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[Official Guidance]
Text of IRS Notice 2019-03: Weighted Average Interest Rates, Yield Curves, and Segment Rates Applicable for December 2018 (PDF)
"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)."
Internal Revenue Service [IRS]
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[Guidance Overview]
IRS Provides 403(b) Plan Relief for Improper Exclusion of Part-Time Employees
"Employers must begin to operate the part-time employee exclusion under their 403(b) plans correctly for the plan year immediately following the transition relief period, which will mean as soon as January 1, 2019 for many 403(b) plan sponsors.... [M]any employers will need to amend their 403(b) plans to properly reflect the conditions that must be satisfied to exclude part-time employees from 403(b) plan participation."
McDermott Will & Emery
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[Guidance Overview]
IRS Formalizes and Provides Relief for Section 403(b) 'Once-In-Always-In' Part-Time Rule -- Immediate Action Required
"This appears to be yet another instance where an unrelated retirement plan requirement -- in this case, under ERISA -- is imported through the section 403(b) tax regulations and generally extended to section 403(b) programs.... The plan document relief is highly pragmatic; pre-approved documents are widely in use for section 403(b) programs, and the need to adopt plan amendments is limited to the smaller population of individually designed plans ... The operational relief is less pragmatic, in that the Notice requires all section 403(b) programs potentially to be dealing with its implications in January 2019, less than a month after its release."
Eversheds Sutherland
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New Class Action Wave: Actuarial Equivalents in Pension Plans (PDF)
"A court in New York is being asked to certify a class action lawsuit served on MetLife earlier this month. This was followed by a nearly identical lawsuit in Texas served on American Airlines as well as another in New York served on PepsiCo. The first two suits fault the use of an old mortality table in determining optional forms of distribution; the PepsiCo suit faults simplified option factors.... These cases highlight the possible need to periodically re- evaluate the reasonableness of factors currently used in ERISA pension plans."
Buck
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Litigation Lessons for 401(k) and 403(b) Fiduciaries: Apply These in 2019
"[1] Your process matters.... [2] Put it in writing.... [3] Know and review your options.... [4] Understand target date funds.... [5] Benchmark plan fees ... [6] Retain an expert to help you.... [7] Consult outside counsel when necessary.... [8] Hold regular committee meetings.... [9] Review your providers.... [10] Schedule regular RFPs."
Cohen & Buckmann, P.C.
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State of the Insured Retirement Industry: 2018 Review and 2019 Outlook (PDF)
32 pages. "Demographic trends continue to favor growth of lifetime income solutions. 2018 saw continued shifts in the leading annuity product types across distribution channels, a trend that will continue in 2019. An improving interest rate environment will improve capacity and potentially have a positive impact on lifetime income benefit design. Rising market volatility will create both challenges (sales disruption) and opportunities (highlighting the value of protecting financial assets and income)."
Insured Retirement Institute [IRI]
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Help People Work Longer by Phasing Retirement
"If we're serious about a transition to working longer, there ought to be a legal framework for doing so.... [It's] easier to measure the costs of older workers than the benefits of having them. Those benefits ... range from reduced turnover and onboarding costs to quicker productivity gains for younger workers through formal mentoring programs. The most important question, however, is especially hard to measure: Are older workers less or more productive than younger ones?"
The Brookings Institution
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Deep-in-Debt CalSTRS Also Has $9.8 Billion Surplus
"The main CalSTRS pension fund is seriously underfunded, and school district pension costs are more than doubling, biting deep into classroom budgets. But a CalSTRS inflation-protection fund has a growing $9.8 billion surplus and an eye-popping positive cash flow.... [T]he add-on inflation protection is a separate special fund ... [which is] paid for only by the state ... Step-by-step, inflation protection grew from 58.4 percent to 85 percent of original purchasing power."
Calpensions
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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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