Retirement Plans Newsletter

July 31, 2018

BenefitsLink.com logo
EmployeeBenefitsJobs.com logo
Search   ·   Past Issues   ·   Get Message Boards Digest   ·   Get Health & Welfare News

Jobs

Senior Qualified Plan Administrator
TCA by E*TRADE
in CO

Pension Plan Administrator
National TPA
in AZ, CA, CO, GA, IL, NC, OH, TX

Retirement Plan Administrator
The Finway Group
in IA, Telecommute

►See All Jobs

►Post a Job


Webcasts, Conferences

IRS and DOL Audit Issues for Retirement Plans
August 7, 2018 WEBCAST
Winston & Strawn

Disclosures, Notices, and Filing Requirements for Your Retirement Plan
September 18, 2018 WEBCAST
Western Pension & Benefits Council

ERISA Basics National Institute
October 10, 2018 in IL
American Bar Association Joint Committee on Employee Benefits [JCEB]

Executive Compensation: MeToo, Employment Agreements, and the Clawback of Executive Compensation
August 7, 2018 WEBCAST
American Law Institute Continuing Legal Education Group [ALI CLE]

►See 116 Upcoming Webcasts and Conferences

►See 1400 Recorded Webcasts


Discussions

New Topics on the BenefitsLink Message Boards

New Comments and Topics

All Topics, Grouped by Forum


This Newsletter:
Subscribe Now

BenefitsLink Health & Welfare Plans Newsletter:
Subscribe Now

Message Boards Digest:
Subscribe Now


[Guidance Overview]

Editor's Pick SEC Proposes New Broker-Dealer Standard and Additional Related Guidance (PDF)

"Through Proposed Regulation Best Interest and the Proposed IA Interpretation, the SEC stated its view that in a number of cases disclosure alone is insufficient to address material conflicts of interest and that the SEC's expectation is that the firm will need to mitigate or eliminate material conflicts of interest, where they cannot be adequately addressed through disclosure alone."
Dechert LLP, via Bloomberg Tax Management Compensation Planning Journal

Retired UPS Workers File Lawsuit Challenging Treasury Department Approval of Pension Cuts under MPRA (PDF)

"Three retired UPS workers filed a lawsuit today against the federal government on behalf of themselves and a proposed class of approximately 22,000 other retirees. The suit alleges that the government acted to protect its own financial interests when it enabled a pension plan to cut each Plaintiffs' pension by 29%, reducing the likelihood that the government-run [PBGC] would go insolvent. The suit revolves around the Department of Treasury's controversial decision from September 2017 to permit a New York pension fund to reduce each Plaintiff 's monthly pension payment -- an amount that had fully vested and for which the PBGC was the insurer if the fund defaulted." [King v. U.S. (Fed. Cl., complaint filed July 31, 2018)]
Messing & Spector LLP

Lessons for Defined Contribution Plan Fiduciaries from Current Litigation

"The court ... dismissed claims involving the number of investment options offered under the University's 403(b) plans, and asset-based fee and revenue sharing arrangements. However, the court declined to dismiss [claims that]: [1] Fiduciaries acted imprudently by using more than one recordkeeper and by failing to engage in a competitive bidding process for administrative services for the plans; [2] The plans paid significantly too much for recordkeeping services compared to market rates; and [3] Fiduciaries caused the plans to incur excessive investment management fees and losses by retaining expensive funds with inferior historical performance." [Short v. Brown Univ., No. 17-318 (D.R.I. July 11, 2018)]
Hanson Bridgett LLP

Examples of Self-Dealing Transactions that are Prohibited as a Result of Fiduciary Duty

"The nature of compensation alone does not determine whether a conflict-of-interest exists. This determination must be made within the context of the association between the two parties. Once that association transforms into one of advice, a fiduciary relationship exists. When a fiduciary relationship exists, the rules of engagement change, and self-dealing, even it allowed in certain regulatory environments, can create liabilities that fiduciaries might be wise to avoid."
Fiduciary News

Understanding Financial Wellness Programs

"Only slightly more than half of the survey respondents said they were familiar with financial wellness topics, indicating a fairly steep learning curve and education challenge in the marketplace.... There is also cause for concern about the dearth of such programs.... [S]urvey respondents perceived that about 46% of their workforce was stressed and about 41% thought they were distracted. In addition, about 24% noticed a connection to physical health and about 22% of employees took time off from work to address these personal issues."
Strategic Benefit Services

New Policies Needed to Empower Plan Sponsors to Think Outside the Box

"Plan sponsors and American employees are locked into an antiquated retirement system that has not kept pace with changing demographics -- and according to industry experts, US lawmakers and new strategies can help ... As a generation of baby boomers retire and Generation X-ers see the end of their working lives in the distance, new paradigms are emerging that have an impact on how workers need to prepare for their post-work years."
Employee Benefit News

