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January 21, 2019 logo logo
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[Official Guidance]

Text of 2018 Instructions for IRS Form 5329: Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts (PDF)

"You must file Form 5329 if any of the following apply ... [1] You received a distribution from a Roth IRA and either the amount on line 25c of Form 8606 ... is more than zero, or the distribution includes a recapture amount subject to the 10% additional tax, or it's a qualified first-time homebuyer distribution ... [2] You received a distribution subject to the tax on early distributions from a qualified retirement plan ... [3] The contributions for 2018 to your traditional IRAs, Roth IRAs, Coverdell ESAs, Archer MSAs, HSAs, or ABLE accounts exceed your maximum contribution limit ... [4] You didn't receive the minimum required distribution from your qualified retirement plan."
Internal Revenue Service [IRS]


ASC's CE Webcast Series: Part 2

Sponsored by ASC

Discover the unique aspects of the 401(k) plans which are imperative to retirement plan practitioners. Part 2 includes limitations on contributions, compensation definitions, determining "highly compensated employees" and much more. Register Now!

The DOL Is Reviewing Your 401(k) Form 5500 and Encouraging Voluntary Correction

"Many 401(k) plan sponsors mistakenly believe that the '15th business day' is the deadline to deposit employee contributions and loan repayments to the plan.... [M]ost plan sponsors must focus on the 'earliest date that such contributions or repayments can be reasonably segregated from the employer's general assets.' Due to the sophisticated payroll and accounting systems that most plan sponsors utilize today, the 'earliest date' will be different for each plan sponsor, but is likely a matter of days."
Masuda Funai

Auto Drawdown Becoming New Mainstay of 401(k) Plans

"Today, nearly 3 in 5 plan sponsors (57%) offer employees the opportunity to draw down their funds in installments, up from 37% in 2013 ... Of the 43% not offering automatic payments, 32% said they are very or moderately likely to offer the capability in 2019."
Pensions & Investments

Take Your Best Shot at a Retirement Plan

"We can look at retirement income as a portfolio optimization problem in which we try to sustain or improve our desired standard of living. The downside is that we could make it worse. Alternatively, we can view it as a risk management problem and try to minimize our risk of losing our standard of living as we age, at the possible cost of limiting our upside. Of course, nothing says we can't choose a goal in between that better fits our risk tolerance, insuring more or less downside and risking more or less upside."
The Retirement Cafe

The Los Angeles Teacher Strike Has a Huge Problem: Pensions

"The United Teachers of Los Angeles and the Los Angeles Unified School District both want teachers to be paid more, class sizes to be reduced, and more support staff hired. But these items are expensive and run headlong into the fiscal wall created by big employee benefit promises to retirees. Pensions and retiree healthcare commitments now threaten the district with insolvency if it accedes to the union position."
Manhattan Institute

Vallejo No Longer Bankrupt But Budget Gap Grows

"Vallejo has taken two steps to reduce pension costs. An extra $6.5 million payment was made to CalPERS in fiscal 2013-14. Two years ago a $1 million payment was made to a new trust that sets aside money to help pay future pension costs. And yet, Vallejo's police and firefighter pension rate is among the top two dozen listed by CalPERS. It was 28.1 percent of pay in 2008, more than doubled to 68 percent of pay this fiscal year, increases to 78 percent in July, and in 2024 is an estimated 90 percent of pay."

Illinois Pension Buyout Participation Rate Higher Than Expected, Early Numbers Show

"Since it launched in December, at least 200 new retirees took the deal, more than expected.... The program is designed to save the state about $380 million per year. Neighboring Missouri introduced a similar program for their state employees in 2017.... 22 percent of retirees there took the buyout ... Missouri offers a 60 percent match while Illinois is offering 70 percent."

Benefits in General

[Official Guidance]

Text of IRS Final Regs: Section 199A Qualified Business Income Deduction (PDF)

247 pages. "This document contains final regulations concerning the deduction for qualified business income under section 199A of the Internal Revenue Code.... The regulations also contain an anti-avoidance rule under section 643 of the Code to treat multiple trusts as a single trust in certain cases, which will affect trusts, their grantors, and beneficiaries. This document also requests additional comments on certain aspects of the deduction."
Internal Revenue Service [IRS]

[Official Guidance]

Text of IRS Proposed Regs: Section 199A Qualified Business Income Deduction (PDF)

39 pages. "This document contains proposed regulations concerning the deduction for qualified business income under section 199A of the Internal Revenue Code.... The proposed regulations provide guidance on the treatment of previously suspended losses that constitute qualified business income. The proposed regulations also provide guidance on the determination of the section 199A deduction for taxpayers that hold interests in regulated investment companies, charitable remainder trusts, and split-interest trusts."
Internal Revenue Service [IRS]

[Official Guidance]

Text of IRS Rev. Proc. 2019-11: Determination of W-2 Wages Under Section 199A (PDF)

"This revenue procedure provides methods for calculating W-2 wages... [1] for purposes of section 199A(b)(2) of the Internal Revenue Code which, for certain taxpayers, provides a limitation based on W-2 wages to the amount of the deduction for qualified business income (QBI); and [2] for purposes of section 199A(b)(7), which, for certain specified agricultural and horticultural cooperative patrons, provides a reduction to the section 199A deduction based on W-2 wages."
Internal Revenue Service [IRS]

[Official Guidance]

Text of IRS Notice 2019-07: Section 199A Trade or Business Safe Harbor: Rental Real Estate (PDF)

10 pages. "This notice contains a proposed revenue procedure that provides for a safe harbor under which a rental real estate enterprise will be treated as a trade or business solely for purposes of section 199A of the Internal Revenue Code[.]"
Internal Revenue Service [IRS]

Executive Compensation
and Nonqualified Plans

[Guidance Overview]

Treasury and IRS Issue Interim Guidance on Executive Compensation Excise Tax Under Section 4960

"[Notice 2019-09] includes an extensive preamble that discusses the various alternatives that the Treasury Department and the IRS considered when developing their positions on certain issues. It is likely that this discussion was included to provide the agencies with a basis for applying certain positions in the Notice retroactively to the date of the interim guidance (which was December 31, 2018) when they propose and finalize regulations. This may allow the IRS to assert that some of its positions apply for all tax years for which section 4960 is effective."
Eversheds Sutherland

Compensatory Action Items to Consider this Proxy Season

"The most common reason for a negative recommendation from ISS is a perceived pay-for-performance disconnect within the compensation structure. Robust disclosure on this point can help ... [I]ssuers with non-grandfathered arrangements should consider simplifying compensation administration by eliminating certain procedure requirements that were required under Section 162(m).... Consider whether to revise the net withholding rate within the equity incentive plan from the supplemental rate of 22% to the highest marginal rate."
Hunton Andrews Kurth

Selected Discussions
on the BenefitsLink Message Boards

404 Deductibility Rule and Tax Exempt Sponsor?

Plan Sponsor of 403(b) is a tax exempt org. They want to make very large employer non-elective contributions. The question is not about the individual limits that apply to participants. The question is, does the Sectioin 404 deductibility rule apply to a plan sponsor who does not have tax deductions? The sponsor is a non-electing church. Would the answer be different than a 501(c)(3) org?
BenefitsLink Message Boards

Loan Repayments While on Maternity Leave

We have a participant who recently took a loan and is now going out on maternity leave. Is there any special regulations regarding repayments while she is out? If no repayments are made, does she default?
BenefitsLink Message Boards

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Press Releases

Mercer's Neil Lloyd Appointed EBRI Research Committee Chair
EBRI [Employee Benefit Research Institute]

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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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