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Retirement Plans Newsletter December 20, 2018 |
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Jobs
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Webcasts, Conferences Coverage Testing with Related Employers [2019]
QDROs [2019]
Essentials for the Benefits Practitioner: What ERISA Practitioners Need to Know About Accounting for Plans
The End is Near! Mastering the Art of Plan Terminations
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Discussions |
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This Newsletter:
BenefitsLink Health & Welfare Plans Newsletter:
Message Boards Digest:
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Senior Pension Administrator - Combo DB/DC Plans|
[Guidance Overview]
Changes in Hardship Withdrawal Rules for 401(k) and 403(b) Plans: What Plan Sponsors Need to Know "The changes to these rules allow plan sponsors and participants more flexibility, as follows: [1] Six-month suspension of elective contributions is eliminated.... [2] No longer required to first take a loan.... [3] Participant representation of no available assets to satisfy need.... [4] Investment earnings can now be distributed.... [5] Safe harbor contributions, QNECs, and QMACs can now be distributed.... [6] Expanded list of 'immediate and heavy' financial needs.... [8] Documentation deadlines -- amendments and communication to participants.... [9] [S]ubstantiation of financial need."
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Ninth Circuit Clarifies Law on Partial Withdrawal Liability "[T]he Ninth Circuit Court of Appeals clarified application of the credit for partial withdrawals, holding that the credit for partial withdrawal is applied before the application of the 20-year limitation on withdrawal liability payments." [GCIU-Employer Retirement Fund v. Quad/Graphics, Inc., No. 17-55667 (9th Cir. Dec. 7, 2018)]
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Most Counts Against GE Allowed to Proceed in ERISA Lawsuit "[The district court said] that, although mere knowledge that 'something was awry' is insufficient for actual knowledge ... Congress intended the actual knowledge requirement to excuse 'willful blindness by a plaintiff.'... [T]he defense unsuccessfully argue[d] that ERISA Section 406 does not apply here because the management fees are not a 'plan asset,' and that even if management fees are a plan asset, the claims must be dismissed because plaintiffs have not pled a non-exempt prohibited transaction." [In re G.E. ERISA Litigation, No. 17-12123 (D. Mass. Dec. 14, 2018)]
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Advantages of DB Plans in a DC Environment (PDF) "[I]mplicit advantages of [defined benefit (DB) plans] include ... [1] Employee retention ... [2] Compensation management ... [3] Employee security ... [4] Asset preservation for retirement ... [5] Defense against more governmental controls ... [6] Defense against collective bargaining threats ... [7] Estate tax, litigation, and bankruptcy threats ... [8] Investment fiduciary insulation."
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Employees Are Working Later, Delaying Retirement; Employers React "[E]mployers admit limited understanding of when their employees plan to retire. The demographics of the U.S. working population illustrate that the pace of their departure is increasing: 83% of employers report a significant number of employees at or approaching traditional retirement age (65).... U.S. employers are increasingly concerned about the staffing challenges they could face from erratic retirements."
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Senators Introduce Retirement Savings Bill Expanding Options "The proposed Retirement Security and Savings Act includes more than 50 provisions aimed at improving coverage with small employers and among part-time workers. It would also reduce barriers to lifetime income options and allow employees to keep retirement savings in qualified plans beyond the current age limit of 70-1/2."
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Bill Would Allow Use of Retirement Plans to Provide Student Loan Repayment Benefits "[Two U.S. senators] have introduced legislation that would allow 401(k), 403(b) and SIMPLE retirement plan sponsors to use their plans to provide student loan repayment benefits to employees. The Retirement Parity for Student Loans Act would permit these plan sponsors to make matching contributions to workers as if their student loan payments were salary reduction contributions.... The benefit cannot be provided to workers who are not eligible to participate in the retirement plan."
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"Although 1,800 employers have registered and nearly 22,000 employees are contributing, the plan's greatest challenge thus far involves implementing payroll deductions: only about a third of employers that have enrolled in the program have actually submitted employee contributions ... Still, OregonSaves saw a 95% retention rate in its inaugural year, with 93% of enrollees maintaining the default 5% contribution and 2% increasing their rate to an average of 10%. Only 5% of enrollees decreased their deferral rate."
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In with the New, Out with the Old: A Flood of Quasi-fiduciary Rules Is Coming (PDF) 27 presentation slides. Topics include: [1] SEC initiatives; [2] DOL activity; [3] State fiduciary initiatives; [4] ERISA litigation trends; [5] 2019 legislative outlook.
