Retirement Plans Newsletter

March 14, 2019

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Jobs

Pension Plan Administrator
American Pension Advisors, Ltd.
in Indianapolis IN

Defined Benefit Operations Specialist
Charles Schwab
in Richfield OH / Austin TX

Defined Benefit Plan Administrator
MGKS
in Phoenix AZ

Associate Plan Administrator
America's 401K LLC
in Dallas TX

Retirement Plan Compliance Processor
The Paragon Alliance Group
in Souderton PA

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[Official Guidance]

Text of PBGC Interest Rate Update for Benefits Payable in Terminated Single-Employer Plans, April and Second Quarter 2019

"The April 2019 lump sum interest assumptions will be 1.25 percent for the period during which a benefit is (or is assumed to be) in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. In comparison with the interest assumptions in effect for March 2019, these assumptions represent no change in the immediate rate and are otherwise unchanged.... The second quarter 2019 interest assumptions will be 3.07 percent for the first 20 years following the valuation date and 3.05 percent thereafter. In comparison with the interest assumptions in effect for the first quarter of 2019, these interest assumptions represent no change in the select period ... a decrease of 0.02 percent in the select rate, and an increase of 0.21 percent in the ultimate rate (the final rate)."
Pension Benefit Guaranty Corporation [PBGC]

[Advert.]

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 IRS Notice 2019-21: Weighted Average Interest Rates, Yield Curves, and Segment Rates Applicable for March 2019 (PDF)

"This notice provides guidance on the corporate bond monthly yield curve, the corresponding spot segment rates used under Section 417(e)(3), and the 24-month average segment rates under Section 430(h)(2) ... In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under Section 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008 and the 30-year Treasury weighted average rate under Section 431(c)(6)(E)(ii)(I)."
Internal Revenue Service [IRS]

Editor's Pick Distributions from DC Plans: How Are Recipients Handling Them?

20 pages. "Data from this report can help employers benchmark their plan's data and answer the following questions ... [1] What do people do with their balances when they terminate employment? [2] What percentage of eligible assets leaves the plan? [3] How do distribution decisions differ by demographics? [4] Where do rollovers go?"
Alight Solutions

Principal 2019 Retirement Plan Deadlines

"This article is intended to alert plan sponsors about applicable major qualified retirement plan deadlines that fall in the first half of 2019."
Ogletree Deakins

The Retirement Plan Raiders are Back: Advisors Push for Withdrawals

"Why should retirement plan sponsors care about having their retirement plans raided by IRA salespeople? One important reason is that other retirement plan participants will pay a lot more if the individuals with the largest account balances leave their plans, since average account balances, as well as cash flow, are important drivers in recordkeeper pricing. And thus, an increasing number of plan sponsors have made conscious efforts to retain retirement plan assets."
Cammack Retirement Group

[Advert.]

It's time to upgrade your Compliance Software!

Sponsored by Wolters Kluwer

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Brown University Settles 403(b) Fiduciary Class Action Suit for $3.5 Million

"Brown University, Providence, R.I., settled a class-action lawsuit alleging the university's 403(b) plans' managers breached their fiduciary duties under ERISA by offering too many similar investment options and paying excessive fees for investments."
Pensions & Investments

The Role of ETFs in Qualified Retirement Plans

"[R]etirement plans are by structure tax efficient, negating any benefit of this ETF attribute. Additionally, short-term trading is ill-advised in retirement plan accounts, and most retirement plans make short-term trading difficult to implement ... A major issue is the platforms used by retirement plan administrators."
Pensions & Investments

Factors Hindering Adoption of ESG Investments in DC Plans

"[M]ore than half (56%) of the 1,000 active 401(k) plan participants [Cerulli] surveyed agree with the statement, 'I prefer to invest in companies that are environmentally and socially responsible.' However, when Cerulli asked plan sponsors to identify their top-three most important attributes considered when selecting 401(k) plan investments, 'environmental and social responsibility' ranked last with 16% of responses.... [F]ee sensitivity and the notion that ESG investing entails a trade-off in performance are two broadly applicable headwinds to ESG adoption."
planadviser

Employers Providing More Investment Assistance to Employees

"[T]ools like managed accounts and target-date funds continue to gain ground, with more than a third of companies now offering investment advice to participants. Some of the ways that companies provide investment support to participants include offering managed accounts, target-date funds, automatic features/qualified default investment alternatives and personalized investment advice from professionals."
Pensions & Investments

