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ESOP Administrator
Blue Ridge ESOP Associates
in VA, Telecommute

Plan Administrator
in MT

Pension Analyst
Benefit Plans Plus, LLC [BPP]
in IL, MO

Retirement and Benefits Consultant
University of Maryland Medical System
in MD

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Mid Year Legislative Update
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[Guidance Overview]

Decoding the SEC Rulemaking Package on Standards of Conduct for Investment Professionals

"[The SEC] requests comments on three potential enhancements to an investment adviser's legal obligations.... [1] Federal licensing and continuing education ... [2] Provision of account statements ... [3] Financial responsibility ... The SEC is also proposing new rules to reduce investor confusion about who is providing them with financial services.... Regulation Best Interest would specifically provide that a broker-dealer would meet the best interest obligation by satisfying four component obligations: [1] the Disclosure obligation, [2] the Care obligation, and [3] the two Conflict of Interest obligations[.]"
Schiff Hardin


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[Guidance Overview]

SEC Proposes Rules of the Road for Brokers Giving Advice to Retail Investors

"Some of the key questions raised by proposed Regulation Best Interest include: [1] What does it mean to act in a retail customer's 'best interest?' [2] Is 'best interest' consistent with current interpretations of a broker-dealer's suitability obligations, or does it require something more? ... [3] How does the new 'best interest' concept impact the sale of proprietary products or a limited range of products? [4] Which conflicts can be disclosed and mitigated, and which must be eliminated? [5] To what extent does the proposal reflect a repackaging of the recently vacated [DOL] Fiduciary Rule and Best Interest Contract Exemption?"
Morgan Lewis

Avoiding the Curveball of a Taxable 401(k) Loan under the New Tax Act

"Under the new Tax Act, the 60-day period was extended to the filing due date for the participant's tax return for the year in which the loan offset amount arises.... [T]his extension of time is only available for loan offsets that become taxable due to separation from employment. This extension is not available for participants that defaulted on a loan repayment while still employed."
Belfint Lyons Shuman

Senate Bill Would Create Commission to Advise Congress on Retirement Issues

"[The Commission on Retirement Security Act of 2018 (S. 2753) would] create a commission that would study Americans' retirement security, including private retirement programs, and make recommendations to Congress on how to improve it. The Commission would be expected to complete a review and report to Congress not later than two years after the Commission is established. Public input through hearings and testimony could be sought by the Commission during this period."

Wells Fargo Struggles to Attract 401(k) Business in Wake of Banking Scandals

"Wells Fargo saw a 5% drop in its number of DC record-keeping clients from the third quarter of 2016 through the same period in 2017. It's been a roughly 10% drop since the third-quarter 2015. Wells provides record keeping services to more than 3,200 DC plans with $212 billion in assets[.]"


ERISA Litigation Update: New Trends and Significant Changes

Sponsored by Lorman and BenefitsLink

May 31 webinar includes tips for avoiding litigation. key issues in defending claims for benefits, and emerging areas of specialized ERISA claims. Discount for BenefitsLink readers.

ESOP Trustees Are Increasingly Becoming Targets

"[C]ompanies can help ESOP trustees avoid claims that they paid too much to shareholders for their stock by providing accurate and reliable information about the company.... ESOP trustees often seek indemnification agreements from ESOP sponsors, and ESOP sponsors are typically willing to provide them. Nonetheless, the DOL and plaintiff's bar have attacked the enforceability of such agreements."
McDonald Hopkins

Coordinating an ESOP with Other Qualified Plans

"Which plan will receive the matching contributions? ... Will the plans have the same limitation year? ... Will the same compensation definition be used for all plans? ... Will the plans have different eligibility requirements?"
Principal Financial Group

Redefining Retirement: Making the Most of Your Older Years

"With more and more people living for decades past retirement, it may be time to think not about golden years but an encore life. In this scenario, the demarcation between working and retired is less severe and more fluid. People can plan around what a thriving mature life is going to look like, and how to fund it. From career transition opportunities to civic engagement to housing to travel, retirement planning will look different for future workers."
United Benefit Advisors

WTW 'Pension 100': Year-End 2017 Disclosures of Funding, Discount Rates, Asset Allocations and Contributions

"At 85%, aggregate funding levels were (modestly) higher than they have been since 2013. Plan sponsors' 2017 contributions were the largest since 2012. Since 2009, average target allocations to public equities declined by 14 percentage points, while average target allocations to fixed-income investments rose by 12 percentage points."
Willis Towers Watson

How Scaling Back Public Pensions Puts Government Revenues at Risk (PDF)

24 pages. "[This research examines] the broader question of state and local revenues generated by public pensions, and whether these revenues exceed taxpayer contributions....[In 2016,] investment of pension fund assets contributed $587.5 billion to the economy, which in turn yielded $125.7 billion in state and local revenues.... $303.1 billion paid to retirees in pension checks during 2016 contributed $757.8 billion to the economy and $151.9 billion to state and local revenues.... [P]ublic pensions in 2016 contributed $1.3 trillion to the economy and $277.6 billion to state and local revenues."
National Conference on Public Employee Retirement Systems [NCPERS]

