Retirement Plans Newsletter

February 26, 2019

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ERISA Litigation Associate
Robinson+Cole
in New York NY / Stamford CT

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Empower Retirement
in Greenwood Village CO

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ftwilliam.com, Wolters Kluwer
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Editor's Pick 2019 Expanded Reporting and Disclosure Requirements Calendar

"[This calendar] provides who, what, when and where reporting and disclosure information for single-employer pension plans under [ERISA]. Plan administrators can access concise instructions for filing reports with the [DOL], IRS and [PBGC], and for disclosing tax and benefit information to U.S. plan participants, beneficiaries and alternate payees."
Willis Towers Watson

[Advert.]

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Things to Know If You Are New to 401(k) Benefits Administration

"[1] Identify the service providers, and understand what they will and will not do.... [2] Understand how the money flows.... [3] Monitor plan loans.... [4] Promptly pay out terminated employees with small balances.... [5] Recognize when a new employee is actually a rehire."
Dickinson Wright, via Lexology; free registration required

Using Financial Wellness to Attract and Retain Employees

"While there are many ways that healthcare institutions can try to appeal to potential new hires, one area in which they can differentiate themselves from their competitors is within their benefits package.... Traditionally, healthcare institutions have offered a retirement plan to help employees save and accumulate assets for their later years.... [O]rganizations may wish to consider enhancing [these] programs to encompass overall financial wellness."
Cammack Retirement Group

Has New Tax Law Twisted Business Owners' Best Interests When It Comes to Retirement Savings Plans?

"With the new law virtually eliminating personal deductions, retirement saving rises in standing.... While the concept of using retirement contributions to lower current tax liability remains the same, the actual implementation has changed. In some cases, the change may be quite dramatic.... [C]omplication comes in the income limits imposed by the new law."
Fiduciary News

Possible Changes on the Horizon for the Escheat and Taxation of 401(k) Funds

"The GAO found that during a sampled time period, the majority of retirement funds transferred to the states as unclaimed property included amounts from 401(k) plans. Digging deeper, however, the study revealed that most of the 401(k) funds reported as unclaimed property were from terminated 401(k) plans, because funds from terminated 401(k) plans can fall outside the scope of the DOL's preemption position."
ReedSmith, via Lexology; free registration required

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New Jersey Moves Toward State-Sponsored Savings Program for Private-Sector Workers

"[E]mployers with 25 or more employees that have been in business at least two years and don't offer a retirement savings plan would be required to automatically enroll employees in an individual retirement account at 3% of pay.... The employees would be able to opt out or change their savings rate. Employers aren't allowed to contribute to the accounts and aren't considered fiduciaries[.]"
The Wall Street Journal; subscription may be required

Should You Hire An ERISA 3(38) Fiduciary to Make Independent Investment Decisions?

"An ERISA 3(21)(ii) fiduciary makes investment recommendations to plan fiduciaries (e.g., committee members) who either approve or reject them while an ERISA 3(38) Investment Manager has the authority to make investment decisions without the approval of other plan fiduciaries.... [R]egardless of whether you hire an advisor in a 3(21) or 3(38) capacity, the advice and process should really be the same."
Greenspring Advisors

Move Carefully When Consolidating Your Retirement Accounts

"A typical employee who has worked for 30 years likely has switched jobs six or seven times and may have just as many former employer plans ... Consolidating can help you manage asset allocation, diversification and rebalancing, and may help reduce taxes and fees.... You might want to keep a 401(k) plan that has lower-cost institutional shares of mutual funds and access to commission-free trading, instead of rolling it into another account that doesn't include those features."
Fidelity

Democrats and Republicans United in Concern About U.S. Retirement Crisis

"Americans see government playing an important role in helping workers prepare for retirement, but lawmakers in Washington aren't delivering results -- and the new tax law has not helped. Only 34 percent say the tax overhaul passed last year is helping on the retirement front, 84 percent say leaders in Washington have no idea how hard it is to prepare for retirement, and 80 percent say government should ease the way for employers to offer pensions."
National Institute on Retirement Security [NIRS]

[Opinion]

Editor's Pick 12b-1 Fees: What They Are and Why You Should Avoid Them

"Of the confusing 401(k) fees, few are more cryptic than 12b-1 plan fees. 12b-1 fees are paid to the salespeople who distribute mutual funds and are paid from the fund's assets. But what exactly are they? How do you know if you're paying them? What impact do they have on you? And how can you avoid these fees in the future?"
ForUsAll

[Opinion]

What is Financial Stress Testing and Why Does It Matter?

"[Pew Research Center is] known for traveling to states and pushing for mandatory stress testing.... [M]ost public pension plans already conduct financial stress tests.... Pew's method of stress testing focuses on downside events only: times when the pension plan's investment returns fall significantly below expectations. This effectively rigs the outcome because the plan is going to look bad if you are only considering worst case scenarios."
National Public Pension Coalition

[Opinion]

Jason Zweig's Proposal to Scrap 401(k)s

"Accumulating a nest egg is an essential first step, but there remains a second: how to convert the assets into income, with safety? One approach is to receive professional help, but for retirees who would prefer another path, today's 401(k)s are deficient. They offer few solutions save for the occasional calculator. They are of little help to investors who wish to make their own income decisions."
Morningstar Advisor

Selected Discussions
on the BenefitsLink Message Boards

Use 1099-MISC Income as Basis for 401(k) Plan by S Corporation?

An individual establishes an S-Corporation. He's the only owner, no employees. He wants to start a 401(k) plan. His income for 2018 consisted only of 1099-MISC income, coded as nonemployee compensation (Box 7). It was paid to him and reported on the 1099-MISC but was coded using his SS number, not the S-Corp's EIN. Is this income eligible to be used for 401k plan purposes?
BenefitsLink Message Boards

Effect of Earlier 401(k) Loan on Maximum Amount of Another Loan

I took out a 401k loan of $20,000 in 2015. I just repaid the remaining balance of $6,700. Does that loan affect the maximum allowable amount because it's old? Or does the balance of that loan at any point in the last 12 months reduce the maximum available amount? Can I take $50,000 or will it be $50,000 minus the balance of that old loan 12 months ago (roughly $10,500), meaning $39,500? My vested balance is more than $100,000.
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Press Releases

SGR Merges with Mazursky Constantine
Smith, Gambrell & Russell, LLP [SGR]

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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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