Retirement Plans Newsletter

November 29, 2018

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Jobs

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

Defined Contribution Analyst
Findley
in KY, OH, TN

Relationship Manager / Consultant
The Retirement Plan Company (TRPC)
in TN, Telecommute

Retirement Account Administrator I
Alerus Financial
in MI, MN, NH

Retirement Account Administrator II
Alerus Financial
in MI, MN, NH

Relationship Manager
Aspire Financial Services LLC
in FL

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Webcasts, Conferences

SALGBA Regional Conference
January 14, 2019 in NV
State and Local Government Benefits Association [SALGBA]

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Discussions

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[Official Guidance]

Text of IRS FAQs on 403(b) Pre-Approved Plan Program: Eligible Adopting Employers and Reliance on Letters

"Who can adopt a 403(b) prototype or volume submitter specimen plan? ... What is an IRS opinion or advisory letter for a 403(b) pre-approved plan? ... To what extent can an adopting employer rely on a 403(b) prototype plan's opinion letter? ... To what extent can an adopting employer rely on a 403(b) volume submitter plan's advisory letter?"
Internal Revenue Service [IRS]

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[Guidance Overview]

IRS Issues Proposed Regs for Hardship Distributions

"[1] Clarification of Code Section 165 casualty loss deduction ... [2] Additional safe harbor for certain disasters ... [3] Extension of relief for victims of Hurricanes Florence and Michael ... [4] Elimination of six-month suspension period ... [5] Elimination of requirement that participant take all available plan loans ... [6] Expansion of available sources ... [7] Elimination of 'facts and circumstances' test ... [8] Plan amendment deadlines."
Ice Miller LLP

Why Now Might Be the Time to Eliminate a Hardship Distribution Provision

"The new standard states that an employee must represent ... that he or she has insufficient cash or other liquid assets to satisfy his/her hardship need. The plan administrator may rely on the employee's representation unless the plan administrator has actual knowledge to the contrary.... [T]hat last part about the plan administrator having actual knowledge to the contrary could be an administrative minefield for plan sponsors, as plan sponsor personnel responsible for administration of the retirement plan might be more aware of personal information regarding some employees[.]"
Cammack Retirement Group

Summary Report by IRS Employee Plans Compliance Unit: Nonqualified 401(k) Plans

"Responses showed that 87% of plan sponsors in the sample made filing errors showing that their plan was not a qualified 401(k) plan. A 401(k) plan must be a qualified plan. A few other sponsors in the sample mistakenly showed their plan was a 401(k) plan when it was not; it was a profit sharing plan. A 401(k) plan is a type of profit sharing plan, but a profit sharing is not necessarily a 401(k) plan."
Internal Revenue Service [IRS]

Summary Report by IRS Employee Plans Compliance Unit: Updating Frozen Defined Benefit Plans for Current Law and Other Compliance Issues

"Overall, the project showed that sponsors of the sampled frozen defined benefit plans amended their plans for current law by the required deadlines, however we found other issues: Incorrect pension feature code listed on Form 5500 ... Form 5500 filed incorrectly ... No Form 5500 filed ... Employer no longer in existence.... Now may be a good time to review your frozen defined benefit plan to see if you: [1] Still have a valid reason for keeping the plan frozen; [2] Have filed Form 5500 for your plan by the filing deadline; [3] Used the correct pension feature code on Form 5500; [4] Amended the plan for current law by the required deadline."
Internal Revenue Service [IRS]

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Year-End Considerations for Retirement Plans, Part 2

"Plan sponsors may use forfeitures to fund QMACs and QNECs ... Plan sponsors may expand 401(k) and 403(b) hardship provisions ... Plan limits ... PBGC premium increases."
Morgan Lewis

Editor's Pick 2019 Key Administrative Dates and Deadlines for Calendar-Year Single-Employer Defined Benefit Plans (PDF)

Chart lists and describes important administrative dates and deadlines for single-employer defined benefit plans subject to ERISA and the Internal Revenue Code.
Milliman

Best Interest and Best Practices, Part 10

"A 'best interest' analysis requires that an advisor consider the investor's needs and circumstances in determining which recommendation would result in a lower cost to the investor based on, among other things, the holding period. This point is not limited to considerations of A shares versus C shares."
FredReish.com

Defined Contribution Plan Participants' Activities, First Half 2018 (PDF)

