Retirement Plans Newsletter

March 19, 2019

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IRS Correction Program Now More Efficient

"The IRS introduced the most recent EPCRS transformation in September 2018, through Revenue Procedure 2018-52, which becomes effective next month, on April 1, 2019. The biggest change is to the VCP submission procedures. The IRS will no longer accept VCP submissions through the mail-in hard-copy form; instead, Plan Sponsors must use the www.Pay.gov website for VCP submissions."
Jackson Lewis P.C.

[Advert.]

ERISApedia.com Announces: 403(b) Plan eSource

Sponsored by Burrmont Compliance Labs LLC

New! 403(b) Plan eSource authored by S. Derrin Watson, JD, APM. Essential reference for 403(b) Plans. Clear, easy to understand language and over 400 examples written in Derrin's unique, light-hearted style. Call or email jpecina@erisapedia.com


Payment of DB Plan Benefits After Normal Retirement Age: Optional Designs

"A defined benefit plan must generally increase a normal retirement benefit actuarially where payment begins after a participant's normal retirement age. The Internal Revenue Code and underlying regulations, however, allow a plan to pay instead the normal retirement benefit amount plus make-up payments in some instances. In light of the DOL's scrutiny in this area, it may be wise for plan sponsors to review pertinent plan provisions and operation to make sure they comply with applicable rules."
Morgan Lewis

ERISA Section 404(a)(5) Participant Fee Disclosures: Rules and Requirements

"The plan sponsor has the duty to distribute the fee disclosure to all participants and account holders with control of their accounts (this includes other beneficiaries with direct management of the funds). [A chart outlines] different participant fee disclosures, what's required, and when."
ForUsAll

Trends in Target Date Fund Investing

"Compared to the first generation of target date funds, recent TDF series are more diverse, less expensive, and often offer a combination of passive and active underlying strategies. They come in many varieties and forms and offer a great range in order to meet all types of investor needs."
Cammack Retirement Group

A Cascading Behavioral Roadmap for Fulfilling Fiduciary Duties

"Breaches of Fiduciary Duty and their poor outcomes tend to originate from poor behaviors and decisions that create a negative cascading effect on a Retirement Plan. A simple impact analysis can reveal whether the Plan Sponsor's/Investment Committee's behaviors and methodologies is having a positive or negative cascading effect on a Retirement Plan."
The Trusted Fiduciary

[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.


Fidelity's 2016 'Hidden' Fee Fix for 'Broken' 401(k) Business Model May Spark Fresh State and Federal 401(k) Crackdown

"[W]hat jumps out here is language from an internal Fidelity document. The company says -- now that revenue sharing from active managers is drying up -- it needs to charge the fee to address a 'broken business model' and 'unsustainable economics.' Interestingly, this is all happening after the death of the DOL fiduciary rule, which means that the free market is causing disruption ... What happens to Fidelity in the this case will almost certainly determine just how recordkeepers charge and disclose fees."
RIABiz

403(b) Retirement Plan Fee Litigation: An Update

"While each lawsuit makes claims based on the particular facts and circumstances of the plan in question, there are some common themes that have emerged ... [P]lan sponsors should understand the issues being raised and keep track of the litigation, in order to manage risk. [A chart provides] a status update on each of the 403(b) lawsuits."
Cammack Retirement Group

Annuity Purchase Update: March 2019 Interest Rates

"During 2018, the market experienced a favorable upward trend of rising interest rates which generally increased U.S. defined benefit plan funding ratios. As interest rates climbed in 2018, plan liabilities dropped which led to a reduction in annuity purchase costs. However, as interest rates have dropped in 2019, annuity purchase costs have increased along with plan liabilities."
October Three Consulting

Editor's Pick 2018 Corporate Pension Peer Analysis

"2018 headline funded status improved 1.5%, to 87.2%, although with dramatic volatility: Average funded status declined an estimated 7.2% in Q4. The average plan returned -3.9% for the calendar year, the worst performance since 2008. The decline was the largest detractor from funded status during 2018. A tailwind from higher discount rates, thanks to rising interest rates and widening credit spreads, provided the largest lift to funded status, followed by sponsor contributions."
J.P. Morgan Asset Management

U.S. Supreme Court Won't Intervene in San Diego Pension Modification Case

"The U.S. Supreme Court [denial of the petition for certiorari leaves] in place a California Supreme Court ruling that the city skipped a key legal step when the cuts were placed on the ballot in 2012. The decision means state courts will resolve the case, including a decision about how to financially compensate 4,000 city employees who don't have pensions because of the voter-approved measure, which was called Proposition B." [Boling v. Public Employment Relations Bd., No. S242034 (Cal. Aug. 2, 2018); cert. denied Mar. 18, 2019] ]
The San Diego Union-Tribune

Principal Financial May Acquire Wells Fargo Retirement Business

"Principal Financial Group Inc is [reported to be] in advanced talks to acquire Wells Fargo & Co's retirement plan services business, in a deal that could exceed $1 billion ... The bank's retirement plan services unit, which includes Wells' 401(k) savings accounts business, would expand a similar business of Principal Financial. If the negotiations are concluded successfully, a deal could be announced later this month[.]"
Reuters

[Opinion]

The Recapitalization of America: Let's Start a National Pension Bank

"[T]here remains an urgent need for new capital investments to help the economy embark on a true and more predictable growth pattern.... [One solution] would be the formation of a National Pension Bank (NPB) authorized by the federal government and operated by experts from within the pension field.... Every pension plan and IRA in the U.S. (public and private) would be required to invest 20% of its assets into its regional Pension Bank.... The NPB's sole purpose would be to make prudent investments designed to create jobs and wealth.... At the end of each year, the Pension Bank would distribute 50% of the excess earnings above the stated yield formula among all the retirement plans and IRAs."
Peter Preovolos

Executive Compensation
and Nonqualified Plans

Parties Reach Settlement in Investors Bancorp Stockholder Litigation

"Under the settlement agreement, the parties agree that: [1] 2.5 million stock options granted to outside directors as part of the 2015 Equity Awards will be cancelled. [2] 95,694 RSUs granted to outside directors as part of the 2015 Equity Awards that are scheduled to vest in 2020 will be cancelled. [3] All stock options and RSUs granted to [two executive directors] as part of the 2015 Equity Awards and any shares delivered to them under the 2015 Equity Awards will be cancelled."
Thomson Reuters Practical Law

Selected Discussions
on the BenefitsLink Message Boards

Post-NRA Employee Now Works Only One Month Per Year: Retired or Not?

An employer maintains a retirement plan that provides no involuntary distribution except as required to meet Internal Revenue Code Section 401(a)(9). The employer has a non-owner worker, older than 71, who works in only one month of each year. The work is real, not a subterfuge. Should the employer/administrator treat that worker as 'retired' to compel a minimum distribution? Why or why not? Does it matter whether the worker is or isn't available to work in the other eleven months (if the employer wanted services of the kind the worker performs)?
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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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