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Retirement Plans Newsletter March 6, 2019 |
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Jobs
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Webcasts, Conferences It's Almost Spring: Time to Get into the Weeds of DC Plan Operations
Traditional Performance Reviews: Are They Helping or Hurting Your Employees?
Rehires in Qualified Plans
Washington Legislative Update
Financial Planning for Public Company Executives & Directors
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Discussions |
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This Newsletter:
BenefitsLink Health & Welfare Plans Newsletter:
Message Boards Digest:
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Client Relationship Manager|
[Official Guidance]
"This notice is to inform taxpayers that the Department of the Treasury and the [IRS] no longer intend to amend the required minimum distribution regulations under Section 401(a)(9) of the Internal Revenue Code to address the practice of offering retirees and beneficiaries who are currently receiving annuity payments under a defined benefit plan a temporary option to elect a lump-sum payment in lieu of future annuity payments."
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[Advert.]
ERISApedia.com: Let us help you with your Testing Season deadline.
Get a Free Trial of our Qualified Plan eSource and Form 5500 eSource until March 15th. Includes 2 free questions for noted attorney, S. Derrin Watson, of our ASK service. Call us for help at 770-999-0819. Email jpecina@erisapedia.com Sign up here. |
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Class Action Challenges Managed Account Revenue Sharing (PDF) "This class action lawsuit shines a light onto the revenue sharing (or possible self-dealing and prohibited transactions) relationship between a recordkeeper and a managed account provider.... In a fee compressed world, recordkeepers are seeking ways to stay in business while remaining competitive. Managed Account is a new revenue source to put recordkeeping back in the driver's seat." [Davis v. Stadion Money Mgmt. LLC, No. 19-119 (M.D.N.C. complaint filed Jan. 25, 2019)]
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Fiduciaries Get Final Win in Lawsuit Over Disney 401(k) Investment in Sequoia Fund "[T]he appellate court found that Sequoia's investment and concentration in Valeant was facially consistent with the retirement plan documents, noting that both the plan's summary plan description and Sequoia's 2015 Prospectus note that Sequoia is 'non-diversified' and there are risks associated with Sequoia's investment strategy. To the extent that the plan documents even distinguish between 'value' and 'growth,' the 9th Circuit agreed with the District Court that these words were used simply to 'describe [Sequoia's] investments; not to also convey [its] overall investment strategy.' " [Wilson v. Fidelity Mgmt. Trust Co., No. 17-55726 (9th Cir. Mar. 1, 2019, unpub.)]
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Safe Harbor or Traditional 401(k) Plan? How to Decide "[A] safe harbor 401(k) plan is not the best fit for every small business. They can cost more than a traditional 401(k) plan, but offer less plan design flexibility ... To make an informed decision, you need to know two things: [1] if your plan will fail ADP/ACP or top heavy tests and [2] if safe harbor status will compromise your ability to meet plan priorities effectively."
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Senate Tax Extenders Bill Has Disaster Provisions Impacting Retirement Plans "The primary aim of the legislation is to extend a number of expired or expiring tax provisions ... This legislative vehicle is also being used to provide tax-related relief to victims of several 2018 natural disaster events. These include presidentially-declared disasters that occurred between January 1, 2018, and March 1, 2019 (this bill's relief does not include victims of California wildfires, for whom similar relief was provided by Public Law 115-123)."
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[Advert.]
2019 SPARK National Conference -- June 4-5, Falls Church, VA
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. |
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2019 Federal Retirement Security Blueprint (PDF) "IRI's 2019 Federal Retirement Security Blueprint includes common sense, bipartisan policies to help Americans achieve their retirement goals.... [1] Expand opportunities to save for retirement by enhancing access to, and features of, workplace retirement plans; [2] Extend greater access to lifetime income products in workplace retirement plans; [3] Preserve and improve access to professional financial guidance, education and information; [4] Increase protections to safeguard Americans from financial exploitation and fraud; and [5] Maintain and enhance the current tax treatment of retirement savings."
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2019 State Retirement Security Blueprint (PDF) "This blueprint describes a number of key steps the states can take to help all Americans achieve their retirement goals.... [1] Adopt a clear, consistent and workable best interest standard of conduct for financial professionals. [2] Maintain the robust private-sector marketplace for retirement savings solutions. [3] Protect seniors and other vulnerable segments of the population against financial fraud and exploitation. [4] Enhance safeguards to protect Americans' personal financial information. [5] Facilitate and encourage improvements to the consumer and advisor experience."
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"[F]or clients who are small business owners, a portion of the total advisory fee may be deductible as a business expense, at least to the extent that business-related advice (i.e., succession planning, retirement plan services, business-related tax strategies, etc.) has been provided.... [O]nly payments made from taxable accounts (i.e., not retirement accounts) could potentially qualify for this treatment[.]"
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[Opinion]
"The glaring questions these cases raise for regulators and investors are: Should major financial intermediaries, such as Wells and Fidelity, be permitted to agree among themselves to withhold, summarily disclose, or even mischaracterize, the payment arrangements between them? Is the answer to this question different when retirement plan assets, protected by the federal ERISA statute, are involved?"
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[Opinion]
Financial Transaction Tax Would Attack Retirement Savings "[A]fter years of attacking 401(k) plan fees, the bill's sponsors now want to charge 10 basis points every time a contribution is invested. And then charge another 10 basis points when the account is rebalanced, something that happens regularly with default investments like target-date funds. And then, another 10 basis points when that worker retires and sells some of those investments."
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Benefits in General |
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Health of Employee Benefit Programs Can Be Make-or-Break Issue for Impending Merger or Acquisition "Companies typically like to delay due diligence of employee benefits to maintain the confidentiality of the impending deal and because employee benefits may be perceived as being less material to the decision about whether to proceed or not. Unfortunately, this level of discretion can be costly, as employee benefit programs can deeply affect a potential deal, sometimes to the surprise of the acquiring company."
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Americans Cite Healthcare Expenses as No. 1 Barrier to Early Retirement "When asked to name barriers to financial independence and early retirement, Americans are less concerned about uncertain market conditions (37 percent) or inflation (35 percent), than they are about healthcare costs (57 percent)... An overwhelming majority of Americans (76 percent) point to Medicare as the best way to pay for healthcare in retirement. Yet more than half of pre-retirees (61 percent) are not confident that it will cover the bulk of their retirement medical expenses."
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Selected Discussions |
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Minimum Gateway Required Despite 1-Month Participation Requirement? If a plan has the same 1 month of service eligibility requirements for profit sharing as it does for deferrals, must the NHCEs all receive a PS minimum gateway allocation in a cross tested plan if they satisfied the one month wait? Can you disaggregate otherwise excludables in this case? So a $0 allocation for those who didn't meet the statutory one year wait?
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Leaving PEO 401(k) Safe Harbor Plan -- Replacement Plan Must Be Safe Harbor? Client wants to leave the the PEO's 401k plan and start their own. The PEO plan is a safe harbor. Does the client's new plan have to be a safe harbor as well? Do they have to continue with the same plan provisions?
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Do Stable Value Funds File as a Direct Filing Entity? Do stable value investments file as a Direct Filing Entity? Why or why not?
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Press Releases |
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National Taxpayer Advocate Nina E. Olson will retire July 31, 2019
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Most Popular Items in the Previous Issue |
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Respondeat Superior in the ERISA Context (PDF)
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Blockchain and Retirement Plan Administration
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Connect
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BenefitsLink.com, Inc.
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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 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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