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DB / DC Administrator
Primark Benefits
in Burlingame CA / Telecommute

Sales - 401(k) / DB Administration
Farmer & Betts
in FL / GA / MO / NC

Defined Contributions Administrator
Primark Benefits
in Burlingame CA / Telecommute

Quality, Compliance, & Projects Analyst
DC Retirement Board
in Washington DC

NQ Client Services Manager
Newport Group
in Lake Mary FL / Dallas TX

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[Official Guidance]

Text of IRS FAQs for Employers Adopting Pre-Approved Retirement Plans

"I have an individually designed plan and would like to adopt a pre-approved plan. How do I make the switch? ... Can an adopting employer request a separate determination letter on Form 5307? ... Can an adopting employer request a determination letter on Form 5300? ... What if a Master & Prototype plan adopting employer makes significant changes to the pre-approved basic plan document or adoption agreement? ... I am an adopter of a volume submitter plan who made changes to my pre-approved document. How do I let the IRS know what changes were made? ... If I apply for a determination letter on my pre-approved plan, what happens if I have not timely adopted interim amendments?"
Internal Revenue Service [IRS]


2019 SPARK National Conference -- June 4-5, Falls Church, VA

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.

[Official Guidance]

Text of EBSA Prohibited Transaction Exemption for UBS Qualified Professional Asset Managers (QPAMs)

65 pages. "This exemption will be in effect for one year from the date of the judgment in the French First Instance Court against UBS and/or UBS France.... This exemption also aims to ensure that Covered Plans can terminate relationships in an orderly and cost effective fashion in the event the fiduciary of a Covered Plan determines it is prudent to terminate the relationship with a UBS QPAM.... The Department cautions that the relief in this exemption will terminate immediately if an entity within the UBS corporate structure is convicted of a crime described in Section I(g) of PTE 84-14 (other than the Convictions and the 2019 French Judgment Against UBS/UBS France) during the Exemption Period."
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

[Guidance Overview]

Check Your Plan's Definition of 'Compensation' in Light of Tax Reform

"The TCJA makes all moving expenses 'nondeductible,' which means that all moving expenses should be included in compensation for plans that use the default Section 415 definition for testing purposes. Or does it? The moving expense deduction has been suspended, not eliminated, so it's not clear whether this change affects Section 415 compensation."
Morgan Lewis

VP of HR Sued by Former Senior Director of Global Benefits Over 401(k) Operational Error

"[T]he troubling takeaway from this case is that Conagra's simple failure to follow the written terms of the plan [may be] sufficient for a court to find that it violated its fiduciary duty. The other concern is that operational errors relating to the definition of compensation are among the IRS 'top ten' failures corrected in the [VCP.]" [Karlson v. Conagra Brands, No. 18-8328 (N.D. Ill., complaint filed Dec. 19, 2018)]
E is for ERISA

The First Circuit's Putnam Decision: Where Does ERISA 401(k)/403(b) Litigation Go Now?

"The First Circuit's decision was ... well-reasoned and well-written. While the decision itself was important, perhaps the most memorable aspect of the decision was the First Circuit's admonition to 401(k) and, by implication, 403(b) ERISA plans and plan sponsors ... The First Circuit's statement raises a number of questions for ERISA 401(k)/403(b) excessive fees/breach of fiduciary duty litigation going forward." [Brotherston v. Putnam Investments, LLC, No. 17-1711 (1st Cir. Oct. 15, 2018)]
The Prudent Investment Fiduciary Rules


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New Lawsuits Over Actuarial Assumptions Could Signal Next Wave of ERISA Litigation

"The plaintiffs in all four cases allege that the actuarial assumptions being used are 'unreasonable' and as a result, certain pension recipients have been underpaid.... To resolve these claims, the courts may need to address whether actuarial assumptions must be reasonable at all times. Currently, most lawyers and actuaries believe actuarial assumptions need to be reasonable when the pension benefit is initially accrued."
Faegre Baker Daniels

DC Plan Participants' Activities During First Three Quarters of 2018 (PDF)

14 pages. "In the first three quarters of 2018, 2.9 percent of DC plan participants took withdrawals, compared with 2.8 percent in the first three quarters of 2017.... Only 2.2 percent of DC plan participants stopped contributing in the first three quarters of 2018, compared with 2.4 percent in the first three quarters of 2017.... At the end of September 2018, 16.4 percent of DC plan participants had loans outstanding, compared with 16.7 percent at year-end 2017."
Investment Company Institute [ICI]

