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Retirement Plans Newsletter October 15, 2018 |
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Jobs
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Webcasts, Conferences Certificate Program for Non-Professional ESOP Fiduciaries
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Discussions |
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This Newsletter:
BenefitsLink Health & Welfare Plans Newsletter:
Message Boards Digest:
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Retirement Plan Consultant|
[Official Guidance]
Text of PBGC Statement on Sears Bankruptcy Filing "PBGC has been working with Sears for several years to improve the funding of the company's two defined benefit pension plans. PBGC expects that its guarantees would cover the vast majority of benefits earned under those Sears plans. If circumstances require, we are prepared to step in and provide PBGC-guaranteed benefits. The plans, which cover about 90,000 workers and retirees, are underfunded by about $1.5 billion."
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[Official Guidance]
"This notice provides guidance on the corporate bond monthly yield curve, the corresponding spot segment rates used under Section 417(e)(3), and the 24-month average segment rates under Section 430(h)(2) ... In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under Section 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008 and the 30-year Treasury weighted average rate under Section 431(c)(6)(E)(ii)(I)."
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Best Practices in Providing Cybersecurity for 401(k) Accounts "Many large third-party recordkeepers have recently unveiled programs pursuant to which the vendor will restore the participants' accounts in the event of a cyber-attack.... [B]est practices for plan fiduciaries regarding cybersecurity will require the fiduciaries to ask [certain] questions ... to their existing service providers and in requests for proposals[.]"
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Attributes of an Excellent DC Plan "[1] Establish and measure the right objective ... [2] Reduce the number of complicated investment decisions for plan participants... [3] Take advantage of participant inertia... [4] Give participants the best chance of success... [5] A win/win for the sponsor and the participant... [6] Help your participants spend appropriately in retirement... [7] Focus on changing behavior."
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Companies With Newly Flush Pensions See Chance to Unload the Risk "Higher funding levels mean corporate sponsors get a better deal when transferring retiree obligations to insurers, so many firms are finding this to be the perfect time to transfer the risks associated with carrying pension plans. Defined-benefit pension plans of S&P 500 companies were in aggregate 91% funded at the end of September ... That is the highest level since the end of 2007, when these plans were 108% funded ... Nearly one-quarter of the plans are now either fully funded or overfunded[.]"
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Pension Accounting Changes Reduce Volatility and Increase Flexibility "Now that the items most sensitive to the interest rate environment are no longer recorded against operating income, the volatile impact of pension and retiree medical plan costs on day-to-day operations is reduced, except in times of extreme interest rate volatility.... This separation of some pension costs from operating costs may open the door to considering new strategies."
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What Percentage of Public Pension Income Is From Investment Returns? From Contributions? "[T]here's no one perfect percentage the mix should be. It's demographically dependent as to what the mix of contributions-to-investment returns it should be.... The issue for CalPERS is that its contribution amounts as a percentage of active payroll is precipitously climbing, for a variety of reasons."
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"According to law, by [Nov. 30], the Committee shall vote on: [1] a report that contains a detailed statement of the findings, conclusions and recommendations of the Joint Committee; and [2] proposed legislative language to carry out the recommendations.... Upon receipt of the approved proposed legislative language, the language shall be introduced in the Senate on the next day on which the Senate is in session ... The statute sets strict rules governing the process of the Senate's concerning any motion to proceed to the consideration of the Bill."
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How to Effectively Take Early IRA Distributions Without Penalty "If IRA owners design their 'series' of payments in accordance with strict IRS rules, and keep taking their series payments regularly without any 'modification' until they are over age 59‑1/2 (and for at least five years), the SOSEPP payments are penalty-free.... Your clients need to get the largest possible payments allowed by IRS rules. This means they should use a single life expectancy ... the highest permitted interest rate ... [and] the amortization method[.]"
