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February 21, 2019 logo logo
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Retirement Plan Consultant
Alliant Insurance Services, Inc.
in New York NY

ERISA Associate
Steptoe & Johnson LLP
in Washington DC

Pension Plan Administrator
DeMars Pension Consulting Services, Inc.
in Overland Park KS

Retirement Plan Services Supervisor
Alerus Financial
in Arden Hills MN

Auditor, Sr.
Alerus Financial
in Arden Hills MN / Grand Forks ND

COBRA Account Administrator
Alerus Financial
in Minneapolis MN

Wealth Management Associate, Sr.
Alerus Financial
in Minneapolis MN

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[Guidance Overview]

Implementing the New Hardship Withdrawal Regs

"[W]ith respect to discretionary provisions: [1] Should the plan delete the six-month suspension provisions for hardship withdrawals issued before January 1, 2020? ... [2] Should the plan continue to require a participant to obtain all available plan loans before granting a hardship withdrawal? ... [3] Should the plan expand the portion of a participant's account from which hardship withdrawals can be made? ... [4] When should the changes to the list of safe harbor expenses be effective?"
Thompson Coburn

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Supreme Court Reaffirms States Cannot Discriminate Against Federal Retirees

"The Supreme Court ... issued a ruling with potentially far-reaching impacts for former federal employees, finding they should not face disparate tax treatment compared to their state counterparts.... West Virginia violated the law and the related intergovernmental tax immunity precedent, the court ruled ... in making the annuities of certain state law enforcement officers tax free but not granting the same benefit to [a U.S. Marshals Service] retiree." [Dawson v. Steager, No. 17-419 (U.S. Feb. 20, 2019)]
Government Executive

Supreme Court Lets Stand Ninth Circuit's Refusal to Compel Arbitration in USC ERISA Lawsuit

"The U.S. Supreme Court has denied the University of Southern California's petition to have the high court determine whether participants who filed a lawsuit challenging the management of the university's two [ERISA] retirement plans should be compelled to arbitrate their claims pursuant to an agreement signed with the university." [Munro v. Univ. of So. Cal., No. 17-55550 (9th Cir. July 24, 2018; cert. denied Feb. 19, 2019)]

Pension Funds' Lawsuit Against Credit Suisse Allowed to Proceed

"The complaint alleges that Credit Suisse misrepresented its trading and risk-limit controls and that they were increased to allow it to accumulate nearly $3 billion in distressed debt and U.S. collateralized loan obligations that later proved to be difficult to liquidate. A subsequent disclosure by Credit Suisse of a $633 million write-down related to the sale of those positions led to an 11% stock drop, the plaintiffs allege." [City of Birmingham Ret. and Relief System vs. Credit Suisse Group AG, No. 17-10014 (S.D.N.Y. Feb. 19, 2019)]
Pensions & Investments

The 199A Deduction Has Changed Retirement Planning

"[If] you don't need to lower your taxable income to qualify for 199A, it is not always clear that saving for retirement in a deductible plan is the best strategy.... [If] your taxable income does not preclude you from the 199A deduction, take the deduction and put the money after-tax into a solo 401(k) Roth account or a Roth IRA."

Evaluating Roth and Pretax Retirement Savings Options

"There are two ways to get Roth account exposure: a Roth IRA or through a retirement plan that has a designated Roth account. While Roth IRAs have income eligibility limits, those do not apply to contributions within a 401(k) plan Pretax contributions are generally preferable for people who expect their income tax rate to decrease in retirement. Having Roth accounts may make sense for tax diversification, flexibility and as a hedge against higher tax rates."
T. Rowe Price

IRA Owners Can Still Make 2018 IRA Contributions

"For most IRA owners, the deadline for making their 2018 IRA contributions is Monday, April 15, 2019. However, for IRA owners who live in Maine or Massachusetts, the deadline is Wednesday, April 17, 2019."
Morgan Lewis

Are Congressional Hearings a Harbinger of Pension Reform?

"Despite the frequent -- and sometimes bitter -- disagreements that seem to permeate lawmaking on Capitol Hill, there is widespread bipartisan support for pension reform. This was evident from the witness testimony and from the senators' and representatives' comments and questions during the hearings. While there remains disagreement about the depth of the retirement savings crisis and about the best remedies, both Democrats and Republicans substantially agree on many matters."


Beware of These Heavily-Marketed Products Touted by Recordkeepers

"[M]anaged accounts certainly have merits, but require significant participant effort can be expensive, and can be difficult to gauge whether the investment professional is adding value to the account.... annuities can be incredibly confusing as to the actual benefits provided.... An increasing number of recordkeepers are offering discounts on recordkeeper fees if you use their proprietary investment products, particularly stable value and target date funds."
Cammack Retirement Group

Benefits in General

[Guidance Overview]

The Cost of Non-Compliance: DOL Announces Increased Penalties for 2019

"[T]hese rates are for penalties assessed after January 23, 2019 with respect to violations committed after November 2, 2015, when the inflation adjustment was approved. The cost-of-living adjustment is based on the Consumer Price Index for all Urban Consumers, which resulted in roughly a 2.5% increase."
Winston & Strawn LLP

2018 Benefits Strategy & Benchmarking Survey: Technology Industry Addendum (PDF)

"Instead of cash bonuses, some reward employees with experiences like exotic vacations, as the experiences may be considered more valuable than bonuses in a high-compensation environment. Tech employers also offer long-term incentive plans, which are deferred, performance-related equity awards. Technology employers realize the need to regularly review compensation and benefits and adjust when necessary."

Selected Discussions
on the BenefitsLink Message Boards

Loan Repayment Failures - Relief from Reporting Loans as Deemed Distributions

The plan sponsor failed to deposit loan payments timely because it didn't understand the process at a new financial institution. The financial institution said they would refinance the loans if the client filed the loan failures under VCP. The VCP filing is 99% complete, but I have one question. Plan loan interest rate is Prime + 2%. When the original loans were issued, the loans were amortized with a 6.5% interest rate. Under refinance, the interest rate is 7.5%. In addition to covering the cost of unpaid accrued interest during the non-payment period, should the employer also be responsible for covering the difference in the dollar value of the loan interest had the loans been paid timely vs. the higher interest rate?
BenefitsLink Message Boards

Splitting a 401(k) Plan -- How to Handle Assets for Spun-Off Plan

Our client is considering splitting their existing 401k plan into two separate plans through a spin-off to avoid a Form 5500 audit requirement on the existing single plan. To effectuate a spin-off, does the plan assets for the spun-off plan have to be physically transferred to a separate custodial account or can the accounts remain where they are if the custodian is able to segregate the accounts among the two plans within the single contract? My inclination is no, that the plan assets have to be transferred to a new account under the new plan name and number.
BenefitsLink Message Boards

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Multiple Employer Plans and PEOs
The Wagner Law Group

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1298 Minnesota Avenue, Suite H
Winter Park, Florida 32789
(407) 644-4146

Lois Baker, J.D., President
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager

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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