Financial Wellness: The New Workplace Imperative

"Financial wellness starts not with a big investment or infrastructure but rather with education and tools ... But financial wellness is also about guidance and solutions ... The employee benefits marketplace is witnessing a financial wellness arms race with employers and their employees being the winners."
MassMutual

Bill Would Create Fiduciary Safe Harbor for Annuity Selection

"The Increasing Access to a Secure Retirement Act (H.R. 1439) would provide a fiduciary safe harbor to the selection of an annuity provider. To qualify for the safe harbor, the fiduciary would need to meet several obligations in the consideration and selection of a provider, including that the cost is reasonable and the insurer is financially capable of satisfying the contract's obligations."
Callan

How to Manage Withdrawals When You Retire During a Bear Market

"[T]hree different strategies ... that can allow you to still retire when you want to without the market fluctuations (or downturn) affecting your plans or causing you to run out of money sooner than you originally projected ... [1] The bucket strategy ... [2] Essential vs. discretionary ... [3] Structured systematic withdrawals."
Financial Finesse

[Opinion]

IRI Testifies to Maryland Legislature on Proposed Fiduciary Rule

"Maryland consumers will have less access to professional financial advice, insurance products and investment products under proposed legislation that imposes sweeping, ill-defined burdens on financial advisors ... Maryland policymakers should collaborate with the SEC in its effort to develop appropriate, cohesive, and workable standard of conduct rules, but should not create additional regulatory layers until the SEC completes its national standard."
Insured Retirement Institute [IRI]

[Opinion]

IRI Testimony at House Financial Services Committee Hearing: Putting Investors First? Examining the SEC's Best Interest Rule (PDF)

10 pages. "IRI supports the SEC's proposed Reg BI because it establishes a new, clear, consistent and workable best interest standard of conduct for financial professionals that will serve as a platform to help consumers make informed decisions and preserve investor choice. To avoid unintended consequences associated with Reg BI, the SEC should provide additional guidance and clarity regarding certain provisions."
Insured Retirement Institute [IRI]

[Opinion]

ACLI Written Testimony to House Financial Services Committee: Putting Investors First? Examining the SEC's Best Interest Rule

"ACLI supports rules requiring all financial profess ionals, when making a recommendation, to act in the consumer's best interest -- with care, skill, pr udence, and diligence -- based on the consumer's financial needs and objectives. ACLI also supports rules requiring financial professionals to avoid or reasonably manage conflicts of interest through inc reased transparency. This is consistent with National Association of Insurance Commissioners (NAIC) and [SEC] (SEC) initiatives underway."
American Council of Life Insurers [ACLI]

Benefits in General

[Guidance Overview]

Editor's Pick JCT Overview of Deduction for Qualified Business Income: Section 199A

32 presentation slides. "An individual taxpayer, estate, or trust generally may deduct 20% of qualified business income, and 20% of qualified REIT dividends and qualified PTP income The deduction is limited above a threshold amount of taxable income ($157,500, or $315,000 for joint returns, indexed).... Taxable income means without regard to the section 199A deduction, for this purpose ... Effective for taxable years beginning after 2017 and before 2026."
Joint Committee on Taxation [JCT], U.S. Congress

Selected Discussions
on the BenefitsLink Message Boards

Distributions from Trust as Named Beneficiary -- Can Be Rolled Over?

Trust is the beneficiary of an individual's 401(k) and Roth IRA. Trust specifies distributions be made to decedent's children at age 25, 30 and 35, distributing 1/3 of their share at each age. First distributions were made from the taxable account, which is now mostly distributed. Remaining distribution to be made from the IRA account. If a distribution is made from the IRA funds, can it be rolled over to an inherited IRA for the trust beneficiary? What are the options?
BenefitsLink Message Boards

Final Form 5500 Needed for Health & Welfare Plan? Small Plan Exemption Satisfied Years Ago

A company filed their first (and only) Form 5500 return for their H&W plan in 2013. The BOY count that year was > 100, with the EOY count dipping below 100 participants. Thus, they stopped filing because they satisfied the small plan exemption. They also did not use the 4R code. In 2018 the company was purchased by another company, and will now be under that new company's H&W plan. Question: Because that single Form 5500 was previously filed, should a final Form 5500 be filed to inform the DOL/IRS the plan no longer exists? There is a 5 year gap because they only had to file in 2013.
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Press Releases

Most Popular Items in the Previous Issue

2019 Guide to Retirement (PDF)
J.P. Morgan Asset Management

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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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