Retirement Plans Newsletter

November 5, 2018

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Jobs

Senior Pension Administrator - Combo DB/DC Plans
Primark Benefits
Telecommute

Retirement Specialist II
Alerus Financial
in MN, ND

Retirement Plan Services Conversion Coordinator
Dubuque Bank and Trust
in CO, IA, IL, MN, WI

Relationship Manager
HORAN
in OH

Experienced 401(k) Distribution Account Manager
Nova 401(k) Associates
Telecommute

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Editor's Pick 2019 Planning for ERISA Single-Employer Defined Benefit Plans

"Set an endgame strategy for closed or frozen plans.... Prepare for the phasing out of funding relief ... Address escalating PBGC premiums.... Consider discretionary funding ... Update the 'Special Tax Notice' for eligible rollover distributions.... Implement benefit restrictions if funding shortfall or top-25 highly compensated employees rules apply.... Identify lost participants with vested benefits.... Address foreign asset reporting obligations.... Review and analyze insurance coverage."
Buck

[Advert.]

The Inside Scoop on Pension Plan Termination

Sponsored by Findley

We'll look at Findley's PlanTerm™ Financial Modeler, how to prepare the participant data needed, and tips to build consensus among stakeholders. Register now for this December 5 webinar.


On the 40th Anniversary of the 401(k): What's Working? What's Not?

"Thirty-five percent [of respondents] said 401(k)s are not sufficient for employees to obtain retirement security, and 16.2% said they are. The top-ranked changes to 401(k) plan laws and regulations respondents reported have helped 401(k)s be more effective at helping employees obtain retirement security are increasing contribution limits and establishment of indexed increases each year (78.4%), followed by addition of catch-up contributions for participants age 50 and older (73%) and sanctioning of automatic enrollment subject to certain requirements (67.6%)"
PLANSPONSOR

Tweaks to Retirement Plan Websites Can Boost Savings

"[Voya Behavioral Finance Institute for Innovation] explored three relatively simple changes. First, they moved important plan information, such as information on the default savings rate, closer to where the individual was prompted to act. Second, they simplified and standardized language associated with enrollment options. And, third, they [replaced] standard orange-colored buttons associated with each enrollment option with traffic-light colors.... [T]he number of participants who personalized their enrollment increased by 15%. Among this group, the average deferral rate was 7.8%, compared to 3.4% for those who accepted automatic enrollment."
planadviser

Improving Employee Retirement Readiness

"What retirees are the least prepared for and need the most help with are understanding how long their money will last in retirement, knowing how much they will need when they retire and preparing for the risks inherent to retirement. Here are four key aspects plan sponsors should consider to help plan participants aptly prepare for retirement."
PlanPILOT

The New Retirement Preparation Strategy: Save Almost Everything, Spend Virtually Nothing

"Some of the youngest members of the U.S. workforce are saving aggressively and spending little so they can leave work decades ahead of schedule ... Their reasons for flouting conventional career norms and saving at high rates range from dissatisfaction with unfulfilling work to the decline of traditional social safety nets to a desire for more economic security in an era defined by events such as the 2008 financial crisis."
The Wall Street Journal; subscription may be required

[Advert.]

Techniques and Risks for Investing IRAs and Qualified Plan Rollovers

Sponsored by Lorman and BenefitsLink

Nov. 15 webinar. Learn the benefits and risks of investing qualified Plan and IRA assets in business startups, real estate and other private investments. BenefitsLink discount.


