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March 27, 2019 logo logo
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Enrolled Actuary
Pension Associates Retirement Planning LLC
in Stamford CT

Retirement Specialist
Tampa Fire & Police Pension Fund
in Tampa FL

Senior Benefits Analyst
Stanford University
in Redwood City CA

Account Manager
in NC / OH / SC / Telecommute

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[Guidance Overview]

2018 Q&As: PBGC Meeting with ABA Joint Committee on Employee Benefits (PDF)

9 pages. Topics include: [1] Standard termination experience; [2] Reportable events experience; [3] Coverage webpage update; [4] Pilot mediation project; [5] Interagency issues relating to missing participants; [6] Premiums; [7] Early warning; [8] Rule on mergers and transfers between multiemployer plans; [9] Guidance regarding requests for approval of alternative method of withdrawal liability payments; and [10] Responses to PBGC's RFI.
Joint Committee on Employee Benefits [JCEB], American Bar Association


Completing the puzzle for your retirement needs

Sponsored by DATAIR Employee Benefit Systems, Inc.

We put the pieces together to simplify Pension Administration. DATAIR's Pension System for DB and DC includes proposals, testing and administration. With an experienced and responsive support staff to answer your questions. 888-328-2474

VCP Submissions Must Be Submitted Electronically Beginning April 1

"To submit a VCP application on or after April 1, 2019, the applicant must [1] create an account at ... [2] complete a Form 8950 using the website ... [3] documents relating to the VCP submission such as a description of failures, Form 14568 (Model VCP Compliance Statement), applicable schedules and other relevant items must be converted into a single PDF file and uploaded to ... [4] pay the applicable user fee via the website."

Retiree Lump Sum Windows: Best Left Closed?

"[R]easons why opening a retiree window may be less than ideal.... [1] Those expecting to live shorter than average will be more likely to take the lump sum, while those who feel poised for a long run will probably refuse the offer and keep their lifetime income.... [2] Processing election packages requires calculations, mailings, and processing, all of which add costs that offset savings.... [3] Embarking on a process that introduces opportunities for retirees to make mistakes, or be misled or exploited by others, is a heavy question for plan fiduciaries to weigh."
The Principal Blog

Examining Financial Behaviors of Those with a Savings Rate of 20% or More (PDF)

" 'Super Savers' [have] a savings rate of 20% or higher of their income.... On average, they are saving 29% of their income, compared to non-super savers who allocate an average of 6% to that line item ... 3 in 4 are financially independent, or on the path to be, compared to less than half of non-super savers ... 46% say they expect retirement will be like a second childhood, compared to 39% of non-super savers ... More than half of Super Savers started investing by age 30."
TD Ameritrade

Supreme Court May Hear Case on ERISA Participants' Standing to Sue

"Because in most instances defined benefit plan participants are not at risk of losing their benefits when the plan loses money -- though the investment losses may make future benefit enhancements less likely -- a requirement of individual harm, whether for statutory or constitutional standing purposes, could effectively preclude participants of these plans from pursuing recovery of plan losses. Second, if the Supreme Court were to rule that individual harm is required as a condition for having statutory standing under Section 502(a)(2) or (3), the ruling could increase the likelihood for mounting an effective argument in defined contribution litigation that plaintiffs lack standing to sue to recover for investment losses in funds in which they did not invest[.]" [Thole v. U.S. Bank, N.A., No. 16-1928, (8th Cir. Oct. 12, 2017; cert. pet. filed June 22, 2018)]
Bloomberg BNA


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.

Emerging Trends in 401(k) and 403(b) Fund Menus

"The power of the 'default effect' in automatic enrollment plans has made target date funds (TDFs) the dominant investment choice for retirement savers.... [Y]ounger participants are proving to be the most powerful advocates for these types of solutions.... [T]he starting point and single most important investment decision for this generation of retirement plan fiduciaries revolve around the target date decision. But first, let's take a step back and briefly discuss the strategic outcomes fiduciaries should be focused on when designing a fund lineup for their plan."
Greenspring Advisors

SEC No-Action Letter Offers Guidance for Processing Rollover Checks

"Banc West Investment Services asked the [SEC] to clarify its stance on the potential conflict between FINRA suitability determinations called for by rollover decisions and, on the other hand, SEC demands to forward customer checks within a day of receipt.... The letter ... lays out further stipulations for BWIS[.]"

GAO Report on Retirement Security: Most Households Approaching Retirement Have Low Savings

"[GAO] found that the percent of households headed by someone aged 55 and over that had no retirement savings decreased from about 52 percent in 2013 to about 48 percent in 2016." [GAO-19-442R; Mar. 26, 2019]
U.S. Government Accountability Office [GAO]

Multiemployer Plan Withdrawal Liability: Lessons from a Recent Seventh Circuit Decision

"[The Seventh Circuit] affirmed a district court's judgment ordering a group of closely held businesses and the group's owners to pay $640,900 in withdrawal liability, plus interest, liquidated damages, attorneys' fees and court costs. The defendants were found to have waived all defenses to the assessment because they failed to make interim payments and initiate arbitration over the liability." [Trustees of the Suburban Teamsters of Northern Illinois Pension Fund v. The E Company, No. 18-2273 (7th Cir. Jan. 29, 2019)]

