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[Guidance Overview]

Socially Responsible Investing: What Retirement Plan Sponsors Need to Know

"The new guidance notes that DOL policy does not require fiduciaries to include ESG considerations in investment policies, develop ESG-specific policy statements or guidelines, or incorporate ESG-related tools, metrics or analyses into risk/return analyses. While the bulletin does not prohibit these actions, it does warn that fiduciaries 'must disregard' routine compliance with ESG-related investment policy statements if it would be imprudent, as it relates to participants' retirement income interests, to comply."
Cammack Retirement Group


Advanced Pension Conference, Sept. 5-7, 2018 - Registration Open

Sponsored by FIS Relius Education

Our ERISA experts will cover new QBI Deduction, 403(b) universal availability, advanced top heavy, 11(g) amendments, beneficiary designations, DB plans, RMDs, fiduciary regs update, and more. 19 CE hours. Early fee ends July 30, 2018. Register now.

[Guidance Overview]

Interesting Angles on the DOL's Fiduciary Rule, Part 96

"[According to] the SEC proposal ... a 'retail customer' includes individual investors, family and personal trusts, IRA owners, and plan participants. However, it does not include businesses, retirement plans, and tax-exempt organizations. Unfortunately, the SEC did not explain why they excluded some of those investors, who may be relatively unsophisticated."

A Retirement Perk for Deeply in Debt Millennials

"More than 100 companies put some money toward employees' student loans ... So far, companies have been offering anywhere between $500 and a few thousand dollars a year toward student loan payments. That money is treated as taxable income, a drawback for all parties that may explain why more employers aren't adding the benefit.... Abbott's twist works around the tax penalty, because 401k payments are tax-free."

MetLife Accused of Failing to Pay Retirees Covered by Pension Risk Transfers

"A would-be class representative whose benefit liability was transferred to MetLife in a pension risk transfer (PRT) deal has filed an expansive lawsuit, challenging the company's practices across its PRT and group annuity contract services business.... The complaint points to various ways that MetLife has allegedly 'admitted' or 'acknowledged' that it has failed to keep track of beneficiaries, failed to contact them, and/or failed to pay them their benefits when due. In one instance, the complaint points to language in a disclosure slide presented during an earnings call with stock and credit analysts."

Massachusetts Charges MetLife with Fraud Over Filings Related to 13,500 Missing Participants

"[T]he complaint alleges that MetLife's public filings contained material misstatements about company finances, because reserves set aside for missing participants were released and 'became assets which inflated MetLife's bottom line.' ... [In a February 8-K filing with the SEC, MetLife] said about 13,500 participants had been affected over the past 25 years. MetLife said the reserves set aside for those participants were released. Now, the company has added $510 million back to those annuity reserves."
Pensions & Investments


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Looking at an Expanding Landscape: Multiemployer Plan Withdrawal Liability

"During the due diligence process, asset purchasers should inquire about the existence of union employees participating in multiemployer plans. If such a plan exists, asset purchasers should review union agreements, plan documents, and any withdrawal liability estimates prepared by the multiemployer plan. Armed with this knowledge, an asset purchaser may negotiate purchase price adjustments, indemnities, or escrow accounts to minimize its financial and legal exposure." [Heavenly Hana LLC v. Hotel Union & Hotel Industry of Hawaii Pension Plan, No. 16-15481 (9th Cir. June 1, 2018)]
Foley & Lardner LLP

The Impact of Alternative Discount Rates on Multiemployer Pension Plan Funding (PDF)

13 pages. "This study uses the latest available Form 5500 data for all multiemployer plans to explore the impact of using alternative discount rates on the multiemployer pension plan system ... The overall funded percentage of the multiemployer system is 73% when measured with current discount rates. This funded percentage falls to 51% if liabilities are determined using corporate bond rates, and to 43% when using 30-year Treasury rates."
Horizon Actuarial Services LLC

U.S. Public Pension Plan Mortality Assumptions (PDF)

"This study compares the mortality assumptions used for funding purposes by state-based and large-city public pension plans in terms of the annuity factors they produce ... Roughly one-third of the plans had adopted RP-2014 mortality base rates or a variation of them.... While 58% of plans use generational projection, about 37% of plans use static projection and 5% of plans do not project mortality.... Mortality assumptions for teachers tend to reflect longer life expectancies than for other job categories."
Society of Actuaries

Top Ten Reasons Not to Save Now for Retirement

"[10] We'll sell our home and move somewhere cheaper when we retire.... [9] I'll work forever.... [8] I'll rely on Social Security or other government programs.... [7] I'm going to receive a large inheritance.... [6] My kids will take care of me.... [5] Saving reduces how much I can spend currently.... [4] I'm too young to save for retirement.... [3] We won't live that long.... [2] I'll win the Lottery.... [1] It will somehow all work out."
Ken Steiner, FSA Retired


