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[Official Guidance]

Text of PBGC Final Regs: Mergers and Transfers between Multiemployer Plans

66 pages. "This final rule makes one major and numerous minor changes to PBGC's regulation on Mergers and Transfers Between Multiemployer Plans. The major change is the addition of procedures and information requirements for a voluntary request for a facilitated merger to implement MPRA's changes to section 4231 of ERISA. This final rule also reorganizes and updates existing provisions of PBGC's regulation."
Pension Benefit Guaranty Corporation [PBGC]

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[Official Guidance]

Text of PBGC Interest Rate Update for Benefits Payable in Terminated Single-Employer Plans, October and Fourth Quarter 2018

"The fourth quarter 2018 interest assumptions under the allocation regulation will be 2.84 percent for the first 20 years following the valuation date and 2.76 percent thereafter.... The October 2018 interest assumptions under the benefit payments regulation will be 1.25 percent for the period during which a benefit is in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. In comparison with the interest assumptions in effect for September 2018, these interest assumptions represent no change in the immediate rate and no changes in i1, i2, or i3."
Pension Benefit Guaranty Corporation [PBGC]

[Official Guidance]

2018 IRS Form 4972: Tax on Lump-Sum Distributions from Qualified Plans of Participants Born Before January 2, 1936 (PDF)

"Use Form 4972 to figure the tax on a qualified lump-sum distribution (defined below) you received in 2018 using the 20% capital gain election, the 10-year tax option, or both. These are special formulas used to figure a separate tax on the distribution that may result in a smaller tax than if you reported the taxable amount of the distribution as ordinary income."
Internal Revenue Service [IRS]

[Guidance Overview]

Understanding the Unwinding of DOL's Fiduciary Rule (PDF)

"The status of service providers that make investment recommendations to plans or IRAs may change with the return to the five-part test of the 1975 regulation.... While regulation best interest largely tracks existing suitability requirements, it also incorporates several concepts raised by the DOL under the BIC exemption. Having said that, the SEC's effort provides an arguably reduced standard of care and maintains less extensive disclosure obligations than the BIC exemption."
Groom Law Group, via Law360

Significant Changes in VCP Fees Affect Small Benefit Plans

"For plans with 1‑50 participants that would have paid a VCP fee of $500-$750, ... effective January 2, 2018 ... Rev. Proc. 2018‑4 ...upended the VCP fee schedule in favor of a model based on assets with a minimum fee of $1,500 that doubled or tripled what they would have paid even one day earlier.... [T]he transition of VCP fees is summarized [in chart form]."
Belfint Lyons Shuman


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Measuring the Value of Financial Wellness Programs

"Asked about the reason they were initially motivated to offer a financial wellness program, several factors were cited ... Leading the pack was a firm belief that it's the right thing to do, with a weighted score of 4.6, followed by 3.7 for those wanting to improve employee productivity, 3.5 to recruit and retain top talent, 3.2 to reduce employee absenteeism, 2.8 because employees requested it, and 2.5 to decrease costs."
Strategic Benefit Services

Best Interest and Best Practices: Improving Retirement Outcomes, Part 1

"There are at least four Best Interest standards.... [1] ERISA's best interest standard of care for plan sponsors and fiduciary advisors for private sector retirement plans.... [2] The SEC's proposed best interest standard for broker-dealers in its Regulation Best Interest. [3] The best interest standard in the SEC's proposed 'Interpretation' for investment advisers. [4] The New York State Best Interest standard for recommendations of life insurance policies and annuity contracts.... All of the Best Interest standards seem to require a process. That is, how can an advisor be careful, skillful, prudent and diligent without engaging in a process?"

