Retirement Plans Newsletter

January 3, 2019 logo logo
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Experienced 401(k) Distribution Specialist
Nova 401(k) Associates

Retirement Plan Administrator
Estate & Pension Advisory Board
in NJ

Senior 401(k) Plan Administrator
in NJ

Litigation Associate
in CT

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[Official Guidance]

PBGC Opens 2019 Electronic Premium Filing Program

"My PAA is now ready to accept electronic premium filings for plan years beginning in 2019.... In addition, [PBGC has] made several enhancements to My PAA to simplify/streamline the premium payment process."
Pension Benefit Guaranty Corporation [PBGC]


Start Your New Year with ASC's Informative Webcasts!

Sponsored by ASC

Whether you are new to the qualified retirement plan field or need a refresher on the rules applicable to 401(k) plans, this webcast series is for you! Part 1 includes popular plan designs, eligibility and coverage rules and much more! Register Now!

[Official Guidance]

Text of 2018 IRS Publication 571: Tax-Sheltered Annuity Plans (403(b) Plans) for Employees of Public Schools and Certain Tax-Exempt Organizations (PDF)

22 pages; rev. Jan. 2019. "Beginning in 2018, as part of a provision contained in the Tax Cuts and Jobs Act of 2017, a retirement savings contribution credit may be claimed for the amount of contributions you make before January 1, 2026, to an ABLE account for which you are the designated beneficiary as defined by section 529A."
Internal Revenue Service [IRS]

Transamerica Faces Familiar Allegations in Self-Dealing ERISA Complaint

"Allegations in the text of the complaint put an emphasis on a warning that ERISA experts have been sharing heading into 2019, based on the results of both recent regulatory audits and litigation.... [If] a fund on a DC plan menu has been underperforming its stated benchmark for a long period of time and no action has been taken, this is a clear red flag." [Karg v. Transamerica Corp., No. 18-134 (N.D. Ia. complaint filed Dec. 28, 2018)]

Comparing Seven Defined Contribution Plan Designs: A Case Study

"There were 10 people eligible for the retirement plan, including one owner.... The owner was willing to spend on staff an amount equal to 5.0% of their total combined payroll.... The results show the differences that can be obtained from various plan designs. The best design for any given situation will vary depending on employee ages and salaries, as well as company objectives."
Retirement Management Services, LLC

Market Downturn Could Accelerate 401(k) Recordkeeper Consolidation

"The 401(k) record-keeper industry is about to enter the third stage of the consolidation curve. While Stage 1 is about preserving first-mover advantage and Stage 2 is about acquisitions, Stage 3 is about ruthlessly attacking weaker competition.... The 38 national 401(k) record keepers ... are circling just five seats at the winner's table, according to the framework of the consolidation curve. Where does that leave the others? Eating scraps."

Deferred Income Annuity Purchases: Optimal Levels for Retirement Income Adequacy

"[At] current annuity rates, purchases of a DIA at age 65 deferring 20 years with no death benefits result in an overall improvement in RRR (for all ages of death combined) for DIA purchases equal to 5, 10, 15, and 20 percent of the 401(k) balance. However, there is an overall decrease in RRR for DIA purchases equal to 25 and 30 percent -- due in part to the interaction with long-term care costs."
Employee Benefit Research Institute [EBRI]

Funded Status of Largest U.S. Corporate Pension Plans Slipped in 2018

"[T]he aggregate pension funded status is estimated to be 84% at the end of 2018, compared with 85% at the end of 2017. After the first nine months of 2018, the aggregate pension funded status stood at 90%.... [T]he pension deficit is projected to be $255 billion at the end of 2018, slightly lower than the $260 billion deficit at the end of 2017."
Willis Towers Watson

FAS87 ASC715 Discount Rates and Moody's Rates, Updated January 2, 2019

An unofficial monthly report as of January 2, 2019, of the Moody's Daily Long-term Corporate Bond Yield Averages and Moody's Daily Treasury Yield Averages (used as benchmarks by some corporate pension plans).
David Rigby, via BenefitsLink Message Boards


