Retirement Plans Newsletter

February 6, 2019

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Webcasts, Conferences

Recent Developments in 403(b) Plan Litigation
February 27, 2019 WEBCAST
Multnomah Group

Getting It Right - Know Your Fiduciary Responsibilities: Retirement and Health Plan Sponsors - Day 1
March 12, 2019 WEBCAST
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

Getting It Right - Know Your Fiduciary Responsibilities: Retirement and Health Plan Sponsors - Day 2
March 13, 2019 WEBCAST
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

Getting It Right - Know Your Fiduciary Responsibilities: Retirement and Health Plan Sponsors - Day 3
March 14, 2019 WEBCAST
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

PlanSource Eclipse
July 16, 2019 in UT
PlanSource

►See 172 Upcoming Webcasts and Conferences

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Discussions

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Editor's Pick How the QBI Deduction-Reduction Hurts Small Business Retirement Plans

"[W]hen an S corporation makes an employer contribution to an employer-sponsored retirement plan, that contribution, itself, reduces corporate profits.... [F]or some S corporation owners, a contribution to an employer-sponsored retirement plan will effectively result in a partial deduction, but still subject the entire contribution, plus all future earnings, to income tax upon distribution."
Nerd's Eye View

[Advert.]

PBI reinvents Death Audit category with launch of CertiDeath

Sponsored by Pension Benefit Information, Inc.

CertiDeath™ eliminates the work, complexity, and uncertainty now associated with identifying deaths, saving companies loads of time spent reviewing obituaries and money lost due to missed or misclassified deaths.


Second Circuit Breathes New Life Into Company Stock Litigation

"[T]he court held that the plaintiffs had sufficiently pled that no prudent fiduciary in the fiduciaries' position could have concluded that an early disclosure would do more harm than good to the Fund.... It is somewhat difficult to reconcile [this case] with the decisions in other post-Dudenhoeffer decisions, in which courts have consistently found that a prudent fiduciary may very reasonably fear an early disclosure would lead to a drop in stock price." [Jander v. Ret. Plans Comm. of IBM, No. 17-3518 (2d Cir. Dec. 10, 2018)]
Trucker Huss

A New England Patriot in the First Circuit's Court: Former Spouse Unsuccessful in Claim for Death Benefits

"The plan argued that Garcia-Tatupu had already received everything she was entitled to under the divorce and, in any event, that the state court's orders were not QDROs ... In other words, Garcia-Tatupu's interest in the pension benefits ended when her ex-husband made the decision to take a lump-sum early benefit payment and duly paid her the one-third share required by the MSA." [Garcia-Tatupu v. Bert Bell/Pete Rozelle NFL Player Ret. Plan, No. 17-2179 (1st Cir. Jan. 14, 2019)]
Bloomberg BNA

Evaluating Judicial Dismissals of 401(k)/403(b) Fiduciary Breach Actions

"In one recent decision, the court dismissed an ERISA action based the disallowance of the plaintiff's use of Vanguard for benchmarking purposes.... A common rationale given by the courts for dismissing ERISA actions is the number of investment options offered by a plan.... Several courts have recently dismissed ERISA actions on the grounds that the expense ratios of the funds involved were appropriate as a matter of law."
The Prudent Investment Fiduciary Rules

Nevada Proposes Fiduciary Regulations

"[T]he definition of 'fiduciary' is very broad and the related duties are stringent. The requirements go beyond the proposed SEC rules under Reg BI. However, there is a nod in that direction -- the Nevada proposal says the Securities Administrator can adopt by order any 'fiduciary duty related rule' approved by the SEC, so long as that rule doesn't 'materially diminish the fiduciary duty' set out in Nevada law and regulation."
Drinker Biddle

[Advert.]

2019 SPARK National Conference -- June 4-5, National Harbor, MD

Sponsored by SPARK

The retirement services industry's leading event for top marketing, sales, administration and record keeping professionals. Comprehensive agenda is designed to meet the needs of 401(k) Plan Providers, Financial Advisors and Record Keepers.


Empowering Employee Retirement Through Tech

"Use data to inform your educational approach.... Don't ignore demographics.... Offer the right programs to meet various participant needs.... Aggregate the resources in smart and usable way.... Simplify tasks when possible."
Voya

Average Funding Ratio for Public Pension Plans Increases in 2018

"Results of the 2018 NCPERS Public Retirement Systems Study showed that the average funding ratio for all plans that responded rose to 72.6% in 2018, from 71.4% in 2017. For pension plans that participated both years, the average funding ratio jumped to 72.2%.... [O]ne-year investment returns averaged 13.4% for all pension plans reporting in 2018, well above the 7.8% average return reported in 2017."
Pensions & Investments

[Opinion]

It's Time to Improve the 'Kitchen Sink' SPD

"SPD standards declined when the requirement to send SPDs to the [DOL] was eliminated. This coincided with the expansion of pre-approved plans. Pre-approved plans have lots of design choices, and vendors did not want to prepare different versions of their SPDs for plans with particular provisions, so they developed ... the 'kitchen sink' SPD that didn't spell out which particular provisions the plan sponsor had elected. Many of these are ineffective communications documents."
Cohen & Buckmann, P.C.