The Pension Hole for U.S. Cities and States Is the Size of Japan's Economy

"State and local pensions lost roughly $35 billion in assets between 2008 and 2009, according to Pew. Liabilities, meanwhile, ballooned by more than $100 billion a year, widening the difference between the amount owed to retirees and assets on hand. Not even a nine-year bull market in stocks could close that gap." [Editor's note: the article attracted 980 comments on the Wall Street Journal site in less than 24 hours.]
The Wall Street Journal; subscription may be required

The Pro Rata Formula and Inherited IRAs

"The pro-rata rule is a rule that almost always determines the taxation of an IRA distribution when the IRA owner has any IRA containing after-tax amounts.... If you have any Roth IRAs, they will not be included for purposes of the pro-rata formula.... [Y]our 401(k) with your employer is not part of the pro-rata formula used to determine the taxation of an IRA distribution.... Any inherited IRAs you may have are NOT included when you are determining the taxation of one of the IRAs in your name."
Slott Report

Executive Compensation
and Nonqualified Plans

[Guidance Overview]

Editor's Pick Understanding and Applying FICA's Special Timing Rule for Account Balance Plans (PDF)

"While the rules and applicable guidance have remained largely unchanged over recent years, some of the rules are unclear on how FICA taxes should be applied with respect to deferred compensation payable under account balance plans, including restricted stock units (RSUs) and deferred dividend equivalent units (DEUs). Further, the special FICA tax rules applicable to deferred compensation are frequently overlooked or misunderstood by employers, resulting in erroneous payment of the applicable taxes."
Mayer Brown LLP, via Bloomberg Tax Management Compensation Planning Journal

Ninth Circuit Overturns Altera and Revives Regulations on Cost Sharing of Stock-Based Compensation

"The Regulations required related entities to share the costs of employee stock-based compensation in order for their cost-sharing arrangements to be classified as qualified cost-sharing arrangements under Section 4824 and the relevant Treasury Regulations.... [T]he Ninth Circuit first determined that Treasury had complied with the APA in promulgating the Regulations ... [and] then applied the two-part Chevron analysis to hold that the Regulations were a permissible interpretation of Section 482." [Altera Corp. v. Comm'r, Nos. 16-70496, 16-70497 (9th Cir. July 24, 2018)]
Wilson Sonsini Goodrich & Rosati

Selected Discussions
on the BenefitsLink Message Boards

Mistaken Exclusion of Employees Otherwise Eligible to Make Deferrals

We have a group of eligible employees -- basically workers who work for 6 months or less, but aren't expressly excluded by the plan -- who have not been given the opportunity to defer (match not an issue). We are doing a VCP and considering a retroactive amendment to exclude these people (rather than making QNECs). This group has always understood they are excluded, and the employee handbook excludes them, but the plan document does not. Unfortunately, as you might guess, they are all non-HCEs. Any chance the IRS goes for this? Should I even try?
BenefitsLink Message Boards

Starting New Plan After Sale of Substantially All Assets

Prospect sold his company (S Corp) effective 2/1/2018 -- strictly asset sale. Employees were terminated 12/31/2017 and were not hired by the purchaser. Remaining employees are seller and spouse, no common law employees. As of 2/1/18, it's the same company but with a new name. Employer ID number is same. Seller wants to start a defined benefit plan. Because the corp's EIN is the same, is it feasible to start the plan 1/1 under the old corp, then change sponsor and name of plan 2/1? Or make the effective date be 2/1 and prorate the salaries 12/11ths and have a short year 2/1-12/31/2018?
BenefitsLink Message Boards

Actuarially-Increased Late Retirement Benefit: A Protected Benefit?

A plan provides that, if a participant works past age 65, no retirement benefit will be paid until actual retirement, subject to any required minimum distributions. Once the participant retires, distributions begin and the participant receives an actuarially increased benefit. The plan has been frozen. The plan sponsor wants to amend the plan to force distribution at age 65. Would such an amendment be an impermissible cutback?
BenefitsLink Message Boards

► Subscribe to the BenefitsLink Message Boards Digest— a free daily email of all new discussions (not just the selected few shown above). View a sample issue.

Press Releases

Rea & Associates, Inc. is Certified to Industry Best Practices
Centre for Fiduciary Excellence [CEFEX]

Connect   LinkedIn logo   Twitter logo   Facebook logo

BenefitsLink.com, Inc.
1298 Minnesota Avenue, Suite H
Winter Park, Florida 32789
(407) 644-4146

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.

Links to web sites other than BenefitsLink.com and EmployeeBenefitsJobs.com are offered as a service to our readers; we were not involved in their production and are not responsible for their content.

Unsubscribe | Privacy Policy