Editor's Pick Contribution Analysis for U.S. Multiemployer Pension Plans (PDF)

"In 2016, 83% of plans that covered 69% of all MEPP participants received enough contributions to reduce their unfunded liabilities as measured with funding discount rates -- down from 86% of plans covering 78% of participants in 2015. The decrease stemmed in part from increased unfunded liabilities in 2016. Of the 83% of plans whose contributions were sufficient to reduce unfunded liabilities in 2016, half of them were on pace to eliminate unfunded liabilities within 8.3 years. Eighty percent of them were funding at a pace to eliminate unfunded liabilities within 16.8 years, and 90% of them were funding at a pace of 23.4 or fewer years."
Society of Actuaries

Editor's Pick Employer Withdrawal Activity Overview: U.S. Multiemployer Pension Plans (PDF)

10 pages. "The percentage of withdrawing employers dropped from 1.49% in 2009 to 0.85% in 2016, and the percentage of plans that experienced withdrawal fell from 18.5% in 2009 to 15.1% in 2016. However, at 60%, the percentage of participants in plans that experienced withdrawal was the same in 2009 and 2016, although the percentage slowly increased to 67% in 2013 before slowly declining to 2016. On average over 2009-2016, assessed withdrawal liabilities were 0.4% of aggregate plan liabilities for zone determination. But the impact on individual plans varied widely."
Society of Actuaries

Combining the IRA Rollover Rules for Surviving Spouses with the Separate Account Rules

"If an IRA account has multiple beneficiaries, and that account is not split by December 31st of the year after death, then all beneficiaries are stuck using the life expectancy of the oldest among them. That treatment lasts until the account is emptied. For non-spouse beneficiaries, all post-death beneficiary Required Minimum Distributions (RMDs) must also begin by December 31st of the year after death. On the other hand, spousal beneficiaries can roll over inherited amounts to their own IRA accounts, essentially changing when RMDs begin. Spouses also get favorable treatment when calculating those RMDs."
Slott Report

Benefits in General

[Official Guidance]

IRS Revises EIN Application Process, Seeks to Enhance Security

"[S]tarting May 13 only individuals with tax identification numbers may request an Employer Identification Number (EIN) as the 'responsible party' on the application.... The change will prohibit entities from using their own EINs to obtain additional EINs. The requirement will apply to both the paper Form SS-4, Application for Employer Identification Number, and online EIN application. Individuals named as responsible party must have either a Social Security number (SSN) or an individual taxpayer identification number (ITIN).... There is no change for tax professionals who may act as third-party designees for entities and complete the paper or online applications on behalf of clients."
Internal Revenue Service [IRS]

Executive Compensation
and Nonqualified Plans

How to Avoid Overpaying Taxes on Stock Sales

"[F]or sales of company stock acquired from most grants of equity compensation and ESPPs, brokers will report to the IRS and you the unadjusted partial basis for all grants.... [1] [E]nter the Form 1099-B cost basis in column (e) of Form 8949.... [2] Identify the type of capital gain or loss.... [3] Adjust the gain or loss.... [4] Explain the reason for the adjustment.... [5] What to do if no cost basis is shown."

Selected Discussions
on the BenefitsLink Message Boards

Spin-Off from PEO's Safe Harbor Plan

Employer A was a participating employer in a PEO. PEO has a safe harbor 401k plan. Employer A has decided to leave the PEO 401k plan and establish its own plan. Effective in April, they want to spin out of the PEO into their own plan. Would Employer A be subject to ADP/ACP test for the short year under the PEO because the safe harbor provisions were not in effect for a 12 month period?
BenefitsLink Message Boards

Counting Service with a Predecessor Employer: What Entry Date?

Company A, which has a 401(k) plan, buys Company B (with no plan) today, and grants all service with Company B. The plan has the standard age 21/1 Year of Service/semi-annual entry provisions. When do the new employees enter the plan, if they satisfied the 21/1 requirements? Can they be held out until 7/1, or are they immediately eligible because they have their 1 year of service and already have passed an entry date (similar to a rehired employee)?
BenefitsLink Message Boards

Correcting an Employer's Nondeductible Contribution

In 2018 a client projected profits to be higher than they were, and in 2018 they deposited an amount above their allowable contribution amount for 2018. How to fix?
BenefitsLink Message Boards

Employer Extends Severance -- 409A Issue?

Executive has a $600k base salary under a written employment agreement. If he is terminated without Cause or he terminates for Good Reason, he gets base salary continued for 1 year plus pro-rata annual performance-based bonus. Employer can extend the severance for up to another year and continue to pay him the base salary for up to 1 more year -- meaning the executive would get another $600k of salary (for another year) if the employer extended the noncompete by another year by giving executive notice within 45 days after termination date. Any 409A issues?
BenefitsLink Message Boards

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Press Releases

Valerie Sinicrope Awarded QPA Designation by ASPPA
Steidle Pension Solutions, LLC, [SPS]

PSCA Announces Innovative New Plan Sponsor Credential
PSCA [Plan Sponsor Council of America]

Most Popular Items in the Previous Issue

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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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