[Opinion]

Editor's Pick GAO Testimony: The Nation's Retirement System -- A Comprehensive Re-Evaluation Is Needed to Better Promote Future Retirement Security (PDF)

45 pages. "It has been nearly 40 years since a federal commission has conducted a comprehensive evaluation of the nation's approach to financing retirement. Without a more comprehensive re-evaluation of the challenges across all three pillars of the system, it may be difficult to identify effective, enduring solutions. Unless timely action is taken, many older Americans risk not having sufficient means for a secure and dignified retirement." [GAO-19-342T, Feb. 6, 2019]
U.S. Government Accountability Office [GAO]

Benefits in General

[Official Guidance]

Text of IRS Disaster Relief Notice AK-2019-01, for Victims of Earthquake in Alaska

"Victims of the earthquake that took place on Nov. 30, 2018 in Alaska may qualify for tax relief from the [IRS].... Individuals who reside or have a business in the Municipality of Anchorage, Kenai Peninsula Borough and Matanuska-Susitna Borough may qualify for tax relief.... [C]ertain deadlines falling on or after Nov. 30, 2018 and before April 30, 2019, are granted additional time to file through April 30, 2019."
Internal Revenue Service [IRS]

Prioritizing Where to Spend Growing Benefits Communications Budgets

"Once your strategy is in place, you've identified the gaps, and you've prioritized spending, you'll also need to budget accordingly for ... [1] Communication experts ... [2] Building and maintaining digital channels ... [3] Ongoing campaigns ... [4] Printing and postage ... [5] Images."
Segal Benz

Unpacking the Settlor-Fiduciary 'Two Hat' Principle (PDF)

"[E]mployers should take proactive steps to protect themselves from the consequences of unintended fiduciary acts.... [1] Distinguishing, and memorializing the distinction between, settlor and plan administrator/fiduciary duties: in service provider agreements; in plan documents ... [and] in plan governance ... [2] [Separating] settlor and fiduciary administrative communications with participants and third parties. [3] Ensuring that settlor communications with counsel are separate so as to protect the attorney-client privilege between settlor and counsel."
Boutwell Fay LLP

Executive Compensation
and Nonqualified Plans

[Guidance Overview]

IRS Notice Offers Good News for State Colleges and Universities (at Least for Now)

"Of particular interest to state colleges and universities is the answer to Q-5 of [Notice 2019-09]. It provides that the Section 4960 excise tax does not apply to a governmental entity (including a state college or university) that is not tax-exempt under Section 501(a) and does not exclude income under Section 115(l).... [This] means the institution could compensate its athletic coaches (or other covered employees) in excess of the $1 million threshold and not be subject to the 21 percent excise tax."
Ogletree Deakins

[Guidance Overview]

New Guidance for Tax-Exempt Organizations Calculating Excise Tax on Pay of Highly Compensated Employees

"Parachute payments can be subject to excise tax even if the covered employee's remuneration is less than $1 million, provided only that the employee also qualifies as 'highly compensated' for purposes of the employer's retirement plans. For 2018, that category included employees who received at least $120,000 of compensation in 2017."
McGuireWoods

Selected Discussions
on the BenefitsLink Message Boards

Ownership Attribution to Son-in-Law

My client has three owners. One, who owns more than 5%, has a son-in-law working there. Is the son-in-law attributed to own the father-in-law's ownership? The daughter is not an employee.
BenefitsLink Message Boards

402(g) Excess Because Employee Also Participates in Another Employer's 401(k) Plan

Participant has informed my client that he is over the 2018 402(g) limit because he contributed the maximum deferral amount into a plan at another employer. Participant entered my client's plan as of 10/01/2018 and deferred a small amount. The participant has requested this small amount of contributions be refunded as excess. As far as the 2018 ADP testing in my client's plan, do I need to remove the deferrals for this person from the testing? I know I would have to remove them if the overage was all in my client's plan, but am unsure of the process when there was no excess, only the request of the participant.
BenefitsLink Message Boards

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Press Releases

Most Popular Items in the Previous Issue

Inspector General's Report: PBGC's Data Protection at Contractor-Operated Facilities (PDF)
Office of Inspector General, Pension Benefit Guaranty Corporation [PBGC]

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Lois Baker, J.D., President  loisbaker@benefitslink.com
David Rhett Baker, J.D., Editor and Publisher  davebaker@benefitslink.com
Holly Horton, Business Manager  hollyhorton@benefitslink.com

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