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Retirement Plans Newsletter September 20, 2018 |
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Jobs
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Webcasts, Conferences Pre-approved Defined Benefit Plan Workshop
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Discussions |
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This Newsletter:
BenefitsLink Health & Welfare Plans Newsletter:
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ESOP Administrator|
[Guidance Overview]
IRS Updates Required Tax Notice to Address Plan Loan Offsets and Other Law Changes "Notice 2018‑74 reminds us that distribution of a 'plan loan offset amount' is an eligible rollover distribution ... [T]his can occur when, for example, the terms of the plan loan require that, in the event of an employee's termination of employment or request for a distribution, the loan is to be repaid immediately or treated as in default. The Notice also indicates that a plan loan offset may occur when, under the terms of the plan loan, the loan is canceled, accelerated, or treated as if it were in default.... The Notice also reminds us, however, that a plan loan offset cannot occur prior to a distributable event."
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[Advert.]
ASC CE Webcast: Plan Terminations
Join John Griffin, J.D., LL.M to discuss the latest IRS guidance on qualified plan terminations and partial plan terminations. Topics include plan termination decisions, the termination process and the consequences of plan termination. Register Now! |
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[Guidance Overview]
IRS Updates Safe Harbor Explanations for Eligible Rollover Distributions (PDF) "IRS has updated the model notices retirement plans use to inform participants receiving eligible rollover distributions about tax information applicable to their benefits.... In addition to providing the updated notices ... the IRS provides editing instructions ... for those plan administrators who prefer to selectively modify notices that they have edited by omitting information irrelevant to their own plans or adding information that is not inconsistent with 402(f), as permitted."
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[Guidance Overview]
"In the Deseret Letter, the DOL concludes that merely advising a plan participant to take an otherwise permissible plan distribution, even when combined with a 'recommendation' as to how that distribution should be invested, is not fiduciary 'investment advice' to a plan under ERISA.... [T]he DOL then went on to muddy the waters for plan officers and other fiduciaries who discuss distribution options with plan participants."
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The Ultimate Guide to QNECs and QMACs "Perhaps you ran the numbers and realized you are almost certainly going to fail your ADP or ACP test. Maybe you're going over paperwork and you notice ... an employee who was eligible for contribution to your company's 401(k) wasn't notified or given the opportunity.... Making a QNEC or QMAC can help you solve it (hopefully before any major damage is done). [This article describes] exactly what QNECs/QMACs are, how they can help (or are necessary), how to go about calculating and making a QNEC/QMAC, and all the important specifics, rules, deadlines, and details you need to know."
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Case Study: Progressive Thinking and Fiduciary Oversight Lead to Participants Positioned for Success "The committee's constant diligence in structuring the plan to provide the best possible outcomes for participants has garnered results. The plan design and offering, combined with the robust communication strategy, have resulted in improved participant success measures. The current participant rate is 90.3% of eligible employees, up from 86.2% in 2017. 73.8% of participants are saving at or above the maximum matching rate, up from 67.7% in 2017. The average account balance for participants is over $106,000."
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[Advert.]
SPARK Forum - November 4-6, 2018 -- The Breakers, Palm Beach, FL
Join us at the retirement services industry's leading event for top marketing, sales, administration and record keeping professionals. Comprehensive agenda includes topics of interest to Record Keepers, 401(k) Plan Providers, Financial Advisors and Cyber Security Professionals. |
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Excessive Fee Suit Defendants Now Seek Sanctions Against Schlichter "The NYU defendants now say that sanctions should be imposed against the employees and Schlichter for 'filing a duplicative -- and now a dismissed -- lawsuit which Plaintiffs and their counsel filed in a blatant attempt to avoid the Court's prior rulings,' or in the alternative, award Defendant its attorneys' fees and costs pursuant to ERISA Section 502(g)(1)." [Sacerdote v. N.Y.U. School of Medicine, No. 17-8834 (defendants' motion for sanctions, S.D.N.Y. Sept. 18, 2018)]
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Sixth Circuit Finds Family Trust, Successors Liable for Pensions "[T]he court adopted the categorical test espoused by its sister circuits in the context of multiemployer plans and by PBGC. Under the categorical test, any entity that leases property to a commonly controlled entity is a 'trade or business' under ERISA.... The Sixth Circuit also reversed the district court on the issue of successor liability, holding that the federal common law should be applied to the case to promote ERISA's fundamental policy of enforcing employers' promises to their employees." [PBGC v. Findlay Industries, Inc., No. 17-3520 (6th Cir. Sept. 4, 2018)]
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Best Interest and Best Practices: Improving Retirement Outcomes, Part 2 "[H]ow does an advisor demonstrate a Best Interest process? Other than for the DOL and ERISA plans, there is not a requirement to maintain documentation of the process. However, it probably goes without saying that a well-documented process is good risk management."
