Retirement Plans Newsletter

February 7, 2019

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Jobs

Retirement Plan Administrator
Noble-Davis Consulting, Inc.
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Webcasts, Conferences

Attribution: It Counts More than You May Think
February 11, 2019 WEBCAST
FIS Relius Education

What's Up In Washington: Employee Benefits Legal and Regulatory Update
March 14, 2019 in OH
Worldwide Employee Benefits Network [WEB] - Greater Cincinnati Chapter

The DOL and more - From the DOL's Lips to our Ears
March 18, 2019 in GA
Pension Education Council of Atlanta [PECA]

Annual Employee Benefits Seminar
May 2, 2019 in DC
Groom Law Group

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Discussions

New Topics on the BenefitsLink Message Boards

New Comments and Topics

All Topics, Grouped by Forum


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[Guidance Overview]

Editor's Pick 401(k) Plan Fix-It Guide for Participant Loans That Do Not Comply with the Plan Document or Section 72(p)

Updated Feb. 6, 2019. "Plan sponsors should ensure that their plan document allows loans before allowing participants to borrow money from the plan. Some plan documents include a complete description of loan rules. Others make only a statement that the plan allows participant loans, subject to a separate written loan program. A participant loan must meet several rules under IRC Section 72(p) to prevent the law from treating it as a taxable distribution."
Internal Revenue Service [IRS]

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401(k) Providers Are Participants' Go-To for Help (PDF)

"For many employees, the 401(k) recordkeeper is the employee's preferred source for help and advice -- even for financial decisions not related to retirement. Most participants want help, and their appetite for it is growing. While different generations evaluate and approach advice differently, all generations want it, and all turn first to their 401(k) plan's recordkeeper." [Article is summarized in an infographic.]
T. Rowe Price

Safe Harbors Can Help Penetrate the ERISA Fog

"[A] Safe Harbor is a provision of the retirement plan law that can ... provide fiduciary protection to plan sponsors and at the same time make their retirement plans more efficient and effective. Here is a brief description of some of them."
The Retirement Plan Blog

Assessing Likely Impacts of IRS Hardship Withdrawal Rule Changes

"New rules established by Congress and the IRS simplify the process for participants to request a hardship withdrawal of DC plan assets; some experts say this could increase 'leakage,' while others anticipate more positive effects, such as lower debt among cash-strapped participants."
planadviser

Financial Security in Retirement: Innovations and Best Practices to Promote Savings

Video of Feb. 6, 2019, hearing, along with statements from Committee Chair Susan M. Collins (R-ME) and Ranking Member Bob Casey (D-PA), and written testimony from witnesses: [1] The Hon. Gene L. Dodaro, U.S. Comptroller General; [2] John Scott, PEW Charitable Trusts; [3] Denis St. Peter, CES, Inc.; [4] Linda K. Stone, Women's Institute for a Secure Retirement.
Special Committee on Aging, U.S. Senate

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Improving Retirement Security for America's Workers

Feb. 6, 2019, hearing. Statements from Chairman Richard Neal (D-MA) and Ranking Member Kevin Brady (R-TX), along with written testimony of witnesses: [1] Diane Oakley, National Institute on Retirement Security; [2] Nancy J. Altman, Social Security Works; [3] Cynthia McDaniel, Missouri-Kansas City Committee to Protect Pensions; [4] Roger W. Crandall, MassMutual; [5] Luke Huffstutter, Annastasia Salon; [6] Robin Diamonte, United Technologies Corporation; and [7] Andrew G. Biggs, American Enterprise Institute.
Ways and Means Committee, U.S. House of Representatives

Multiemployer Solvency Crisis: An Analysis of Proposed Adjustments to the PBGC's Benefit Guarantee

"[I]ncreasing the PBGC's benefit guarantee to $70 per year of service leads to a $44 billion increase in the projected present value of PBGC assistance payments. Freezing the plan five years before projected insolvency and cutting benefits to their guaranteed levels under current law leads to a $33 billion reduction in projected PBGC assistance payments. If implemented together, [these two provisions] lead to a $34 billion increase in projected PBGC assistance payments."
The Pension Analytics Group

Achieving Retirement Income Equivalency Between Final-Average-Pay Defined Benefit Plan Accruals and Automatic Enrollment 401(k) Plans in the Private Sector

"Assuming historical rates of return as well as annuity purchase prices reflecting average bond rates over the period from 1986 to 2013, the analysis shows that: [1] For males, defined benefit 'break-even' rates ... are rarely less than 1.5 percent of final pay: in only 2 of the 16 combinations of wage quartiles and years of plan eligibility for males are defined benefit 'break-even' rates less than 1.5 percent of final pay per years of service. In the case of females, only 5 of the 16 combinations have 'break-even' rates under 1.5 percent."
Employee Benefit Research Institute [EBRI]

