Retirement Plans Newsletter

September 7, 2018

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

Jobs

Pension Plan Administrator
American Pension Advisors, Ltd.
in IN

New Business Consultant
Actuarial Systems Corporation
in CA, FL, Telecommute

Process Specialist - Retirement Services
Infosys McCamish Systems
in GA

►See All Jobs

►Post a Job


Webcasts, Conferences

Hot Topics in Retirement Plans
October 4, 2018 in MD
Worldwide Employee Benefits Network [WEB] - Baltimore Chapter

Student Loans Burdening Employees: How Employers Can Help, and the New IRS Ruling
November 6, 2018 WEBCAST
HRWebAdvisor

►See 113 Upcoming Webcasts and Conferences

►See 1374 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]

IRS Authorizes 401(k) Plan Contributions for Student Loan Repayments

"There are various legal and administrative issues to consider when designing such a Student Loan Contribution program.... In a safe harbor 401(k) plan, it may be necessary to make both the match and the Student Loan Contributions for a participant who makes both deferrals and student loan payments. The safe harbor rules require that the safe harbor match be made to all non-highly compensated employees, and the contingent benefit rule would not allow the Student Loan Contributions to be made only to employees who choose not to make deferrals. This requirement could make the student loan program prohibitively expensive."
Mazursky Constantine LLC

[Advert.]

Strategies for Collecting Past Due Payments

Sponsored by International Foundation of Employee Benefit Plans [IFEBP]

The Collection Procedures Institute will provide information you need to fulfill your fiduciary responsibility to collect benefit payments. Learn best practices, trends, legal/legislative updates and the opportunity to network.


IRS Extends Nondiscrimination Relief for Certain Closed Defined Benefit Plans

"The original nondiscrimination testing relief for closed pension plans ... was already extended on three prior occasions, and [IRS Notice 2018‑69] further extends the relief until the end of plan years that begin before 2020, as long as the conditions of the original 2014 IRS Notice continue to be satisfied. In 2019, the IRS also intends to issue final regulations under Section 401(a)(4) of the tax code that address the nondiscrimination requirements for closed pension plans."
McDermott Will & Emery

Court Defers to Plan Language in Denying 401(k) Eligibility to Distributors

"The company's success in this case was the direct result of its precisely drafted plan document and SPD. The plan language made it clear that the company did not intend for this category of workers to be eligible for plan participation, no matter what their classification." [Ryan v. Flowers Foods, Inc., No. 17-817 (N.D. Ga. July 16, 2018)]
Thomson Reuters / EBIA

You Improperly Excluded an Employee from Your 401(k) Plan -- Now What?

"[T]he correction procedures for an elective deferral failure included the employer making a contribution equal to 50% of the employee's missed deferral ... The first exception completely eliminates the QNEC for the missed deferral opportunity ... The second exception reduces the QNEC for the missed deferral opportunity from 50% to 25% of the missed deferral[.]"
Graydon

Understanding Fiduciary Roles: 3(21) vs. 3(38)

"Who is a fiduciary? ... What is the difference between 3(21) and 3(38)? ... What fiduciary is right for your plan? ... Added benefits of 3(38) fiduciary."
PlanPILOT

[Advert.]

Now is a great time to join Worldwide Employee Benefits Network (WEB)

Sponsored by WEB - Worldwide Employee Benefits Network

Worldwide Employee Benefits Network provides me a forum for education and information exchange with other Benefits Executives. Join today.


Survey Results: Perceived Helpfulness of Financial Well-being Programs (PDF)

"An overwhelming majority of workers thought the following programs would be either very or somewhat helpful: help calculating how much to save for a secure retirement (75 percent), help calculating how much to anticipate spending each month in retirement (72 percent), planning for health care expenses in retirement (72 percent), and help with comprehensive financial planning (68 percent).... [F]ewer than four in ten (39 percent) workers thought student loan debt assistance programs would be helpful in preparing for retirement."
Employee Benefit Research Institute [EBRI]

Editor's Pick Rules of Thumb for Retirement Savings

"[These rules of thumb assume a retirement age of 67, which is the full Social Security benefits age for those born in 1960 or later.] ... [1] [S]ave enough to replace at least 45% of your preretirement income, after accounting for Social Security.... [2] [S]ave 1x your current income by 30, 3x by 40, 6x by 50, 8x by 60, and 10x by 67.... [3] [S]ave at least 15% of your pre-tax income a year over the course of your working life.... [4] [L]imit withdrawals to 4% to 5% of your initial retirement savings, then keep increasing this withdrawal based on inflation."
Fidelity

Retirees: Use Online IRS Withholding Calculator to Avoid Unexpected Taxes on Pensions

"With tax reform bringing major changes for the year ahead, the [IRS] today urged retirees to make sure they are paying in enough tax during the year by using the Withholding Calculator, available on IRS.gov.... The Tax Cuts and Jobs Act, enacted in December 2017, changed the way tax is calculated for most taxpayers including retirees.... For retirees who receive a monthly pension or annuity check, this may mean changing the amount of federal income tax they have withheld. The easiest way to do that is to use the Withholding Calculator. Though primarily designed for employees who receive wages, this useful online tool can also be helpful to those who receive pension or annuity payments on a regular schedule, usually monthly or quarterly."
Internal Revenue Service [IRS]

Retirement Savings and Tax Reform 2.0 -- Will It Pan Out?

