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Retirement Plans Newsletter May 22, 2018 |
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Jobs
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Webcasts, Conferences Benefit Plans in M&A: Transitioning Pension, Savings and Welfare Plans
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Discussions |
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This Newsletter:
BenefitsLink Health & Welfare Plans Newsletter:
Message Boards Digest:
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Retirement Account Administrator II|
[Guidance Overview]
The Death of the Fiduciary Rule Doesn't Mean That Broker-Dealers Won't Be Fiduciaries "The Five-Part Test is a more narrow definition than the vacated Fiduciary Rule, and the prongs do materially limit the scope of fiduciary advice.... But consider a broker who has a longstanding relationship with a 401(k) plan sponsor, offering regular recommendations on plan investment options. If the advice has been followed by the plan fiduciaries (as is typically the case), it will be increasingly difficult to argue that there is no 'mutual understanding' that the advice is 'a primary basis' for investment decisions"
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[Advert.]
Findley Davies | BPS&M is now Findley
We make the complex world of retirement, benefits, human capital and M&A simpler for organizations across the nation. Learn how! |
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A Pension Sponsor's Readiness Guide to Plan Termination: Review the Data (PDF) "Review and address data issues early in the planning process. The [diagram included in this article] can help to assess the condition of participant data."
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Can a Company Freeze a 401(k) Account If an Employee Is Suspected of Stealing from the Company? "This is one of the very rare instances when there is a clear-cut answer, and it is a resounding 'no.' ... One of the unique features of company-sponsored retirement plans is that they are protected from legal judgments and bankruptcies. They also cannot be used as collateral and cannot be assigned to another individual. There are a few exceptions, but they are very narrow and specific."
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What Plan Sponsors Can Learn from the Thrift Savings Plan "While the TSP excels in its simplicity, the plan's few investment categories impacts performance, for better or worse, at various points in time. The TSP's core menu includes an S&P 500 index tracker, a small-cap stock index fund that tracks the Dow Jones U.S. Completion Total Stock Market Index, an international-stock fund that tracks the MSCI EAFE Index, and a Bloomberg Barclays U.S. Aggregate Bond Index tracker. As solid as this lineup is, it misses exposure in a couple of worthwhile areas, such as emerging markets and inflation-protected bonds."
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Administrative Fee-Leveling to Impact Penn State Retirement Program Participants "Beginning July 1, Penn State will adopt a 'fee-leveling' approach, an industry best practice, to create a more fair and equitable way to account for administrative expenses. Fee-leveling ensures that all participants pay the same percentage of their account balances for record-keeping and administrative fees, regardless of the funds in which they invest.... In 2018, the annual administrative fee is 0.052 percent, or $0.52 per $1,000 invested."
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[Advert.]
ERISA Litigation Update: New Trends and Significant Changes
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. |
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How a Fiduciary Answers the Individual Stocks vs. Mutual Fund Question "[If] the investor possesses enough asset size, there's no need to continue riding the mutual fund bus. It's possible to switch to that chauffeured limousine known as a privately managed portfolio.... the need to move away from mutual funds becomes more acute in taxable account situations.... Many professionals use two numbers -- one which anything below it will remain in funds, the other which anything above it will be in individual stocks and bonds."
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Two-Year Retirement Commission Proposed "The Commission on Retirement Security Act of 2018 [S.2753] would call for a comprehensive review of U.S. private benefit programs, with a particular focus on the shift from defined benefit to defined contribution models. The commission would be charged with examining plan coverage, account balances, investment trends, costs, and retirement distributions -- and reviewing economic issues, the gig economy, and demographic changes (longer life expectancy and shrinking household size). Its report would be due within two years from naming most of the members of the commission."
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Puerto Rico Oversight Board Tweaks Fiscal Plan, Keeps Pension Reforms "On pension reform, the plan calls for freezing pension benefit accruals by July 1, 2019, and enrolling all employees in defined contribution plans, as well as Social Security. Benefits would be reduced progressively to an average cut of 10%, with no cuts for participants whose combined pension and Social Security benefits are below the poverty level of $1,000 per month. The board has reached an understanding with the government on some economic development measures, including labor reforms, but not the pension changes."
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"This report examines [1] the steps taken to calculate financial interchange amounts, [2] factors that could account for trends in transfers over time, and [3] the extent to which RRB, SSA, and HHS provide oversight to ensure calculations are accurate.... GAO makes eight recommendations, including that RRB create formal policies and improve documentation of its processes, work with SSA to obtain data electronically, and that SSA and HHS increase their oversight."