The Case Against Having a Bond-Heavy Retirement Account

"[B]onds no longer hold big tax advantages when it comes to choosing the contents of an IRA or other tax-sheltered/tax-deferred account. Recent research suggests that the best type of investment to overweight in a tax-advantaged retirement account is an actively managed REIT or small-cap equity fund."
The Wall Street Journal; subscription may be required

California State-Run Retirement Savings Plan Ready to Launch

"CalSavers is scheduled to launch a pilot Nov. 19 for an on-the-job retirement savings plan, formerly known as Secure Choice ... Employers with five or more employees, who do not offer a retirement plan, will be required by state law to offer the CalSavers plan to their employees ... Employees can opt out. After the pilot and the voluntary period beginning next July 1, employers with 100 or more employees must register with CalSavers by June 30, 2020, employers with 50 to 99 employees by June 30, 2021, and employers with 5 or more employees by June 30, 2022."
Calpensions

[Opinion]

Impediments to Saving for Retirement: The Barriers, Part 1

"Certainly, studies show most Americans live paycheck to paycheck. However, payday-to-payday living is not a barrier to saving. Others cite out-of-pocket medical costs or student debt. Recent studies show those aren't a barrier, either. Consider: [1] The median annual out-of-pocket medical expense was $264, a very small portion of medical spending, and [2] A minority of households have student debt. More importantly, the median monthly student loan payment was $203."
Plan Sponsor Council of America [PSCA]

Benefits in General

Will Your Fiduciary Insurance Cover You When You Need It?

"[1] Get a qualified independent review.... [2] [T]he commitment may become worthless in the event of bankruptcy or other financial distress. [3] Understand the exclusions in your policy and find out whether endorsements are available to eliminate some of them. [4] Consider whether your policy limits should be increased.... [5] Understand and follow the notice requirements in your policies."
Carol Buckmann, via Pension360

Ohio Law Recognizes Safe Harbor in Data Breach Litigation

"On November 1, 2018, the Ohio Data Protection Act establishes a safe harbor from state tort actions in data breach cases for entities that have developed an information security program with 'administrative, technical, and physical safeguards for the protection of personal information and that reasonably conforms to an industry recognized cybersecurity framework.' Without establishing minimum cybersecurity standards, the Ohio law affords defendants an 'affirmative defense' against state tort actions and establishes an important precedent that may serve as a model for other states and the federal government to follow."
Data Matters, by Sidley Austin LLP

Executive Compensation
and Nonqualified Plans

[Guidance Overview]

NQDC Impacts of 2019 IRS Qualified Retirement Plan Limits

"[In] November and December many NQDC plan participants must choose how much of next year's salary to defer.... The changes in limits from 2018 to 2019 are slight. If you have already maxed out your qualified plan contributions for 2018, you will probably do the same in 2019, so you will need to rely on NQDC plans to defer any salary and bonus increases you expect in 2019."
myNQDC.com

Selected Discussions
on the BenefitsLink Message Boards

House for Flipping: Purchase with a Self-Directed 401(k) Account?

I have a client who wants to purchase a house to flip in his 401(k) plan. My first thought is NOOOOO. But I need something to back that up. Unfortunately, the advisor said yes.
BenefitsLink Message Boards

Temp Worker's Service Must Count Toward Eligibility Upon Becoming Employed?

Sponsor of large plan uses a temp agency to "test drive" potential employees for 3‑6 months. After the trial period a worker may be hired to become a regular employee of the plan sponsor. We have advised the sponsor that the time while the worker was working through the temp agency must be counted toward eligibility for plan participation. Does anyone have a citation or code section that supports that position?
BenefitsLink Message Boards

Wrong Definition of Comp Used for Several Years -- Can Correct One Year at a Time?

Plan has been using the wrong definition for compensation to calculate deferrals since 2016. We'd like to correct this under SCP by the end of the year. Does anyone know if plan failures can be separated by plan year, so that we can correct only the 2016 error now? Or do we have to treat the error like one failure that started in 2016 and correct everything now?
BenefitsLink Message Boards

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Press Releases

Federal Court Orders Defunct Las Vegas Airline to Pay Former Employees $219,716 to Restore Health Plan Losses
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

Applications Now Open for Steven H. Sandell Grant Program
Center for Retirement Research at Boston College

Applications Now Being Accepted for Dissertation Fellowship Program
Center for Retirement Research at Boston College

Most Popular Items in the Previous Issue

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Lois Baker, J.D., President  loisbaker@benefitslink.com
David Rhett Baker, J.D., Editor and Publisher  davebaker@benefitslink.com
Holly Horton, Business Manager  hollyhorton@benefitslink.com

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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