Testing of SEC Adviser Relationship Summary Form Yields Troubling Results

"[A] mock version of the [customer relationship summary (CRS)] has been published by the SEC. This form has now been subjected to rigorous independent usability testing by Kleimann Communications Group on behalf of AARP, Consumer Federation of America (CFA), and the Financial Planning Coalition.... [T]he groups say the CRS forms are far too complicated to benefit the average retail investor." [Editor's note: relevant links are: proposed rules (471 pages); Appendix A: Form ADV General Instructions; Appendix B: Instructions to Form CRS; Appendix C: Dual Registrant Mock-up; Appendix D: Broker-Dealer Mock-up; Appendix E: Investment Adviser Mock-up; Appendix F: Feedback on the Relationship Summary.]

Funded Status Drops by $3 Billion in August (PDF)

"The funded status of the 100 largest corporate defined benefit pension plans fell by $3 billion in August ... The deficit widened to $110 billion from $107 billion due to a decrease in the benchmark corporate bond interest rates used to value pension liabilities. The funded status decline was partially offset by August's robust investment gain of 0.85%. As of August 31, the funded ratio dipped slightly to 93.3%, down from 93.5% at the end of July."

Multiemployer Pension Crisis Fix Would Cost $34 Billion -- Far Less Than First Estimated

"The finalized estimate for the Butch Lewis Act of 2017 (S.2147), which would provide government-backed loans to financially struggling plans while avoiding cuts to retiree benefits, is significantly less than a previous 10-year estimate that the measure would cost the government up to $100 billion[.]"
Bloomberg BNA


Spending During Retirement: Realistic Estimates for Replacement Ratios

"[R]eplacement ratios compare costs for the first year of retirement to the year before. Hopefully, your retirement will last longer than a year and it is unlikely that if you decide to travel the world at age 65, for example, you will still be flying at 85.... Even if the retirement you envision requires a 130% replacement ratio, that increase won't last forever and probably won't require doubling your pre-retirement savings target, though it will increase it."
The Retirement Cafe

Benefits in General

Senate Confirms Charles Rettig as IRS Commissioner

"The Senate voted Wednesday to approve the nomination of Beverly Hills tax attorney Charles 'Chuck' Rettig as commissioner of the [IRS]. Rettig, who has been with the firm of Hochman, Salkin, Rettig, Toscher & Perez for 35 years, will be expected to help the IRS deal with the impact of the Tax Cuts and Jobs Act, including a large number of new tax forms and schedules and demand for guidance on various aspects of the hastily drafted tax law, even as the IRS struggles with flat budgets and diminished staffing."
Accounting Today

Executive Compensation
and Nonqualified Plans

An Overview of ISS' Equity Plan Scorecard (EPSC) Model (PDF)

9 pages. "If you are considering taking a request to shareholders for the approval of shares for an equity compensation plan and a significant number of your shareholders are influenced by the Institutional Shareholder Services (ISS) vote recommendations, you should understand how ISS evaluates equity plan proposals. This document provides an overview of ISS' EPSC model which ISS uses to evaluate equity compensation plan proposals"

Selected Discussions
on the BenefitsLink Message Boards

Amending a Plan to Eliminate Floor-Offset Language

If a plan sponsor wants to amend the floor-offset provision out of their calendar year CB plan, would that be a straightforward as using the 12/31/18 year end hypothetical account balance with offset as the 1/1/19 beginning balance and going forward without the offset?
BenefitsLink Message Boards

Assumed Earnings Rate for Corrective Contributions for Missed Deferrals

Any thoughts on whether the IRS considers the average rate of return for the plan as a whole a reasonable rate to use to adjust earnings on corrective contributions for missed deferrals? The plan participants had made investment elections, but employer wishes to avoid that level of complexity. Most participants are NHCEs. It seems that many service providers advise clients to use this approach.
BenefitsLink Message Boards

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Press Releases

NPPG Appoints Natale Coraci to Senior Pension Administrator
Northeast Professional Planning Group [NPPG)]

NPPG Appoints Matthew Donnachie to Retirement Plan Administrator
Northeast Professional Planning Group [NPPG)]

Most Popular Items in the Previous Issue

AICPA Working Draft of Chapter on Multiemployer Benefit Plans (PDF)
American Institute of Certified Public Accountants [AICPA]

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David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager

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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