The State Pension Model Isn't Working

"In theory, state pensions are stand-alone entities that collect contributions, invest them for growth, and then disburse benefits. Very simple. But in many places, all three of those components aren't working. Employers (governments) and/or workers haven't contributed enough. Investment returns have badly lagged the assumed levels. Expenses are more than expected because they were often set too high in the first place, and workers lived longer."
John Mauldin, in Forbes


ARA Comments to IRS on Pre-Approved Plan Document Program Under Rev. Proc. 2017-41 (PDF)

"This letter asks for clarification on certain provisions of the new procedures, makes recommendations for further enhancements to Program and requests a 5-month extension of the submission deadline for Cycle 3 defined contribution pre-approved plans."
American Society of Pension Professionals & Actuaries [ASPPA]

Benefits in General

Text of IRS Publication 4557: Safeguarding Taxpayer Data -- A Guide for Your Business (PDF)

21 pages, rev. June 2018. "Data security is now a necessity for every tax professional, whether a partner in a large firm or a sole practitioner, and every Authorized IRS e-File Provider. Every employee, both professional and administrative staff, should be educated about security threats and safeguards.... According to the FTC Safeguards Rule, tax return preparers must create and enact security plans to protect client data. Failure to do so may result in an FTC investigation."
Internal Revenue Service [IRS]

Text of IRS Publication 5293: Data Security Resource Guide for Tax Professionals (PDF)

"The Data Security Resource Guide for Tax Professionals is intended to provide a basic understanding of minimal steps to protect client data. All tax professionals are encouraged to work with cybersecurity professionals to ensure secure systems. Protecting taxpayer data from theft and disclosure is your responsibility." [Rev. May 2018]
Internal Revenue Service [IRS]

Is Your Plan's IRS Form 5500 Complete, Accurate, and Ready for Filing?

"[I]ssues to look out for include: [1] Reporting the incorrect plan name, employer name, and/or plan number.... [2] Reporting of late deposits and/or qualification failures in an appropriate manner. [3] Misreporting on 'Schedule C.' ... [4] Entering incorrect codes describing the plan characteristics. [5] Reporting that there is no 'ERISA fidelity bond' in place ... [6] Misreporting the use or nonuse of leased employees. [7] Misreporting relating to controlled group, affiliated service group, multiple employer, or multiemployer status."
Hawley Troxell

North Carolina Creates Solvency Fund to Pay Down Unfunded Employee Benefit Liabilities

"The Unfunded Liability Solvency Reserve Act creates a reserve that will be funded through several sources, including General Assembly appropriations, overflows from the state's rainy day fund, or savings from refinancing of general obligation bonds. Between pension and health care, the state has $50 billion in unfunded liabilities, $35 billion in health care alone. The solvency fund is believed to be the only one of its kind in the nation[.]"
Pensions & Investments

Selected Discussions
on the BenefitsLink Message Boards

Davis Bacon/Prevailing Wage Plan with Safe Harbor Nonelective Offset

I am curious how others set up and track these plans. Assume individual accounts. So prevailing wage contributions are made to offset 3% SNHE contributions. All non PW EEs receive 3% SHNE from the employer. However, as I understand it, any PW contribution in excess of 3% of pay would be classified as discretionary profit sharing. Should I be attempting to set up two DB/PW buckets? Or is it allowable to re-source the money into SHNE/discretionary? The reason I ask is because down the line it may get tricky with determining amounts available for hardship or early in-svc withdrawals and the like.
BenefitsLink Message Boards

Compensation for Deferrals include Group Term Life?

I had an auditor call and ask if taxable income for group term life benefits is included in the deferral calculation and if not, how is it excluded in the document? He was at a recent seminar and the presenter scared everyone with an example where someone was wronged by this and missed out on a very small match ($2.00-ish) and it cost a fortune to resolve. For this plan, we use 3401 compensation, no exclusions. We do include the fringe amount for the life insurance in the PS allocation. The client does not include in the deferral calculation. Their logic is that GTL income is not compensation paid to the participant, it is just taxed and not compensation included in the deferral calculation. For example, one person makes $50,000 and $30 in GTL annually. 10% deferral is $5,000 not $5,003.00. Does this make sense and does 3401 without exclusions support this?
BenefitsLink Message Boards

Can Profit Sharing Plan Be Amended to Remove In-Service Distributions?

I have a plan that currently allows profit sharing contributions to be paid from the plan after the assets have been allocated for 2 years and requires that they participate for at least 5 years. The client wants to remove this distribution option. Is that a protected benefit? I've read conflicting information.
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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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