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Retirement Plans Newsletter August 6, 2018 |
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Jobs
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Webcasts, Conferences 2018 Employee Benefits Forum: Plan Sponsor's Toolkit: DIY Maintenance and Repairs
Collection Procedures Institute: Strategies for Collecting Past Due Payments
IRS Audits: A Necessary Evil
PBGC Reporting and Notices
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Discussions |
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This Newsletter:
BenefitsLink Health & Welfare Plans Newsletter:
Message Boards Digest:
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Mid-Level Employee Benefits Attorney (#75180111)|
Bipartisan Savings Legislation Introduced in Senate "S.3218 would authorize an employer to 'make available to employees a stand-alone, short-term savings account, using an automatic contribution arrangement.' ... S.3220 would generally allow a taxpayer to defer 20% of her tax refund and have it deposited in a 'Rainy Day Fund' that would be invested in US Treasury bills.... [These two bills] were part of a package that also included S.3219, authorizing Open MEPs, and S.3221, making certain modifications to the current automatic enrollment 401(k) nondiscrimination testing safe harbor."
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What Every Advisor and Plan Sponsor Should Consider When It Comes to 404(c) and QDIA Compliance "[1] Fiduciaries should not 'set it and forget it' when it comes to Target Date Funds (TDFs).... [2] Advisors can develop custom ETFs to help plans meet their fiduciary duties and control the risk exposures and fees for participants, but must be sure they are appropriate for the plan. Some questions to consider ... [3] If you're considering ESG investments as part of a plan lineup, consider competing views.... [4] For plans that include TDFs with a lifetime annuity option, make sure the fund satisfies IRS requirements in order to avoid separate nondiscrimination tests.... [5] Don't blindly recycle last year's QDIA notice.... [6] Check all documents thoroughly.... [7] Make sure to document the evaluation of these and other appropriate considerations and keep it in a centralized file.... [8] Revisit employee communications."
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Advisors Selecting Target Date Funds Crave Legal Protection (PDF) "Advisors can protect themselves from lawsuits by choosing TDFs that protect beneficiaries from losses. Advisors are not choosing safe TDFs because they believe procedural prudence will protect them from lawsuits. They are copycats, choosing what everybody else chooses. Either approach might fail to protect. Being different or being reckless could get you into court."
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Nearly a Third of U.S. Pension Plans Are Now Within Striking Distance of a Buyout "30% of US plans analyzed by fintech company RiskFirst have assets equal to or exceeding 95% of their liabilities on an accounting basis, according to RiskFirst data. Analysis of some 500 plans with assets of over $100bn highlights that the number of plans within this funding level band -- which arguably puts them within reach of a buyout or termination (given the premium required to match current annuity pricing, offset by the increasing costs of plan management) -- has increased by 50% in the first half of 2018."
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Buyouts Continue Roaring Along, But Sponsors Change Up Tactics "The pension buyout trend shows no signs of slowing down, although how many more jumbo deals are in the offing is unclear.... [O]ne of the notable changes ... is a lot more discussions about full plan termination than just retiree liftouts ... Another trend since 2017 has been transferring liabilities of participants whose monthly benefits are relatively small, less than $500 a month, for example. Many plans have prioritized the reduction of headcount because of rising fixed-rate premiums to the [PBGC]."
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A Tale of Two Teamsters Pension Plans "Central States is among the approximately 130 plans that have projected they will run out of money in the next 20 years. That means the plan's members could lose their pension benefits. The Western Conference, on the other hand, is close to fully funded and in a good position to pay out pension benefits. So how did these two plans that were set up to provide pensions to workers in the trucking industry end up in opposite positions?"