Expiring Smoothing Provisions May Require Cash Calls to Fund Pensions Beginning in 2021

"Absent another law to further extend the pension smoothing provisions, we expect plan funding targets to increase at greater speed than the levels experienced in recent years beginning in the 2021 plan year. This projected increase in funding target liability, absent an offsetting increase in plan assets, is likely to deteriorate a plan's funded status.... Even plans that have experienced funding holidays for the last several years could see a cash contribution required in the 2021 plan year."
Milliman Retirement Town Hall

Editor's Pick Social Security: Revisiting Benefits for Spouses and Survivors

35 pages. "This report presents the current-law structure of auxiliary benefits for spouses, divorced spouses, and surviving spouses. It makes note of adequacy and equity concerns of current-law spousal and widow(er)'s benefits, particularly with respect to female beneficiaries, and discusses the role of demographics, the labor market, and current-law provisions on adequacy and equity. The report concludes with a discussion of proposed changes to spousal and widow(er) benefits to address these concerns." [Report R41479, updated Feb. 6, 2019]
Congressional Research Service [CRS]

[Opinion]

403(b) Results Aren't Adding Up

"The secret sauce of a truly great 403(b) plan is a low fixed costs pricing structure which results in greater compounding of wealth than the products in many 403(b) plans that feature high asset-based costs. It's critical for school districts to understand how much high -- and ongoing -- asset-based costs can erode savings in a 403(b) plan over an educator's career."
W. Scott Simon, in Morningstar Advisor

[Opinion]

Why Debt is the Biggest Barrier to Retirement Savings: An Insider's Perspective

"[If] you are a retirement plan sponsor, there are likely many people ... in your plan who cannot save due to the stranglehold of debt that has taken over their lives. To successfully engage them in your retirement plan and other employee benefits, you need to attack the root of the problem -- by offering debt management assistance, ... education, and other financial wellness initiatives."
Cammack Retirement Group

Benefits in General

ERISA and Awards of Attorney Fees: What Does 'Some Degree of Success on the Merits' Really Mean?

"[W]hat happens when the Court remands the claim for further consideration by the administrator, and on remand the claim is still denied? Is the Claimant still entitled to attorney fees, even though the remand failed to change the outcome of the claim denial? Yes." [Host v. First Unum Life Ins. Co., No. 13-11578 (D. Mass. Jan. 28, 2019)]
Lane Powell PC

Developing an Effective Strategy for Employee Retention

"[W]hen budget constraints exist, [a retention strategy] should be designed with key employees and positions in mind.... Ensure that your managers are quality managers.... Create a pay for performance culture.... Verify that your total rewards package is competitive.... Foster employee engagement.... Communicate to employees (repeatedly) the organization's value proposition."
Findley

Executive Compensation
and Nonqualified Plans

Review Equity Award Forms for Massachusetts Employees

"[U]nder the new [Massachusetts] rules: [1] Employers must pay or provide for 'garden leave' or 'other mutually-agreed upon consideration' if a post-employment noncompete covenant is included; [2] The duration, geographic reach and scope of the noncompete must fit within specified parameters; and [3] A post-employment noncompete restriction is enforceable only in limited circumstances[.]."
Skadden

Selected Discussions
on the BenefitsLink Message Boards

Designing a More Effective Lump Sum and/or Early Retirement Window -- Actuarial Equivalence Issue

Client is interested in a lump sum window. They did one a couple of years ago with limited success, but want to consider "sweetening the pot" to improve the take-up rate. Is there a way to enhance the lump sum value without also increasing the annuity benefit? My thought is no. Can I use different overall assumptions and/or calculation methodology just for the window period -- because it's not considered part of the accrued benefit?
BenefitsLink Message Boards

Definition of Compensation for ADP Testing: Changeable from Year to Year?

A plan excludes bonuses in the definition of compensation. If the plan can pass 414(s) testing, I know I can include the bonuses to calculate the ADP's. My question is, can this change from plan year to plan year (i.e. one year include bonuses in ADP testing, the next year exclude bonuses in ADP testing)?
BenefitsLink Message Boards

'Beneficial Interests' When Determining Controlled Groups

I've never heard of beneficial interests before, but I am now learning that the shares of a surgical center owned by a hospital are held for the "beneficial interest" of the surgeons who perform their surgeries there. Now, it's an affiliated service group either way (I'm omitting details, take my word for it!), but I'm curious as to how the controlled group rules are impacted by beneficial ownership.
BenefitsLink Message Boards

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Press Releases

PSCA Launches First Annual HSA Benchmarking Survey
PSCA [Plan Sponsor Council of America]

TRA Hires a Texas Regional Sales Consultant
The Retirement Advantage [TRA]

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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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