American Benefits Council Letter to IRS Requesting Guidance on Retirement Plan Issues Related to Student Loan Repayments

"There has been some uncertainty about whether the conclusions reached in [PLR 201833012] were based in any way on the particular facts presented, such as the particular matching formula or the structure and timing of the true-up matching contribution.... For many [companies] the approach will create nondiscrimination and coverage testing problems, because the 'matching' contributions are technically nonelective contributions that must be tested separately for coverage and nondiscrimination. We believe that it is within the authority of Treasury and the IRS to address certain of these issues in guidance of general applicability."
American Benefits Council


SEC's Proposed Form CRS Obfuscates, Rather Than Informs

"2019 may well be a watershed year for those who care about the future of the emerging profession of financial and investment advice. Against the backdrop of a court's overturning of the [DOL's] Conflict of Interest and related rules, and the SEC's bungling, several state securities administrators, and/or state legislatures, may step in to feel the void. First up may the New Jersey Bureau of Securities, which will likely release in early 2019 a proposal to impose fiduciary duties upon brokers who provide investment advice."
Ron A. Rhoades, JD, CFP

Executive Compensation
and Nonqualified Plans

[Guidance Overview]

IRS Answers Questions on Tax-Exempt Executive Compensation

"[Notice 2019-09] appears to answer most of the outstanding section 4960 questions and uses familiar concepts from other related areas as often as possible.... [Applicable Tax Exempt Organization (ATEOs)] and their related entities will have to determine the related entities, choose a reasonable method for allocating compensation among the entities, and determine the appropriate remuneration for each calculation. Exempt organization professionals and compensation and benefits professionals will likely have to work together on some of the issues to address overlapping concepts."

Selected Discussions
on the BenefitsLink Message Boards

402(g) Refund -- Effect of Losses on Figure Reported on 1099-R

An employee goes over the 402(g) limit for the year and the correction is made in the current year. What would the Form 1099-R look like? For example, John contributes $19,500 for 2018. We correct this in December 2018 but because of losses the refund is only $900 ($1,000 in excess, less $100 in losses). When he gets his 1099-R in January 2019, should it say $900?
BenefitsLink Message Boards

Effect of Corporate Fund Actions on Required Fee Disclosures

A question about participant fee disclosures and corporate fund actions (i.e., actions taken by the fund issuer to rename, merge, or otherwise change one or more of their funds) -- I can't see any supporting guidance that excuses a plan sponsor from having to notify participants when the investment information in the disclosure changes due to a corporate action. Do you?
BenefitsLink Message Boards

SSA Tells Participant an Already-Paid Benefit Is Still Due to Him

We filed an 8955-SSA for 2010 reporting one participant who was paid out (Code D). We've just been notified by the participant that he was informed by SSA that he has a benefit that's due to him. We're debating whether we should send a letter to SSA with a copy of the return previously filed, or add said participant to the next SSA. Your thoughts?
BenefitsLink Message Boards

Midyear Vesting Change Adopted 12/31 -- Anti-Cutback Violation?

403(b) plan sponsor wants to adopt an amendment on 12/31/18 to change vesting of employer matching contributions from immediate vesting to 3 year cliff (100% vested after 3 years), effective 7/1/18, for all employees hired on or after 7/1/18. Is this a violation of the anti-cutback rules?
BenefitsLink Message Boards

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Press Releases

HERO Elects Karen Moseley as President
Health Enhancement Research Organization [HERO]

ECFC Announces New Health Savings Account (HSA) Expert Certification
ECFC [Employers Council on Flexible Compensation]

NAPA Unveils the Top Retirement Plan Advisors Under 40
National Association of Plan Advisors [NAPA]

Most Popular Items in the Previous Issue

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Holly Horton, Business Manager

BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2019, 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, 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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