Public Pension Funded Ratio Falls Back in Q1, Down to 71.4% (PDF)

"The robust gains of Q4 2017 have essentially been washed away in Q1 2018 as a sharp increase in volatility for equity markets caused a $93 billion setback in the estimated funded status of the 100 largest U.S. public pension plans ... From the end of December 2017 through the end of March 2018, the deficit grew from $1.332 trillion to $1.425 trillion. As of March 31, the funded ratio stood at 71.4%, down significantly from 73.1% at the end of December."


Chairman's Statement at Hearing on Proposals to Simplify and Modernize Retirement Plan Administration

"Many ERISA provisions related to retirement plan administration are in desperate need of updating, with some having last been revised over two decades ago. Red tape and unnecessary federal restrictions stand in the way of lower costs for small businesses and have contributed to compliance uncertainty, making it harder for employers to provide their employees with retirement savings programs. These are not the most encouraging things to hear as more Americans are retiring, and studies show that Americans should be saving more for retirement."
Rep. Tim Walberg (R-MI), Chairman, Subcommittee on Health, Employment, Labor, and Pensions; Committee on Education and the Workforce; U.S. House of Representatives


ICI Statement at Hearing on Proposals to Simplify and Modernize Retirement Plan Administration (PDF)

74 pages. "While there is opportunity for improvement, the US retirement system is helping millions of Americans achieve a secure retirement.... Targeted changes building on the strengths and successes of the current national system would reduce cost and increase access."
Investment Company Institute [ICI]

Benefits in General

Dynamex Case Sets Forth New California Standard for Answering the Question: Employee or Independent Contractor?

"[T]he opinion will likely make it considerably harder for some businesses and organizations to justify independent contractor classifications. The opinion's focus on industrial wage orders (and not employment laws arising from other sources) is unlikely to lessen the impact. The decision certainly makes it easier for some contractors to demonstrate misclassification." [Dynamex Operations West, Inc. v. Superior Court of Los Angeles County, No. S222732 (Cal. Apr. 30, 2018)]
Duane Morris LLP

Sixth Circuit Clarifies Importance of Firestone Language for ERISA Plan Interpretation

"[P]lan sponsors should take the following steps as a result of this litigation. [1] Inventory all plans, including qualified, nonqualified, health and welfare, and severance plans, that are subject to ERISA. [2] Review these plans to make sure that they have language that provides the plan administrator with authority to interpret the plans and resolve ambiguities, consistent with Firestone. [3] Ensure that these plans have appropriate claims procedures. If the plans provide benefits upon a determination of disability, make sure that the plans comply with the most recent claims procedure regulations from the DOL. [4] Document compliance with the claims procedures and take steps to avoid conflicts of interest in order to help ensure a favorable arbitrary and capricious standard of review rather than a de novo standard of review." [Clemons v. Norton Healthcare Inc. Ret. Plan, Nos. 16-5063 and 16-5124 (6th Cir. May 10, 2018)]
Porter Wright Morris & Arthur LLP

Selected Discussions
on the BenefitsLink Message Boards

'Schedule' for Deposit of Withheld Taxes on Plan Distributions?

Client has been taking distributions for several years from his single member plan. He is older than 59-1/2 (70-1/2 this year, as a matter of fact) so there's no premature distribution issue. We pay the taxes on all distributions in excess of the 20% minimum (33%),and prepare the 1099-R and 945. Uncle Sam has sent him a penalty letter saying his tax payments are late, and that he is on a tax payment "schedule." How can he be on a "schedule" if he doesn't know when he will take a distribution? And, when he does take a payout, he immediately pays the taxes using the EFTPS system. Did I miss the memo?
BenefitsLink Message Boards

Uninsured Short-Term Disability Payments: Treated as Compensation from Employer for Plan Purposes?

Company has a QACA safe harbor 401(k) plan with matching contributions made on a payroll basis. The company is considering entering into an arrangement with an insurance company to have it make short-term disability payments to the company's employees. The employer company will then reimburse the insurance company for the payments made. Are these payments compensation from the employer company (and not the insurance company)?
BenefitsLink Message Boards

Supplemental Executive Retirement Plans: Year-End Reporting to IRS

Client has a non-qualified unfunded defined benefit Supplemental Executive Retirement Plan. It's not nonqualified deferred compensation. The covered executives make no contributions under the plan. The benefits are computed based on years-of-service and final average compensation. The benefits are paid out of general company funds on a monthly basis. There is NO SURVIVOR BENEFIT. There is a very strict anti-alienation clause. There is no option to take a lump-sum payment. So, given those facts, what year-end IRS form should these payments be reported on -- W-2, 1099-R, 1099-MISC?
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