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Retirement Plans Newsletter November 14, 2018 |
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Jobs
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Webcasts, Conferences Benefits and Breakfast: Post-Acquisition Integration of Benefit Plans
Benefits and Breakfast: Post-Acquisition Integration of Benefit Plans
Contracts 101: Creating Simple, Compliant Service Provider Agreements
Understanding Short Plan Years [2018]
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Discussions |
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This Newsletter:
BenefitsLink Health & Welfare Plans Newsletter:
Message Boards Digest:
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Associate Director of Pension Benefits|
[Official Guidance]
"The December 2018 interest assumptions under the benefit payments regulation will be 1.50 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 November 2018, these assumptions represent an increase of 0.25% in the immediate rate and are otherwise unchanged."
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[Advert.]
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[Guidance Overview]
IRS Releases Proposed Hardship Distribution Regulations "While certain sponsors may have viewed these changes as voluntary design-based changes, ... certain changes are mandatory.... [On] and after January 1, 2020, [1] plans may no longer impose a six month suspension period on participant contributions following a hardship distribution and [2] plan administrators must begin obtaining representations from each affected participant that he or she does not have the necessary cash or liquid assets available to satisfy the hardship."
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[Guidance Overview]
IRS (Finally) Answers Questions About 2019 Hardship Distributions "[The prior 'amount necessary' requirements] are replaced with a single new standard ... [1] The distribution may not exceed the amount of the participant's financial need ... [2] The participant must have obtained all other available distributions under the employer's retirement plans; and [3] The participant must represent, in writing, that he/she has insufficient cash or liquid assets to satisfy the financial need."
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[Guidance Overview]
IRS Proposed Hardship Distribution Regs Include Safe Harbor for Disaster Relief "The proposed regulations add to the list of safe-harbor hardship expenses any expenses or losses (including lost income) incurred due to a federally declared disaster if the employee's principal residence or principal place of employment is in an area designated by [FEMA] as eligible for individual assistance. This expansion is consistent with the IRS's past administrative practice ... Note, however, that the proposed regulations do not address the relaxed hardship documentation requirements that has typically accompanied the IRS's federally declared disaster relief."
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401(k) Plan Administration Checklist for the 2019 Plan Year "[This checklist is] broken into 3 sections: [1] Deadline Tasks -- Summarizes the tasks that must be completed by a specific deadline. [2] Periodic Tasks -- Summarizes the tasks that may need completed during the year. [3] Plan Records -- Summarizes the plan year records to keep for documentation purposes."
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DOL Clarifies Fiduciary Roles in Auto-Portability Solution "The agency says plan sponsors have fiduciary responsibility for selecting and monitoring Retirement Clearinghouse's Auto-Portability Solution, but once assets have been transferred from a plan sponsor's retirement plan, it is no longer a fiduciary with respect to those assets."
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Best Interest and Best Practices, Part 9 "The best interest duty of care is more complicated. The only agency that has offered a full definition is the DOL in its vacated Best Interest Contract Exemption.... The duty of care in the SEC's proposed Reg BI and [in] the New York standard also requires that an advisor exercise care, skill, diligence and prudence in developing a recommendation for an investor or, in the case of New York, an insured. Because of the identical language in all three rules ... it is likely that the three standards of care will be interpreted similarly."
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Mean Reversion of Equity Returns and Retirement Planning "Do stock returns exhibit long-term mean reversion? That's an economist's way of asking if stocks get safer the longer we hold them.... As retirees, we have to ask some follow-up questions ... Does mean reversion equate to less risk? If we believe they do mean-revert, what impact would that process have on retirement plans? How would its impact compare to other factors of retirement planning? How should a retiree bet on mean reversion?"
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Equity Risk Looms Large for Fund Sponsors "Over the last year, three years, and five years, Taft-Hartley plans had the strongest returns of all fund types, while public plans have done best over the last 10 years.... Many sponsors are seeking higher returns outside of traditional asset classes ... The late stage of the economic cycle combined with elevated equity valuations and low bond yields is causing sponsors to explore allocations to U.S. Treasuries, managed futures, and tail risk hedging."