"House Ways and Means Committee Chairman Kevin Brady (R-TX) has released a preview ... of the second round of tax cuts initiative that he plans to act on next week. The 'Promoting Family Savings' component seeks to help local businesses provide retirement plans to their workers and help workers participate in retirement plans, including: [1] allowing small businesses to join together to create a 401(k) plan more affordably (presumably this is the open MEPs or pooled employer plan (PEP) proposal); [2] giving employers more time to put new retirement plans in place; [3] simplifying the rules for participation in employer plans; [4] exempting small retirement accounts from mandatory payouts; [5] eliminating the age limit on IRA contributions; [6] and allowing military reservists to maximize their retirement contributions."
National Association of Plan Advisors [NAPA]

Piloting the State-Run Defined Contribution Retirement Plan: Where Are They Headed?

"Will each state have a designated board or committee which oversees the program? If so, how will they be held accountable to keep the program in the best interest of the employees and beneficiaries? ... Who bears the responsibility in a state-run retirement program to select, monitor, and understand the fees? ... If the employer does not pick up the tab, then is the employee paying for their state retirement account or will the state pick up some of the cost? ... Are these state-run plans designed to provide retirement readiness? ... What conversations should we be having with plan sponsors? ... What would our ideal state plan design include?"
Milliman

Pension Finance Watch, August 2018

"The Willis Towers Watson Pension Index has now increased for five consecutive months. Investment return, led by strong domestic equity results, outpaced the growth of benefit obligations. The index measures 81.6 at the end of August, which marks a .9% increase during the month."
Willis Towers Watson

Benefits in General

Fee Awards Under ERISA: The Long and Winding Road to 'Some Success on the Merits' (PDF)

"The [Supreme Court] found that attorneys' fees may be awarded if a party obtains 'some degree of success on the merits.' As is its prerogative, the Court did little to elucidate this standard... [A recent Ninth Circuit] decision and the dis­trict court's handling of two separate fees requests by both parties demonstrates just how lenient the 'some success' standard can be when applied to plaintiffs, and how that leniency can evaporate when the party seeking fees is the defendant." [Brasley v. Fearless Farris Service Stations, Inc., No. 16-35519 (9th Cir. Mar. 13, 2018, unpub.)]
Jenner & Block, via Employee Relations Law Journal

Executive Compensation
and Nonqualified Plans

[Guidance Overview]

Guidance on Section 162(m) Modifications: A Not So Benevolent Grandfather and Details About Covered Employees Are Uncovered

"Companies subject to Section 162(m) should consider several action items in light of the guidance: [1] Regularly update (or start keeping) a list of covered employees, which will be needed for future years. [2] Inventory and analyze existing contracts (including plan documents and employment agreements) to determine whether and to what extent payments thereunder can come within the Grandfather Rule.... [3] Determine whether and to what extent preserving deductions is a priority to the company, and whether it makes sense to preserve any grandfathering that may be available given any associated uncertainty and complexity."
Mayer Brown

[Guidance Overview]

SEC Weighs 'Modernizing' Rule 701(e) as It Raises Disclosure Threshold for Private Companies Granting Equity

"The required change increases the equity value threshold (measured annually) from $5 million to $10 million. This benefits private companies which would have to provide additional disclosure requirements for the offer and sale of securities granted to their employees once the threshold is surpassed."
Willis Towers Watson

Selected Discussions
on the BenefitsLink Message Boards

Who Calculates Matching Contributions: The Recordkeeper or the Payroll Vendor?

A client recently changed payroll vendors. The payroll vendor calculates their match and notifies the client of the funding amount. During the client's recent audit, it was determined that the Compensation Limit was not capped at $170,000 when determining the match. The payroll vendor said it was not something they track. They indicated that the recordkeeper would catch that during the testing process. So basically the payroll vendor knows that the match is incorrect, but does not believe it's their responsibility to monitor this. The recordkeeper states that they assume that the match calculation is correct, unless they have been told differently. They indicated they do not test for match accuracy. I always assumed that the party calculating the match would take into consideration the annual compensation limits. What do you think?
BenefitsLink Message Boards

Let a Distribution Check Go Stale on Purpose?

Participant was forced out of the plan with a balance of under $1,000. Participant received the check which was made payable to him, but did nothing with it for 90 days. He realized he missed the 60 day rollover window and would rather not claim the funds as income. Can he intentionally let the check go stale and ask the record keeper to send a new check? Will that start the 60 window over again? I am guessing no, but thought I would ask the experts. The recordkeeper refuses to reissue a check to the IRA provider.
BenefitsLink Message Boards

Refusal to Make a PS Contribution by a Division of an Employer

The client is a Native American tribe that has a commercial entity that sponsors an ERISA-covered 401(k) plan. That commercial entity has no HCEs. The employer decides that overall for 2017, it will contribute 5% as a profit sharing contribution for the year. Per the plan document, profit sharing is totally discretionary and is supposed to be allocated on a salary ratio basis. However, each division within the company is responsible for being a profit center and one division says it doesn't have the resources to make any contributions for 2017. This means that about 2/3 of the employees get a 5% of pay contribution and 1/3 of the employees get nothing. Is it permissible for the 1/3 to get nothing in profit sharing for the year?
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

ARA Taps Daniella Moiseyev for New CMO Role
American Retirement Association

Two West Capital Advisors is Certified for Fiduciary Excellence
Centre for Fiduciary Excellence [CEFEX]

Most Popular Items in the Previous Issue

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  |   Change Email Address  |   Privacy Policy