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[Opinion]
Corporate Pension Funds Have Come a Long Way -- Are They Ready to Derisk? "Plan sponsors contemplating ways to get the most duration exposure for their incremental dollar need to understand the less obvious costs embedded in each alternative.... The credit markets might not be as risky as they look ... Derisking doesn't just mean buying long bonds."
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[Opinion]
"[1] [B]usinesses should be allowed to join open associations based on their state or industry so they can sign up easily for efficient, large-scale group 401(k) plans and avoid administrative burdens and fiduciary liability.... [2] States or the federal government should incentivize businesses to adopt at least the basic multiemployer plan ... [3] Employees should be automatically enrolled in company-offered retirement plans, with contribution levels increasing at least 1 percentage point per year.... [4] Upon retirement, employees' 401(k) account balances would automatically convert into an annual annuity for them and their spouse for the rest of their lives.... [5] Individuals should be given access to the same broad range of investments that pension funds have by providing safe-harbor rules for qualified managers to include alternative and illiquid assets in
401(k)s as part of diversified investment strategies."
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Benefits in General |
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[Official Guidance]
Text of IRS Disaster Relief Announcement GA-2018-04, for Victims of Hurricane Michael in Georgia "Individuals who reside or have a business in Baker, Bleckley, Burke, Calhoun, Colquitt, Crisp, Decatur, Dodge, Dooly, Dougherty, Early, Emanuel, Grady, Houston, Jefferson, Jenkins, Johnson, Laurens, Lee, Macon, Miller, Mitchell, Pulaski, Seminole, Sumter, Terrell, Thomas, Treutlen, Turner, Wilcox, and Worth counties may qualify for tax relief.... [C]ertain deadlines falling on or after Oct. 9, 2018 and before Feb. 28, 2019, are granted additional time to file through Feb. 28, 2019."
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[Official Guidance]
"Update 10/14 -- Added Holmes and Washington counties. Update 10/13 -- Added Calhoun, Gadsden, Hamilton, Jackson, Jefferson, Leon, Liberty, Madison and Suwannee counties.... Individuals who reside or have a business in Bay, Calhoun, Franklin, Gadsden, Gulf, Hamilton, Holmes, Jackson, Jefferson, Leon, Liberty, Madison, Suwannee, Taylor, Wakulla and Washington counties may qualify for tax relief.... [C]ertain deadlines falling on or after Oct. 7, 2018 and before Feb. 28, 2019, are granted additional time to file through Feb. 28, 2019."
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[Guidance Overview]
Summary of IRS Help for Victims of Hurricane Michael This page provides links to all IRS disaster relief notices and announcements related to Hurricane Michael, and is updated as new guidance is released.
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In Memoriam: ERISA Attorney Nick Saakvitne Dies at 66 "Nicholas Larsen Saakvitne, 66, of Pacific Palisades, died on October 2, 2018 after suffering a ruptured cerebral aneurysm. Nick was a pension attorney and professional ERISA fiduciary and trustee in Santa Monica, California.... In 1989 with his business partner, Steven E. Rosebaugh, Nick founded his own law firm specializing in pension law and providing ERISA and ESOP fiduciary services."
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Selected Discussions |
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Wondering About the Many DB Plan Relief Rules When will each of the recent pension relief rules we've been living under (MAP21, HATFA, etc.) expire? Will it be a big deal?
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Late Deposits: Self Correction and Form 5330 Employer had two late deposits during 2017. If they correct it on their own, and deposit lost earnings, are they required to file a Form 5330 with the excise tax?
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SARs and SPDs Required in Spanish? I am being asked if there is a legal requirement to produce notices in Spanish or other languages for people whose primary language isn't English. Mind you the client agrees it is a good idea and is trying to get translations done. They just want to know if there is a requirement and if so which notices.
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Press Releases |
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Russell Investments Announces "Tax-Smart" Partnership with LifeYield LLC
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Most Popular Items in the Previous Issue |
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2019 Estimated Limits for Retirement Plans
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IRS Provides Tax Relief for Victims of Hurricane Michael
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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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