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Oregon Expands State-Run Retirement Plan to Individuals "Last year, Oregon became the first state to roll out a mandatory retirement plan, and now the state is expanding the program to individuals, such as self-employed or gig economy workers.... [The program] now includes more than 45,000 employees, who have contributed more than $9 million towards retirement. Workers are saving an average of $114 a month."
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"The sudden erosion of pension benefits for 1,100 former employees of the old St. Clare's Hospital in Schenectady is a scenario that isn't supposed to happen.... [ERISA] contained a religious exemption that was later expanded to hospitals operated by religious groups, and St. Clare's took advantage of that.... But what about the rest of America? Two generations of American workers increasingly don't have to worry about pension plan failures because fewer and fewer workplaces offer pensions."
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Benefits in General |
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[Official Guidance]
Agencies Release Advance Copies of Form 5500 Annual Return/Report for 2018 "[EBSA, IRS and PBGC have] released advance informational copies of the 2018 Form 5500 Annual Return/Report and related instructions. The 'Changes to Note' section of the 2018 instructions highlights important modifications to the Form 5500 and Form 5500-SF, and their schedules and instructions.... The advance copies of the 2018 Form 5500 are for informational purposes only and cannot be used to file a 2018 Form 5500 Annual Return/Report." Schedule A --
Insurance Information Form 5500-SF Annual Return/Report of Small Employee Benefit Plan, and Instructions. Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL] |
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[Official Guidance]
Text of IRS Disaster Relief Notice CA-2018-13, for Victims of November 8 Wildfires in California "Victims of Wildfires that took place beginning on Nov. 8, 2018 in California may qualify for tax relief ... Individuals who reside or have a business in Butte, Los Angeles and Ventura counties may qualify ... [C]ertain deadlines falling on or after Nov. 8, 2018 and before April 30, 2019, are granted additional time to file through April 30, 2019."
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"As the end of the year approaches, employers should be aware of important year-end deadlines and considerations related to their retirement, health and welfare plans. [The authors] have compiled a list of these deadlines and provide guidance on how to comply with recent changes."
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Selected Discussions |
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RMD from a 403(b) Plan: Participant Must Ask for It? We are the TPA firm for an ERISA 403b that has assets with a well known recordkeeper. Plan sponsor has an unbundled service agreement with the recordkeeper. We have a terminated participant who will be due an RMD by 12/31/18 and we're being told that only the participant can request the RMD. Not the TPA, not the plan sponsor. But if the RMD is missed, it is the plan sponsor who is responsible and liable for the missed RMD, correct? If the RMD is missed because the participant either intentionally or unintentionally does not request the RMD, but the plan sponsor requests it, is the plan sponsor still liable? Is the answer different because this is a 403b plan?
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Employees Being Moved to PEO; Controlled Group Issues Still Involved? Husband and wife jointly own Company A. Company A's employees are being moved to a PEO, and will be participating the PEO plan. I'm assuming the existing Company A plan is being merged into the PEO plan. Husband and wife jointly also jointly own Company B. They will be receiving compensation from Company B. Does anyone have any experience that they could share with the testing involved if Company B sponsors a plan that would cover just the husband and wife?
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Press Releases |
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Walmart Honored by National Alliance of Healthcare Purchaser Coalitions for Efforts to Improve Healthcare Delivery System
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Fidelity Introduces Industry-First Global Retirement Savings Guidelines
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Most Popular Items in the Previous Issue |
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IRS Proposes New Hardship Distribution Regs
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New Hardship Distribution Guidance Brings Several Surprises
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Text of DOL Advisory Opinion 2018-01: Retirement Clearinghouse Auto-Portability Program (PDF)
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Connect
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BenefitsLink.com, Inc.
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(407) 644-4146
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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