Estimating the Effects of the Required Minimum Distribution Rules on Withdrawals from IRAs

23 pages. "In each year, approximately 20 percent of 60-year-old IRA holders took distributions. For each year this percentage increased linearly until age 70 ... There was a sharp increase at age 70-1/2 ... In 2008 and 2010 -- years in which required minimum distribution rules were in place -- roughly 95 percent of those age 70-1/2 to 85 took distributions. This substantial increase relative to younger ages is evidence of the effect of these rules." [JCX-5-2019, Feb. 22, 2019]
Joint Committee on Taxation [JCT], U.S. Congress


Corporate Giveaways and the Funding of Public Pensions

"Public pensions are proven economic engines, generating $1.2 trillion in economic output in 2016 and supporting 7.5 million jobs.... In Kentucky, [a] state with a long history of underfunding public pension plans, the state actually gives away more each year through tax expenditures than it collects in tax revenue. [The] annual cost of funding pensions in Kentucky is only two-thirds of the cost of those corporate giveaways."
National Public Pension Coalition


Pity the Poor Congresspeople -- Someone Is Trying to Take Away Their Pensions!

"There's a bill out there to get rid of U.S. Congressional pensions.... [T]he point [may be] to make Congress like the private sector ... but they are not like union employees or some such. It makes absolutely no sense to give something that gets only more valuable the longer they sit around."

Benefits in General

Sixth Circuit Finds Insurance Agents Properly Classified as Independent Contractors, Dealing Fatal Blow to ERISA Class Action

"[A] divided Sixth Circuit reversed a district court's finding that the agents were 'employees' in an ERISA class action suit brought on behalf of several thousand current and former insurance agents, instead finding that a proper weighing of the Supreme Court's Darden factors established that the insurance giant properly classified them as independent contractors. In particular, in the 'legal context' of ERISA eligibility, 'control and supervision is less important' than the financial structure of the parties' relationship." [Jammal v. American Family Ins. Co., No. 17-4125 (6th Cir. Jan. 29, 2019]
Wolters Kluwer; free registration required

Executive Compensation
and Nonqualified Plans

[Guidance Overview]

Editor's Pick Unexpected Effect of Section 4960 Excise Tax (PDF)

"New Code Section 4960 imposes a 21% tax on excess compensation (over $1,000,000) paid to the current and former top-5 paid employees of tax-exempt organizations.... Under initial IRS guidance, however, the additional tax could ensnare corporations (public and private) and plan sponsors."
Ivins, Phillips & Barker

Selected Discussions
on the BenefitsLink Message Boards

Coverage Problem with 401(k) Plan Sponsored by Only One Member of a Controlled Group

We have a 401(k) plan whose sponsor, Company A, is part of a controlled group. Company A is the only one of the controlled group that sponsors a plan. The plan has immediate entry for 401(k). The plan is failing 410(b) coverage by the ratio test. I don't believe the average benefits test is available, because coverage uses the fail-safe provision. What's my remedy? Do I bring in one or more of the employees of the members other controlled group? Companies that have not adopted the plan at all?
BenefitsLink Message Boards

Amending DB Plan to Provide Subsidized Early Retirement

We have a defined benefit plan with a normal retirement age of 65 and no early retirement age. Can the plan be amended currently to add a fully subsidized early retirement age of 50? Does the IRS restrict the use of a fully subsidized early retirement age that is below a certain age or would age 50 be acceptable? for example, an employee age 45 participates for 5 years under the plan and terminates at age 50. After the amendment is made, can the lump sum benefit for this individual be calculated unreduced and fully subsidized at age 50 as opposed to deferred from age 65?
BenefitsLink Message Boards

Is Rollover Money Exempt from the 10% Early Distribution Penalty?

Our client's document says that unrelated rollover money can be withdrawn at any time, while for all other sources, the participant must be 59.5. A participant in the plan with 6-figure unrelated rollover balance wants to withdraw money immediately for the down payment on a new home. She is literally a month away from turning 59.5. My thinking is that she needs to wait until her date of attainment of 59.5 in order to avoid the 10% penalty on her withdrawal. But a colleague says that, because the funds originated in the retirement plan of a previous employer, and she no longer works for that employer, and she left that employer after turning age 55, then she shouldn't have to pay the 10% penalty. I am thinking that might be true if she had left the money in the old employer's plan, but once she rolled it into her current employer's plan, she's become subject to the penalty if she doesn't wait until she is literally 59.5.
BenefitsLink Message Boards

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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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