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Relationship Manager - Retirement Plan Services
Trust Point Inc.
in MN

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Unified Trust Company
in KY

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Liden, Nestle, Soled & Associates
in CA

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[Official Guidance]

Text of PBGC Proposed Regs: Methods for Computing Withdrawal Liability, Multiemployer Pension Reform Act of 2014

68 pages. "[PBGC] proposes to amend its regulations on Allocating Unfunded Vested Benefits to Withdrawing Employers and Notice, Collection, and Redetermination of Withdrawal Liability. The proposed amendments would implement statutory provisions affecting the determination of a withdrawing employer's liability under a multiemployer plan and annual withdrawal liability payment amount when the plan has had benefit reductions, benefit suspensions, surcharges, or contribution increases that must be disregarded. The proposed amendments would also provide simplified withdrawal liability calculation methods."
Pension Benefit Guaranty Corporation [PBGC]

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[Official Guidance]

Treasury Department Approval of Mid-Jersey Trucking Industry and Local 701 Pension Fund Application for Reduction of Benefits (PDF)

"Treasury has determined that the Plan is eligible to reduce benefits under MPRA and that your application satisfies the requirements of subparagraphs (C), (D), (E), and (F) of section 432(e)(9) of the Internal Revenue Code, as added by MPRA. This notification is not a final authorization to implement the benefit reduction described in your application. Pursuant to Code section 432(e)(9)(H), no reduction of benefits can take effect before a vote of the participants and beneficiaries of the Plan with respect to the proposed reduction."
U.S. Department of the Treasury

[Official Guidance]

Treasury Department Approval of Toledo Roofers Local No. 134 Pension Fund Application for Reduction of Benefits (PDF)

"Treasury has determined that the Plan is eligible to reduce benefits under MPRA and that your application satisfies the requirements of subparagraphs (C), (D), (E), and (F) of section 432(e)(9) of the Internal Revenue Code, as added by MPRA. This notification is not a final authorization to implement the benefit reduction described in your application. Pursuant to Code section 432(e)(9)(H), no reduction of benefits can take effect before a vote of the participants and beneficiaries of the Plan with respect to the proposed reduction."
U.S. Department of the Treasury

[Guidance Overview]

The 403(b) Hardship Distribution That's Not a Hardship Distribution Under the Proposed Regs

"[A] 403(b) QNEC and QMAC distribution ... is made under Reg 1.403(b)-6(b), under which amounts NOT attributable to elective deferrals can be distributed.... This [has] at least four operational effects: [1] [T]hese amounts CAN be rolled over, unlike a 403(b)(11) distribution of elective deferrals ... [2] [T]he plan document language which will need to be amended is NOT the hardship section. Rather, it is the in-service withdrawal section of the plan document.... [3] [T]he 'financial need,' 'deemed hardship' and other rules required of hardship distributions by statute or regulation will not apply as a matter of law, but only as a matter of chosen plan operational rules ... [4] [T]he 402(f) notice needs to properly identify the tax attributes of this type of distribution, that is, that it can be rolled over."
Business of Benefits

Eighth Circuit Appellate Panel Says No Bankruptcy Exemption for Certain Retirement Plan Assets Acquired in Divorce

"Normally, individuals who file for bankruptcy protection may keep all of their qualified retirement plan assets -- and up to around $1.3 million in IRA assets. But the 8th Circuit has ruled that retirement assets received in a divorce -- including those obtained through a qualified domestic relations order (QDRO) -- may not always enjoy these special protections." [In re Lerbakken, No. 18-6018 (B.A.P. 8th Cir. Oct. 16, 2018)]


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Judge Rejects Anthem Parent's Petition to Dismiss Fiduciary Breach Claims

"Plaintiffs filed claims against the Anthem 401(k) fiduciaries alleging, among other things, that the plan managers failed to explore capital preservations alternatives to a money market fund and paid 'unreasonable' investment management fees and administrative fees to record keeper Vanguard Group. The defendants' primary argument was that most of the claims were made beyond a statute of limitations mandated by [ERISA]." [Bell vs. Pension Committee of ATH Holding Co. LLC, No. 15-2062 (S.D. Ind. Jan. 30, 2019)]
Pensions & Investments

Senators Collins, Warner Introduce Legislation to Boost Retirement Saving Plans

"The SIMPLE Plan Modernization Act would: [1] Raise the contribution limit for SIMPLE plans from $12,500 to $16,000 ... for the smallest businesses (1 to 25 employees) ... [2] Give businesses with 26 to 100 employees the option of the higher contribution limits, and, in order to continue to encourage them to transition to 401(k)s ... increase their SIMPLE plan mandatory employer contribution requirements ... if they elect the higher limits.... [3] Make the limit increases unavailable if the employer has had another defined contribution plan within the past three years (to encourage businesses that already have qualified plans to retain them)."
United States Senate

Background Data Relating to Retirement Income

19 pages. "This document ... provides background data relating to retirement income.... [I]ndividuals may derive the resources to support their living needs from one or more of three sources: [1] income from pension benefits accumulated during their working years under employer pension plans or individual retirement arrangements; [2] benefits received under Social Security ... and [3] other assets. The tables that follow provide data related to the extent to which current retirees use these sources and data indicative of the extent to which the next generation of retirees may draw upon these same sources."
Joint Committee on Taxation [JCT], U.S. Congress

Ways to Increase Retirement Plan Participation Among Millennials

"[T]he majority of Millennials haven't saved a penny for retirement and likely do not have a pension plan ... The trick to getting your workforce's youngest members to begin contributing to a retirement plan in earnest lies in just a few key principles.... [1] Offer a match ... [2] Illustrate the power of compound interest ... [3] Make eligibility and portability easy ... [4] Highlight tax advantages of saving ... [5] Lower fees, increase returns."