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Nabisco Offers $15,000 to Each Union Worker, Wants to Replace DB Pension with 401(k) Plan "To end a two-year contract standoff with about 2,000 union members at its six Nabisco bakeries in the U.S., Mondelez International is offering to triple its proposed contract ratification bonus to $15,000 per employee. All workers would have to do to get that money is ... let the company withdraw from their union's pension plan and reduce their health insurance benefit.... The offer expires at midnight May 20."
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Multiemployer Pension Funding a Big Challenge for PBGC, Wider Economy "Multiemployer pension plan insolvencies will obviously be harmful to the participants and beneficiaries of the plans in question, but the loss of the significant economic momentum provided by retirees spending their pension plan assets could also harm the wider economy."
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[Opinion]
Government Money Should Help Solve This Pension Crisis "[T]he government has not established a meaningful insurance program for participants in bankrupt multiemployer plans.... [T]he 'crisis' of multiemployer plans is really about one plan: Central States Teamsters. If not for the imminent failure of Central States, moderate reforms to the PBGC multiemployer program and withdrawal liability procedures could right the multiemployer retirement system."
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Benefits in General |
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[Guidance Overview]
Impact of GASB 74/75 on Small Government Employers (PDF) "[This article reviews] the Alternative Measurement Method (AMM), which is used by small government employers in lieu of an actuarial valuation. This AMM review is followed by a discussion of the important changes relevant to small government employers as GASB 74/75 takes effect."
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They're Yours, They're Mine or They're on Their Own: More on Employee vs. Independent Contractor "[T]he Dynamex case dramatically changes the test for determining whether workers should be classified as employees or independent contractors under the California Wage Orders and adopts a rule that generally presumes that someone working for a business or organization is an employee and not an independent contractor. However, this new rule only applies for purposes of the California Wage Orders, and does not change the 'common-law' test of employment status[.]"
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2018 Employee Financial Wellness Survey "Forty-two percent of employees say it's likely they'll need to use money held in retirement plans for expenses other than retirement ... Employees want a financial wellness benefit with access to unbiased counselors and help understanding and using their benefits.... A growing number of employees would be willing to sacrifice future pay increases for better healthcare benefits. Overall, among employees' retirement concerns, worries over health issues and healthcare costs combined are even more prevalent than the fear of running out of money."
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Post-Retirement Experiences of Individuals 85+ Years Old "The Society of Actuaries' Committee on Post Retirement Needs and Risks is pleased to make available two research reports on post-retirement experiences of individuals 85+ years old. The first report summarizes sixty-two interviews of individuals 85 years and older. Interviews were conducted in the United States and Canada. The second report summarizes 201 surveys of Americans age 85+ years old and 202 surveys of adult children of Americans in this age group. The study seeks to understand how the habits and behaviors from earlier in life played out in the later years of retirement."
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Executive Compensation |
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"Going forward, when S Corp and/or LLC owner executives are eligible for the 20% deduction, the difference in marginal rates will provide an even greater incentive to minimize wages in favor of a larger share of distributable net income. This must be weighed against other important factors including [1] optimizing the value of any qualified plan deductions and benefits, and [2] recognizing the appropriate value for services rendered by each of the owner executives who may have different levels of ownership and hold different jobs (with different values)."
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Selected Discussions |
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PBGC Plans Exempt from ERISA Bond Requirement? Are PBGC plans exempt from an ERISA bond? Specifically asking about small DB plans that typically would not be subject to audit if the bond requirement is met.
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'Participant Loan' Allowed from Rollover Account in Plan Before Employee Becomes a Participant? Plan allows incoming rollovers by employees who are expected to become a participant but who haven't met the requirements yet. Are these people "participants" when it comes to the availability of a participant loan?
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Can Rights Under a NQDC Plan Be Assigned to a Trust? Employer has an NQDC plan in the form of "appreciation units." Executive wants any payments under the plan to be paid to a trust, of which he and his wife are the trustees, instead of to him directly. My understanding is this does not avoid taxation for him, but he wants the trust to hold all of his assets. Plan currently does not permit the assignment of rights under the plan. Does amending the plan to allow a participant to assign his/her right to payment to a trust present problems under 409A? Any right to payment is still subject to forfeiture.
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Press Releases |
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Cariloop Receives Minnesota Health Action Group Innovation Award
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NPPG Appoints Patrick Carragher to Senior Vice President of Employee Benefits
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Securian Financial Launches New Brand Identity, First-Ever National Television Advertising Campaign
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2018 Willis Towers Watson Best Practices in Health Care Survey Now Open
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Connect
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BenefitsLink.com, Inc.
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Lois Baker, J.D., President
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager
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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