Retirement Plans Newsletter

September 21, 2018

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Director, Client Relationship Management
Healthcare Association of New York State
in NY

Retirement Plan Document Specialist
Empower Retirement
in CO, WI

Retirement Plan Services Specialist II (2124)
First Financial Bank
in IN

Pension Administrator
Preferred Pension Planning Corporation
in NJ

Director, Marketing Strategy
Ascensus
in PA

401(k) Consultant
TPS Group
in CT, MA, ME

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Cybersecurity: Are Your Plan Participants Protected?

"When operating under the assumption that any plan can be hacked, you can prepare appropriately. Organizational policies and training will ensure cybersecurity understanding and consistent practices across the board. The most effective cybersecurity strategy includes both a prevention plan as well as a response plan of action against a breach."
PlanPILOT

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The Defined Contribution Plan Proposition: Retirement Readiness

"Sponsors can strengthen their plan governance and improve their plans' return on investment by using detailed analytics that evaluate specific segments of their employee population based on age, job category, tenure and benefit structure. The right analytics highlight those employees and groups most at risk, and allow sponsors to determine which participant tools and strategies best prepare employees for retirement."
Willis Towers Watson

Assessing the Recent Proposals to Reduce RMD Obligations

"[L]ife expectancy increases have not been terribly dramatic -- no more than about 2 years of joint life expectancy for a 70-something retiree.... [T]he first RMD would actually decrease only about 25 basis points -- from 3.65% of the account balance to just 3.4% instead -- or a whopping $250 of reduced RMDs per year on an account with a $100,000 balance.... [W]hat hasn't received much attention at all is a ... proposal buried in the Retirement Enhancement and Savings Act of 2018 (RESA) ... which would eliminate the stretch IRA for most non-spouse beneficiaries, who would then be subject to the far-harsher 5‑year rule instead!"
Nerd's Eye View

Tax Reform 2.0 Holds House GOP Retirement Policy Bargaining Chip

"The Family Savings Act [HR6757] includes 10 provisions from the original RESA bill, omits many, and adds a few of its own ... One of the new provisions to the House bill would create short-term tax-favored universal savings accounts without income limits ... Critics ... say the provision in the bill would encourage more affluent individuals to transfer their savings into the more favorably taxed accounts, but wouldn't encourage savings among lower-income individuals[.]"
Bloomberg BNA

Editor's Pick Retirement in America: Out of Reach for Working Americans? (PDF)

32 pages. "Over 100 million working age individuals (59.3%) do not own any retirement account assets, whether in an employer-sponsored 401(k) type plan or an IRA, nor are they covered by defined benefit (DB) pensions.... Even after counting an individual's entire net worth -- a generous measure of retirement savings -- three-fourths (76.7%) of Americans fall short of conservative retirement savings targets for their age and income based on working until age 67."
National Institute on Retirement Security [NIRS]

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Benefits in General

Sixth Circuit Provides 'Guideposts' for Consideration of Plan Reformation

"[T]he Sixth Circuit Court of Appeals ... rejected the lower court's analysis based on the absence of intentional fraud on Chrysler's part ... Where there is a conflict, especially where the participant relied on the language in the SPD for a critical decision, courts are likely to have some sympathy for the participant's claim. Risk is highest where a large number of participants are affected by a decision for which the terms of the plan (and the SPD) are critical." [Pearce v. Chrysler Group LLC Pension Plan, No. 17-1431 (6th Cir. June 20, 2018)]
October Three Consulting

A Closer Look at Health Savings Accounts: An Overlooked Retirement Savings Vehicle

"Legislation has been proposed to enhance HSA accounts ... [1] An HSA could be used to pay for over-the-counter medications. [2] HSA contribution limits would be raised to $6,650 for individuals and $13,000 for families ... [3] Individuals who are actively employed but participating in Medicare Part A and covered by a qualifying HDHP would be able to contribute to and HSA. [4] Flexible spending account (FSA) and health reimbursement account (HRA) balances could be transferred to an HSA.... [5] Individuals would no longer be barred from contributing to an HSA if his/her spouse is enrolled in a medical FSA."
Cammack Retirement Group

How to Gain Employee Compliance on Cybersecurity Procedures

"[1] Start With Employee Awareness ... [2] Provide Regular Training Programs ... [3] Make It Personal And Relatable ... [4] Be Transparent About Security Procedures ... [5] Use Entertaining Videos To Convey Your Points ... [6] Tie Training To Their Personal Lives ... [7] Keep It Simple And Easy."
Forbes Technology Council

Executive Compensation
and Nonqualified Plans

Under New IRS Section 162(m) Guidance, Many Common Arrangements Will Lose Grandfathered Status

"[Notice 2018‑68] provides a number of examples of its interpretations of the amended Code Section 162(m) that are not always intuitive.... In addition, there are a number of areas that still require future guidance, including what modifications will be permitted with respect to deferred compensation plans that require a payment delay until such payment will be fully deductible by the company, as permitted under Section 409A of the Code."
Dorsey & Whitney LLP

Selected Discussions
on the BenefitsLink Message Boards

Rehired After 14 Years -- Count Earlier Service for Vesting Purposes?

I have a rehired employee who terminated employment back in 2004 (he worked 1997‑2004). He was rehired in August of this year. I don't want to credit the prior years of service and I want to have him start over for vesting purposes. But am I allowed to do so? If so, is there anything I can do to amend the plan document to stop this from recurring with other rehires? Currently the plan uses a a volume submitter document.
BenefitsLink Message Boards

Elimination of the 5 Year Remedial Cycle

Can anyone explain the rules moving forward in plain English (after the elimination of the 5 year remedial cycle)? When is it necessary to restate?
BenefitsLink Message Boards

Amend Entry Date from Quarterly to Semi-Annual: Retroactive to 1/1/2018?

Plan sponsor wants to amend its current non-safe harbor 401(k) plan to change from quarterly entry dates to semi annual. Can this be done for 2018? Or would it need to be done effective 1/1/19? It doesn't "feel" right to me that it would be permitted this late in the year. I would think that if they have employees that have met the age/service to enter 10/1/18, they wouldn't be able to make them wait until 1/1/19.
BenefitsLink Message Boards

Plan Sponsor Has Two 403(b) Plans: One ERISA and One Non-ERISA

A prospective client is running two 403(b) plans: a non-ERISA plan that is a deferral-only plan and an ERISA plan that holds only the employer contributions. Has anyone ever encountered this before? Does it matter if the employer contributions are non-elective versus matching contributions?
BenefitsLink Message Boards

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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 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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