over the last six months, compared to 85% a decade ago. For noncritical plans, the aggregate funded percentage was 93% compared with 90% a decade ago.... The aggregate funded percentage for critical plans was 60% as of December 31, 2017. These plans had a 76% funded status ratio a decade ago."
Milliman

Benefits in General

[Official Guidance]

Text of DOL Regulatory Agenda, Spring 2018

EBSA items in Proposed or Final Rule stage: [1] Amendment of Abandoned Plan Program; [2] Electronic Filing of Apprenticeship & Training Notices, and Top Hat Plan Statements; [3] Adoption of Amended and Restated Voluntary Fiduciary Correction Program; [4] Religious Exemptions and Accommodations for Coverage of Certain Preventive Services Under the ACA; [5] Moral Exemptions and Accommodations for Coverage of Certain Preventive Services Under the ACA; [6] Definition of an 'Employer' Under Section 3(5) of ERISA -- Association Health Plans; and [7] Short-Term, Limited Duration Insurance.
U.S. Department of Labor [DOL]

[Official Guidance]

2017-2018 IRS Priority Guidance Plan, 3rd Quarter Update (PDF)

37 pages. "The 2017-2018 Priority Guidance Plan contained 198 guidance projects, 30 of which had been completed before its publication.... This third quarter update to the 2017- 2018 plan reflects 13 additional projects as well as guidance we published (or released) during the period from October 13, 2017 through March 31, 2018."
Internal Revenue Service [IRS]

[Official Guidance]

Text of IRS Disaster Relief Notice NC-2018-02, for Victims of Tornadoes and Severe Storms North Carolina

"Individuals who reside or have a business in Guilford and Rockingham counties may qualify for tax relief.... [T]he IRS gives affected taxpayers until August 15, 2018, to file most tax returns ... that have either an original or extended due date occurring on or after April 15, 2018 and before August 15, 2018."
Internal Revenue Service [IRS]

Third Circuit Severance Plan Decision Should Prompt Employers to be Proactive

"A recent 3rd Circuit Court of Appeals decision should remind employers to take the initiative -- in severance plans and agreements -- to affirmatively address whether ERISA will govern plan disputes, as well as how disputes will get resolved. This is because a well-drafted ERISA plan should expedite the resolution of employee claims in a cost-effective manner that involves a high level of deference to an employer's decisions." [Girardot v. The Chemours Company, No. 17-1894 (3d Cir. Apr. 30, 2018)]
The Wagner Law Group

Myths You Shouldn't Believe About Employee Benefit Packages

"Myth No. 1: Everyone wants a gym membership.... Myth No. 2: The biggest benefit is salary.... Myth No. 3: Additional benefits are too expensive for employees.... Myth No. 4: There is no return on investment.... Myth No. 5: My employees already know we provide great benefits."
Grooms Benefit Solutions

IRS Publication 5279: Your Pathway to Becoming an Enrolled Agent (PDF)

Rev. May 2018. "How do I become an Enrolled Agent? ... How do I prepare for the special enrollment examination? ... How do I maintain my Enrolled Agent credential?"
Internal Revenue Service [IRS]

Executive Compensation
and Nonqualified Plans

[Guidance Overview]

New Excise Tax on Excess Compensation Paid by Tax-Exempt Employers

"The new excise tax is effective for tax years beginning after 2017. There is no grandfather or transition rule for existing arrangements, such as Section 457(f) retirement arrangements."
Fox Rothschild LLP

Selected Discussions
on the BenefitsLink Message Boards

ERPA CE Requirements: Confusion Over Which Years Are Involved

On 10/18/17, I received my ERPA renewal letter from the IRS. It says it was issued on 10/1/17 and expires 9/30/20. To the left of that same page, it says, under CE Requirements: "Annual CE Cycle: January through December". I know that the requirements are 72 hours with a min of 16 per year and 2 of ethics per year. What constitutes each of the three years? Is it 2017/2018/2019? Or 2018/2019/2020? Or 10/1/2017-9/30/2018, 10/1/2018-9/30/2019, and 10/1/2019-9/30/2020?
BenefitsLink Message Boards

Handling DB/DC Combo Plan Gateway When DC Plan Has 1,000-Hours Minimum for Allocations

Assume the DB/DC combo plan has no any type of safe harbor contribution and the only contributions are employee deferrals and group based profit sharing. It appears the client's volume submitter plan document doesn't have any gateway language. How do you handle the DB/DC combo plan gateway when the DC plan has a 1,000 hours requirement if terminated before the end of the plan year?
BenefitsLink Message Boards

IRS Wants Proof of Industry Standard Before Approving Document with NRA Younger Than Age 62

We submitted a determination letter request for a defined benefit plan with a normal retirement age of considerably less than 62. The IRS is asking for statistical data to verify the NRA of less than 62 is an industry standard. The plan is a one-person plan for a professional athlete with endorsement deals. Can anyone point me to what kind of information and sources of information the IRS is willing to accept?
BenefitsLink Message Boards

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Economic Group Pension Services [EGPS]

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David Rhett Baker, J.D., Editor and Publisher  davebaker@benefitslink.com
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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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