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Lawmakers Want to Reform Rules Around RMDs "The Family Savings Act ... would exempt retirees from taking RMDs if they have less than $50,000 in total assets held in retirement accounts.... Perhaps most importantly for financial advisers, the Retirement Enhancement and Savings Act -- which has been introduced in both the House and Senate -- would effectively scrap the 'stretch IRA.' "
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"[E]nactment of this Bill [S. 3457] would result in a net increase in OASDI benefit cost starting in 2020, reducing (worsening) the long-range OASDI actuarial balance by 0.05 percent of taxable payroll, from a deficit of 2.84 percent of payroll under current law to a deficit of 2.89 percent of payroll ... The estimated year of combined OASI and DI Trust Fund reserve depletion would remain at 2034."
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Biggest U.S. Public Pension Looks to China for New Investment Chief "An official with China's foreign-exchange regulator is the lead candidate to become next investment chief of the largest U.S. public pension fund ... [CalPERS] has offered the job to Ben Meng of China's State Administration of Foreign Exchange ... The agency is in charge of China's more than $3 trillion in foreign reserves. Mr. Meng previously worked for the California pension fund earlier this decade."
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[Opinion]
House GOP Bill a Mixed Bag for Retirement Savers "[M]uch of HR 6757 is likely to become law within a year or so.... While various provisions are overreaching or otherwise fall short of good policy, overall, RESA would do significantly more good than harm and therefore should be enacted. However, the Senate and industry proponents have been trying, to no avail, to get the House to sign on."
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Executive Compensation |
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Compensation Designs and Strategies That May Help Limit the Impact of Section 162(m) "[1] Scrutinize the Executive Order (EO) setting and Named Executive Officer (NEO) selecting processes; [2] Non-qualified deferred compensation or SERP plans; [3] Coordinated non-qualified plan distributions; [4] Automatic or voluntary deferral of RSUs or annual bonus; [5] Qualified Plan SERP-switch; [6] Code Sec. 409A allowed deferral; [7] Coordinated non-qualified option exercises; [8] Incentive stock options; [9] New Code Sec. 199A."
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Helping Organizations Define Optimal Executive Benefits Opportunities "[E]mployers and employees clearly see NQDC plans as a significant component in corporate and individual success and stability: 3 percent of survey participants indicated that the most common reason employers offer an NQDC plan is to 'have a competitive benefits package' and 23.4 percent believe the reason is to help 'eligible employees accumulate assets.' 50 percent of all employers surveyed allow both employer and employee contributions to NQDC plans. And, nearly 60 percent of plans set money aside to fund benefits."
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Selected Discussions |
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Pick-Ups for Specific Classes of Employees Under Governmental Plans One of the requirements for a pick-up arrangement is that the "employer must specify in writing (e.g., minutes of meeting, a resolution, or an ordinance) that "contributions on behalf of a specific class of [its] employees ... although designated as employee contribution, will be paid by the employer in lieu of employee contributions." Is there any guidance on what constitutes a "specific class of employees"? It appears that the employer need not cover all employees, just a "specific class."
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Plan Administrator's Duty when QDRO Inconsistent with Divorce Decree? Let's say a plan receives a QDRO, it's reviewed, the plan administrator determines it meets the requirements of a QDRO under ERISA, and so it's implemented. Does that change if the plan administrator then get extraneous information, like a divorce decree in which the terms of the QDRO are not described accurately? Does a duty to investigate arise? Or is the plan required to implement the terms of the QDRO and not look beyond those terms?
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Calculating Allocations for Self-Employed Participants in an Integrated PS Plan I am looking for a two tier integrated spreadsheet for calculating profit sharing allocations under a plan sponsored by a partnership. Some partners' plan compensation will be over the taxable wage base but some will be below it.
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Hurricane Florence 5500 Extension for Plans If TPA Not in Affected Area Does anyone know if the hurricane extension applies to a TPA firm that is preparing the 5500 if they are in the declared disaster area?
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Press Releases |
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OneDigital Health and Benefits Acquires Premier Benefit Resources
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Principal Launches Principal Milestones, New Financial Wellness Program
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Tom Demko Joins SageView Advisory Group's Southern California Team
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Most Popular Items in the Previous Issue |
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IRS Provides Guidance for Avoiding Incomplete VCP Submissions
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Here's Why You Shouldn't Retire Super Early, Even If You Can
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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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