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Benefits in General |
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Merging of Payroll and Benefit Platforms Creates New Challenges, Opportunities "The move toward integration of payroll and benefit management platforms exists for a relatively simple reason: it creates efficiencies and ease-of-use for both employees and HR departments. The actual process of finding seamless integration between payroll and benefit platforms has been less simple. But as technology and AI advances have opened new possibilities, integrated systems are becoming more common."
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Executive Compensation |
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[Guidance Overview]
Text of SEC Fact Sheet on Final Rules for Disclosure of Hedging Policies "The final rules implement Section 14(j) of the Securities Exchange Act of 1934, which was enacted by Section 955 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.... New Item 407(i) of Regulation S-K will require a company to describe any practices or policies it has adopted regarding the ability of its employees (including officers) or directors to purchase securities or other financial instruments, or otherwise engage in transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of equity securities granted as compensation, or held directly or indirectly by the employee or director.... Item 407(i) specifies that the equity securities for which disclosure is required are equity securities of the company, any parent of the company, any subsidiary of the company, or any subsidiary of any parent of the company.... Companies generally must comply with the new disclosure requirements in proxy and information statements for the election of directors during fiscal years beginning on or after July 1, 2019."
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[Guidance Overview]
SEC Adopts Final Rules on Hedging Policies (Dodd-Frank Section Act 955) "The rules add a new Item 407(i) to Regulation S-K that will require a company to describe any practices or policies it has adopted regarding the ability of its employees (including officers) or directors to purchase securities or other financial instruments, or otherwise engage in transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of equity securities granted as compensation, or held directly or indirectly by the employee or director."
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Why CEO Pay Disclosures Can Be Misleading: The Example of Singapore "Willis Towers Watson analyzed pay disclosures among the largest 120 listed companies in Singapore over the past five years. This article shares some of the common perceptions regarding CEO pay in Singapore (and often elsewhere) and presents analyses to corroborate or dispel the perceptions[.]"
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Selected Discussions |
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Determination of HCEs in Year of Merger of Plans Company A acquires Company B. Company B's 401(k) plan is merged into Company A's plan as of 1/1/18. In looking at HCEs for the 2018 Plan Year, do 5% owners of company B now employed by Company A with no ownership in Company A count as HCEs? What about employees earnings $120,000 or more in Company B in 2017?
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Valid Rollover But Account Incorrectly Titled by Broker I have a takeover DB. The client, a sole proprietor, recently changed brokers. The rollover was done a few years ago, from a previous DB plan, but the previous broker incorrectly titled the account "401(k)." The rollover was approximately $1M. The broker was from another brokerage firm. I am working with the new broker and we want to straighten this out. This is not a 401(k), and she does not want a 401(k) and will never contribute to a 401(k). Could the client claim "ignorance", "stupidity" or whatever -- such that, if she were to be audited, could explain what happened? The DB plan has less than $250K in assets.
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OK to Change New DB Plan's Valuation Date? One-participant DB plan was effective 1/1/2017. The valuation date is EOY so valuation date was 12/31/2017 for first year. Can the valuation date be changed to 1/1/2018 for the second year of the plan?
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Compensation and Limits for Initial Short Plan Year New plan, effective date 10/1/2018. "Compensation" means a Participant's Basic Compensation, (which are W-2 wages), paid during the Compensation Computation Period (defined in the document as the Plan Year). Compensation excludes pre-participation compensation. The document says: "In the case of an initial Limitation Year, the Limitation Year will be the twelve [12] consecutive month period ending on the last day of the initial Plan Year." Eligibility is normally age 21, 1-year of service, monthly entry. However, all entry requirements were waived 10/1/2018. 4 Employees; 2 hired 5/30/2017, 1 hired 6/26/2017, and one hired 10/15/2017. [1] Is the 415 or compensation limit pro rated for 2018? I don't think so, based on my reading of the above. [2] For the employees, do I take compensation from 10/1/2018 -- 12/31/2018, or from what their individual entry dates would have been
(6/1/2018 for the first two, 7/1/2018 for the third, etc.)?
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Press Releases |
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NTSA Honors Susan Jennings with Bob D. Schiller Award
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Most Popular Items in the Previous Issue |
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IRS Issues Proposed Regulations to Relax 401(k) Plan Hardship Distribution Rules
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Connect
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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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