How Math Anxiety Ruins Retirement -- and What to Do About It

"The inability to visualize tomorrow's financial needs today may explain why we see so many statistics bemoaning the lack of, specifically, retirement readiness and, more generally, financial wellness.... The problem of math anxiety isn't solved by changing only one variable. Many factors go into properly preparing yourself in order to live a comfortable retirement. Math anxiety only makes it more difficult to juggle all these factors simultaneously."
Fiduciary News

Inspector General's Report: PBGC's Data Protection at Contractor-Operated Facilities (PDF)

32 pages. "We found controls relating to data protection at the contractor-operated facilities are, for the most part, suitably designed.... Controls relating to monitoring of the personnel security process and oversight by the Contracting Officer's Representatives (CORs) are not consistently executed in a manner to ensure protection of sensitive data. Vulnerabilities in the employee separation process ... require additional controls."
Office of Inspector General, Pension Benefit Guaranty Corporation [PBGC]

More Than Two-Thirds of Retirees Say They Live as Well or Better in Retirement Than During Their Working Years

"Nearly 70 percent of retirees feel somewhat or very concerned about both their health and the cost of health care heading into retirement, followed by 65 percent of retirees reporting concerns about their assets lasting.... Seventy-two percent say long-term care services, like a nursing home, is the top spending concern in retirement, followed by health insurance premiums (64 percent) and out-of-pocket health care expenses (64 percent).... Seventy-seven percent of retirees say that they have enough money to pay for health care and this belief increases with the number of years spent in retirement[.]"
T. Rowe Price


House Multiemployer Bill Emulates Single-Employer DB Risk Strategies -- With a Twist

"[T]he Rehabilitation for Multiemployer Pensions Act (RMPA) recently introduced in the House by Representative Richard Neal (D-MA) ... proposes to address multiemployer DB risk using two strategies single-employer plans have been increasingly implemented over the past decade: [1] Purchasing annuities to transfer risk permanently to an insurance company. [2] Hedging interest rate risk using liability driven investing (LDI) strategies featuring high quality, duration matched bonds.... Putting the uncertainty of the PRA loan repayments aside, the bill protects retiree pensions better than anything else being proposed."
The Principal Blog

Benefits in General

[Official Guidance]

Text of IRS Final Regs: Qualified Business Income Deduction

247 pages. "This document contains final regulations concerning the deduction for qualified business income under section 199A of the Internal Revenue Code.... This document also requests additional comments on certain aspects of the deduction." [Editor's note: These final regs were originally released in draft form on January 20; IRS has also provided a redlined version which identifies changes from the draft.]
Internal Revenue Service [IRS]

[Official Guidance]

Text of IRS Proposed Regs: Qualified Business Income Deduction

37 pages. "These proposed regulations ... contain amendments to two substantive sections of the August Proposed Regulations, Sections 1.199A-3 and 1.199A-6, each of which provides rules relevant to the calculation of the section 199A deduction. These additional proposed rules respond to comments received on the August Proposed Regulations as well as address certain issues identified after additional study."
Internal Revenue Service [IRS]

Public Employees Living Longer, Deepening State Pension Crisis

"In the private sector, defined-benefit pensions must follow mortality tables issued by the federal government. No such strictures bind public pensions.... Longer lives for public employees will mean higher costs, and not just for pension plans. Many state and local governments promise to pay for the health care of their retired workers, but few have enough money set aside to do so."
City Journal

Selected Discussions
on the BenefitsLink Message Boards

Miniscule Error Causes Top Heavy Problem

A very small SH 401(k) plan has five eligible participants. Two are deferring, one HCE and one NHCE. Two other HCEs are not deferring, and one (now deceased) NHCE did not defer. In 2018 the plan sponsor made the SH match every pay period (by choice -- not required). The NHCE who was deferring received a few dollars too much match as of the end of the year. The extra amount equals 0.07% of the NHCE's annual compensation. So a miniscule profit sharing contribution made to one NHCE is causing the plan to fail to meet the exemption to the top heavy rules. What are the options for addressing this?
BenefitsLink Message Boards

Top Heavy Exemption Doesn't Apply?

Plan has immediate eligibility for salary deferrals, but has a 1 year of service for safe harbor non-elective. No other contributions in plan. Assets are greater than 60% for Key Employees. I know plan is subject to ADP testing for the otherwise excludable group. Does the deemed-not-top-heavy rule apply to those with less than 1 year of service and who are not eligible for the SH NEC? (Or instead are they required to receive a top-heavy minimum?)
BenefitsLink Message Boards

Compensation for S Corp Owner-Employee: Include 1099-MISC Payments?

The S corp owner has received a W-2 compensation payment, additionally he has received 1099-MISC from the same corporation. Compensation in the plan document is defined as W-2 wages or earned income for self-employed individuals. Can we use the 1099-MISC line 3 "other income" as income in addition to the W-2 wages?
BenefitsLink Message Boards

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EBSA Enforcement for 2019
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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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