Retirement Plans Newsletter

February 18, 2019

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Jobs

Plan Termination Account Manager
Nova 401(k) Associates
in Houston TX / Dallas TX / Austin TX / Scottsdale AZ / Telecommute

Account Manager, Employee Benefits
LoVasco
in Detroit MI

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Webcasts, Conferences

Sharing Pension Costs & Labor Negotiations
February 25, 2019 WEBCAST
Liebert Cassidy Whitmore

Voluntary Fiduciary Correction Program
February 27, 2019 WEBCAST
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

Investments Institute
April 8, 2019 in AZ
International Foundation of Employee Benefit Plans [IFEBP]

SPARK National Conference
June 4, 2019 in VA
SPARK Institute

►See 160 Upcoming Webcasts and Conferences

►See 1485 Recorded Webcasts


Discussions

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Defined Contribution Plan Compliance Calendar, 2019 (PDF)

"The dates on this calendar pertain to a plan with a calendar plan year."
Watkins Ross

What Is a DOL Adviser Investigation Like?

"The number of [DOL] investigations of financial advisers has steadily increased over the years; here is a primer on the DOL's sources of authority, and what to expect when examiners come knocking."
planadviser

Employers Are Also Flunking Retirement Planning

"Only 1 in 10 large employers offers a formal phased-retirement program that lets workers cut back their hours or responsibilities before they quit work entirely ... Most employers realize retirement is a looming issue, with 83 percent of the large employers ... polled saying significant numbers of their workers are approaching retirement age. In fact, 54 percent of employers believe the loss of talent from retiring workers will be more significant than other labor market risks in the next five years[.]"
InsuranceNewsNet.com

How Do Lifetime Social Security Benefits and Taxes Differ by Earnings?

"This brief uses DYNASIM, the Urban Institute's dynamic microsimulation model, to project lifetime benefits and taxes for people born between 1940 and 1999. The results show that most nondisabled beneficiaries who survive to age 65 are scheduled to receive more in benefits than they contribute in taxes. The benefit-to-tax ratio is higher for those with lower lifetime incomes and is projected to remain stable over time for each quintile of lifetime income."
Urban Institute

Retirement Implications of a Low Wage Growth, Low Real Interest Rate Economy

"Low returns increase optimal Social Security claiming ages and the marginal benefit of working longer, while low wage growth decreases the marginal benefit of working longer. Low economy-wide wage growth has a much larger welfare effect than low individual wage growth due to wage indexation of the initial benefit and the progressivity of the Social Security benefit formula."
National Bureau of Economic Research [NBER]; purchase required for full document

[Opinion]

401(k) Audits Are Not a Commodity

"[T]he financial statements and the auditor's opinion are extremely important, but the heart of the audit lies in audit procedures performed that link ALL the intricate details of how the Plan operates between the third-party administrator and/or recordkeeper, the custodian, financial advisor, and the plan sponsor. Auditors see ALL the moving pieces, rather than just the one-sided view of the giant puzzle the rest of the parties involved in the plan observe. This is where the true gold lies and how all parties involved can reap some hearty gains."
Pooler CPA Group, LLC

[Opinion]

Pritzker's Plan for Illinois Pensions: 'Clever' Tricks

"The big problem with the 'pay more later' idea -- which is 'we can't pay much more right now, but because of growth/inflation/whatever, we'll be able to pay more later' in longer form -- is that it doesn't necessarily become easier to pay more in the future. Ask Detroit and Puerto Rico, which saw substantial population drops in small periods of time, in a vicious cycle that lead to more-and-more unaffordable debt payments."
STUMP

[Opinion]

Retirement Advice from a Prussian Military Commander

"Plan updates often require more than having a planner calculate a new safe spending amount annually or rebalance your portfolio. The entire plan needs to be reviewed annually or anytime there is a significant change in your goals, resources or expectations."
The Retirement Cafe

Benefits in General

Public School Teachers Strike for Higher Pay Amid Growing Retirement, Benefit Costs

"While average inflation-adjusted teacher salaries have been relatively stagnant since 1990, benefits costs have risen from 16.8 percent of expenditures in 1990 to 23 percent of today's much larger expenditure base.... Almost every state increased teachers' retirement benefits in the booming 1990s. But the additional promises were not accompanied by responsible funding plans. Overfunded at the turn of the millennium, by 2003, teacher pension plans were collectively short by $235 billion. By 2009, pension debt had more than doubled, to $584 billion."
USA TODAY

Executive Compensation
and Nonqualified Plans

Editor's Pick Giving Nonqualified Deferred Compensation Plans Their Due Diligence in M&As (PDF)

"Section 409A compliance present[s] perhaps the most challenging question for sponsors of nonqualified deferred compensation plans (NDCPs) during a merger and acquisition (M&A) due diligence test.... Two [additional] questions are 'fit' related: [1] will the NDCPs still fit within the top-hat exemption post-merger; and [2] have the NDCPs' [FICA] taxes been properly applied to the benefits? This article prepares NDCP sponsors to answer these two important topics and alert them to any trick questions they may pose."
Milliman, via Benefits Law Journal

Selected Discussions
on the BenefitsLink Message Boards

1,600 Hour Minimum Service Requirement?

Is there any permissible situation where a 401(k) can exclude employees who work less than 1,600 hours in a year? I am aware of the IRS guidance on excluding part-time employees who work less than 1,000 hours, but I'm so flabbergasted to see a 1,600 hour participation requirement in a plan that was restated in 2018 that I feel I must be missing something.
BenefitsLink Message Boards

Suspending Nonelective Safe Harbor Mid-Year

Am I reading the regulations correctly? A 401(k) plan can eliminate its 3% nonelective Safe Harbor contribution mid-year without showing that the company is operating at a loss, if the notice that was distributed in December of the prior year included language that the Safe Harbor may be suspended?
BenefitsLink Message Boards

True-Ups for the Self-Employed

Partnership has a 401(k) plan with match, the match is funded per payroll, but the two partners do not have paychecks -- they only have a few "draws" during the year. Some have no draw. The document allows the plan administrator to decide whether or not to apply a true-up for the plan year. The partners' NESE will be determined at year-end and will include their full compensation for the year for determining the match. Does that then require the plan to provide a true-up for the W-2 employees? The plan document does not appear to require that.
BenefitsLink Message Boards

Formal Notice of Forfeiture Buy-Back Opportunity?

Large plan (over 300 lives) has many rehires. Just wondering what's the general practice by other administrators -- do you provide formal notice of the forfeiture buy-back option to the affected participants?
BenefitsLink Message Boards

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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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