12 pages. "DC plan withdrawal activity in the first half of 2018 remained low and was similar to the activity observed in the first half of 2017.... The vast majority of DC plan participants continued contributing to their plans in 2018:H1 ... Most DC plan participants stayed the course with their asset allocations as stock values generally rose during the first six months of the year.... DC plan participants' loan activity was little changed at the end of June 2018."
Investment Company Institute [ICI]

Rescue for Failing Multiemployer Pensions Not Expected from Joint Select Committee

"A November 30 deadline was set to report bipartisan legislation. But Republican and Democrat members could not agree on an 'equitable' solution, despite getting 'close' to a compromise ... The Committee's inability to report legislation comes in spite of an array of economists that have warned of massive macroeconomic implications of letting the pensions, and the [PBGC] fail."
BenefitsPro

The Multiemployer Solvency Crisis: Estimates of the Cost and Impact of the Butch Lewis Act (PDF)

"Across 500 stochastic trials, the average number of participants in plans projected to become insolvent is 3.2 million in the baseline scenario, and 2.3 million if [the Butch Lewis Act (BLA)] is implemented.... In about 40% of trials, plans covering more than three million participants are projected to become insolvent, while in about 20% of trials we project that fewer than one million participants will be affected by plan insolvency.... Across the 500 trials, the average loan default rate was 52% ... While the loan maturity period is 30 years, BLA delays plans' insolvency by an average of only 16 years."
The Pension Analytics Group

New Jersey Senate Hearing Scheduled on Secure Choice Savings Program

"The Labor Committee of the New Jersey Senate will hold a hearing Dec. 3 on legislation that would create the New Jersey Secure Choice Savings Program, a state-run retirement plan for private-sector employees whose employers do not offer a retirement plan. Under the proposed plan, those employees would be automatically enrolled in an IRA with a standard payroll deduction of 6% of wages."
American Society of Pension Professionals and Actuaries [ASPPA]

[Opinion]

'Work Hard. Save Easy' -- OregonSaves Retirement Program Is Off to a Promising Start

"Since the program's Wave One rollout began, OregonSaves has been adding approximately 1,000 employees per week. The program now has more than 44,000 employees enrolled. That number will climb rapidly in the coming years, because the majority of Oregonians without access to a plan work at small businesses."
Tobias Read, Oregon State Treasurer, via Georgetown University Center for Retirement Initiatives

[Opinion]

Surprise -- Employees Want Pensions

"In today's workplace, however, as compared to one generation ago, pensions get little, if any, attention yet nearly one-third of workers would rather have pensions than a raise.... Workers are beginning to realize that 401(k) plans are exactly what Congress intended them to be -- supplemental tax-favored savings plans. In fact, generating lifetime income from those 401(k)s is beyond what a typical worker is able to do."
Benefits and Compensation with John Lowell

Executive Compensation
and Nonqualified Plans

NYSE Opens Compensation Committee Exemptions to More Companies

"The SEC in June adopted amendments to the 'smaller reporting company' (SRC) definition to expand the number of companies that qualify for certain existing disclosure benefits.... SRCs can take advantage of certain exemptions from the exchange's compensation committee requirements. Specifically, they do not have to comply with: [1] Enhanced requirements with respect to the independence of compensation committee members; [2] Requirements regarding the analysis of the independence of any compensation consultant, legal counsel or other adviser to the compensation committee."
Corporate Secretary

Selected Discussions
on the BenefitsLink Message Boards

State Taxation of Trust with UBIT

Where a trust/trustee is located in one state, but the plan and its beneficiaries and the unrelated business are located in another state, what state law applies when considering taxation of UBIT?
BenefitsLink Message Boards

Loan Should Have Been Treated as In Default

Proverbial takeover case. Loan should have defaulted in 2006 at around $46,000. Some payments have been made since then but not many, and even those have been sporadic. At 8.25%, John Hancock is carrying this at $75,000 now. I'm referring this to an attorney, but just curious what BL mavens have to say as likely outcomes under VCP, or other thoughts.
BenefitsLink Message Boards

Second IRA Withdrawal Used to Meet 60-Day Rollover Deadline for Earlier IRA Withdrawal

Client withdrew funds from IRA, intending to redeposit that amount within 60 days and avoid the tax. She is not going to be able to meet the 60-day deadline. Can she withdraw an additional amount, then turn around and deposit it back into the IRA to cover the first withdrawal within the first 60-day period, starting a new 60-day clock on the second withdrawal? She thinks she will have the funds to cover it before the end of the second 60-day period.
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Press Releases

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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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