Retirement Plans Newsletter

June 13, 2018

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Target Date Fund Benchmarks: Availability and the Selection Process (PDF)

14 pages. "[F]iduciaries must monitor and evaluate their TDF selection. This article describes the benchmarks that are currently available and offers some guidance on selecting the appropriate benchmark. Fiduciaries should align the objectives of their TDF with those of the benchmark, and confirm that the benchmark glide path and underlying allocations are in line with the TDF that is being evaluated."
Target Date Solutions

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Northwestern University Defeats 403(b) Lawsuit

"[P]laintiffs alleged that Northwestern University and its fiduciaries ... mandated the inclusion of particular stock accounts in the plans, impos[ed] excessive record-keeping fees, improperly allowed payment for record-keeping expenses through revenue sharing, and included too many investment options. The Court rejected all of plaintiffs' fiduciary duty claims." [Divane v. Northwestern Univ., No. 16-8157 (N.D. Ill. May 25, 2018)]
McDermott Will & Emery

SEC Best-Interest Proposal Doesn't Affect 401(k) Brokers

"While the SEC has proposed to impose a limited, or transaction-based, best-interest standard on broker-dealers, that only applies to investment recommendations made to 'retail customers.' Based on the SEC's definitions, it does not appear that, ... retirement plans are retail customers. As a result, broker-dealer investment recommendations to retirement plans would not be covered by the best-interest standard."
InvestmentNews

401(k) Matching Contributions: What Employers Need to Know

"[N]onelective contributions may be the superior alternative when trying to meet the following 401(k) goals: [1] Provide a base retirement benefit to low wage workers that can't afford to save themselves [2] Maximize business owner contributions with the least possible expense -- often, a new comparability profit sharing contribution is less expensive than a matching contribution in meeting this goal."
Employee Fiduciary

The Evolving Retirement Planning Landscape

"Rising rates, uncertain markets, lengthening life expectancies, and the elimination of pensions are complicating retirement planning for accumulators and decumulators alike.... Target-date funds continue to enjoy significant inflows -- to the tune of $70 billion in 2017.... Small retirement plans are still lacking ... The cost of retirement and 'safe' withdrawal rates ... Products for guaranteed income in retirement."
Morningstar Advisor

Benefits in General

BenefitsLink Message Boards Digest Now Has 1,000 Subscribers

The Message Boards Digest has just passed 1,000 subscribers! Begun six months ago, the free daily email publication has the text of each new topic on the popular BenefitsLink Message Boards. Take a look at a recent, sample issue. To subscribe, just enter your email address on our online form, then click the Subscribe button.
BenefitsLink

Executive Compensation
and Nonqualified Plans

Moving the Bonus Plan Goalposts: Be Smart or Be Sued

"Well-drafted plans and programs include significant employer protections. But some defects can really come back to haunt employers, such as the failure to allow for the impact of a future merger or acquisition, or the omission of a maximum limit. Panera Bread tried to recover from the latter, but lost in the 8th Circuit Court of Appeals because its bonus plan did not clearly reserve a right for Panera to unilaterally modify or terminate the plan." [Boswell v. Panera Bread Co., No. 16-3230 (8th Cir. Jan. 5, 2018)]
The Wagner Law Group

Selected Discussions
on the BenefitsLink Message Boards

Foreign Entities Owned by U.S. Plan Sponsor -- Ignore for Purposes of Section 414?

When considering controlled group or affiliated service group issues with respect to a U.S. corporation, is it true that one cannot simply disregard a foreign business owned by that U.S. corp? If that foreign entity employed U.S. citizens?
BenefitsLink Message Boards

Refund of Amounts Contributed Due to Mistake or Fraud/Embezzlement

An employee of a sponsor of a 401(k) plan fraudulently caused deposits, in excess of what was deferred, to be made for the employee and several others in a 401(k) plan. Now that this has been discovered, can these contributions be refunded to the plan sponsor?
BenefitsLink Message Boards

Projected Limits for 2019 Based on Tuesday's Release of CPI

Based on the CPI value released on June 12, 2018 (and using the values for Mar-Apr-May) the rounded/actual 2019 limits would be:
· Catch-up: $6,000/$6,364
· Deferrals: $19,000/$19,092
· Comp: $280,000/$281,900
· 415: $56,000/$56,380
· DB limit: $225,000/$225,520
· Key Employee definition: $180,000/$183,235
· HCE definition: $125,000/$127,376
Tom Poje, on the BenefitsLink Message Boards

Non-Adopting Employer Allowed to Participate

A client with a controlled group of companies recently created a new company and transferred several plan participants to the new company. These employees were allowed to continue to participate, but the new company is not an adopting employer. We've been advised that this must either be corrected with a VCP filing, or by returning the ineligible contributions. I'm wondering why this couldn't be self-corrected with a retroactive amendment under the "Early Inclusion of Otherwise Eligible Employee Failure."
BenefitsLink Message Boards

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Press Releases

DOL Works With Insurers to Distribute Up to $116 Million to Retirement Plan Participants
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

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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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