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Data on Multiemployer Defined Benefit Pension Plans (PDF) 22 pages. "This report provides data on multiemployer DB plans ... First, the report categorizes the data based on plans' zone status in 2015. Next, it provides a year-by-year breakdown of the number of plans that are expected to become insolvent and the number of participants in those plans.... Finally, the report provides data on those employers whose plans indicate contributed more than 5% of the plans' total contributions ... in the 2015 plan year[.]" [R45187, July 26, 2018]
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[Opinion]
'Multiple' Choices: All MEPs Not Created Equal "[Under the Small Business Employees Retirement Enhancement Act (S.3219)], employers that have 100 or fewer employees who earned at least $5,000 during the preceding year and that participate in a pooled employer plan (PEP) registered with the [DOL] ... would not be considered a fiduciary to that plan -- including with respect to the selection and monitoring of any plan service provider or any investment under the plan.... [F]or the first time since the passage of ERISA in 1974, the employer -- in what remains an employment-based retirement system -- would basically have no fiduciary role."
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[Opinion]
"[1] Net capital requirements are inappropriate for the advisory business and particularly burdensome to small advisory firms. [2] The Commission should clarify that broker-dealers' recommendations to non-professional fiduciaries of small retirement plans are required to comply with the best interest obligation because such fiduciaries are 'retail customers' within the meaning of Regulation Best Interest. [3] Broker-dealers' compliance with [DOL] disclosure requirements when providing investment advice to small retirement plan fiduciaries should be deemed to satisfy Regulation Best Interest's disclosure requirements. [4] A federal licensing regime is overly duplicative of state efforts that near-universally require the Series 65 license. [5] Provision of account statements is an onerous and costly requirement that duplicates efforts by custodians."
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[Opinion]
ACLI Comment Letter to SEC on Proposed Regulation Best Interest "[1] A full assessment about the current regulatory framework is important to the SEC's thorough evaluation of potential approaches under Reg. BI and should include the comprehensive network of state insurance regulation. [2] Joint collaborative efforts between the SEC, FINRA, DOL and state insurance regulators will generate a uniform best interest standard across all regulatory platforms that properly protects consumers while advancing financial and retirement security.... [3] Disclosure required under Reg. BI will need careful coordination to properly mesh with amendments to Form CRS. A single disclosure fulfilling Reg. BI and Form CRS would reduce disclosure burdens and increase the likelihood consumers will read the required information."
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Benefits in General |
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[Official Guidance]
29 pages. "What's New: [1] Online fillable forms Copies 1, B, 2, C, and D.... [2] New mailing address for Kansas City, MO.... [3] Backup withholding rate change.... [4] Form 1096.... [5] Form 1099-H.... [6] Reportable policy sales and reportable death benefits."
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Selected Discussions |
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Fixing a Distribution Made Before a Distributable Event Despite Termination of Plan One-person 401(k) plan wanted to move investment companies in 2010, was advised he had to terminate plan and adopt a new plan. Participant was less than 59-1/2 and no distributable event. Assets were rolled over over to IRA and never withdrawn. Still in the IRA, so apparently no tax consequences. New plan is terminating in 2018. Owner wants to fix the failure in the first plan. What's the fix? Can he ride the statute of limitations and do nothing?
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What Do You Do with a Recalcitrant Participant-Payee? Much has been said and written about missing or unlocated participants. But much less has been discussed about what some describe as recalcitrant participants -- those who decline to deposit or negotiate the check that pays a distribution. The participant is not missing; rather, the administrator has solid proof that the distributee accepted delivery of a mailing. Many months pass and the payee has not deposited or negotiated the check. What steps should the plan administrator take next?
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Moving to a New Third Party Administrator. Continue to Use Old TPA's Prototype Document? If a Employer adopts a Prototype Plan sponsored by its Third Party Administrator, can the Plan continue to use the Prototype Plan in the event the relationship with the sponsoring TPA is terminated? Would switching the Plan's TPA likely trigger "discontinuance" in the Prototype Plan?
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Press Releases |
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Lincoln Financial Group Launches YourPath Portfolios for Employer-Sponsored Retirement Plans
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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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