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Courts, Congress & Compliance
April 18, 2019 in CA
Western Pension & Benefits Council - Orange County Chapter

Rollovers Between Retirement Plans and IRAs
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Proposed Higher Compensation Thresholds for Overtime Exemption Would Indirectly Affect Retirement Plans

"The DOL has estimated that the increased dollar amounts would cause approximately 1.3 million employees to become eligible for overtime. In many cases, such eligibility would result in higher wages, which would translate into increased retirement plan contributions under plans that calculate plan contributions using a definition of compensation that includes overtime pay."
Thomson Reuters / EBIA


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Nearly One Third of U.S. Workers Have Dipped Into 401(k) Savings

"28% of boomers (aged 53 and above), who are closest to actually retiring, had already tapped their accounts, most commonly to pay down general debt or to buy or fix up a home. So did 22% of Gen Y workers (ages 23-36), aka millennials, who cited unexpected expenses and debt, including medical bills and student loans ... [M]ore than one quarter (26%) of [Gen Z (ages 21 and [22] participants] have borrowed or withdrawn money from their retirement savings ... [for] medical debt, student loan debt, general debt, and, for 20% of Gen Zs, to purchase a car. The worst offenders, however, were the Gen Xers (aged 37-52)."

Schlichter Law Firm Wins $55 Million Settlement in 401(k) Fee Suit

"The law firm that helped pioneer 401(k)-fee lawsuits against big companies more than a decade ago announced a $55 million settlement on Thursday against ABB Inc. ... The firm said it has secured $446 million in settlements for clients since 2010 ... Consumer advocates say the litigation trend has saved 401(k) participants nationwide billions of dollars by helping to push down fees, which declined 21% from 2009 to 2015[.]"
The Wall Street Journal; subscription may be required

Managed Retirement Accounts: The Value of Advisors and Consultants

"Managed retirement accounts can reduce the fiduciary obligation of plan sponsors, but it's important to identify who will assume fiduciary responsibility: the managed account provider, the recordkeeper, or the plan sponsor.... Consider how participants may want to access, learn, and interact with the service.... [A]dvisors and consultants ... should continue to evaluate the appropriateness of a managed accounts program for participants -- just as they would for a target-date fund -- by staying well-versed in the provider's methodology."
Morningstar Advisor

Charles Schwab Launches Subscription-Based Financial Planning

"Schwab Intelligent Advisory, which includes unlimited guidance from a CFP and an in-depth financial plan, will charge new customers an upfront fee of $300 and a flat $30 a month starting on April 1, instead of the current 0.28% of assets. The hybrid robo service is being renamed Schwab Intelligent Portfolios Premium."
Financial Planning


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Nevada, Maryland Proposals for Fiduciary Standards Meet Opposition

"More than 25 advisors, firms, and advocacy groups appeared at the Maryland hearing in opposition to the state's proposal. Approximately 20 firms and trade organizations have filed responses to the Nevada state secretary opposing its calls for a statewide fiduciary duty.... [This article includes] a sampling of the feedback culled from the Maryland General Assembly hearing, open letters to the Nevada state secretary, as well as Tweets, and public statements from advisors and others."
Financial Planning

Tenth Circuit Upholds Great-West Stable Value Win in ERISA Case

"Because participants could leave the fund after learning the credited rate, without penalty, Great-West did not have the power to force its rate decision upon any unwilling participants and was therefore not a functional fiduciary under [ERISA]. The Court of Appeals found that Great-West was not liable as a non-fiduciary party-in-interest to a prohibited transaction because the plaintiff failed to demonstrate that the relief he sought was equitable, the only relief available against a non-fiduciary under ERISA Section 502(a)(3)." [Teets v. Great-West Life & Annuity Ins. Co., No. 18-1019 (10th Cir. Mar. 27, 2019)]
Holland & Knight

Benefits in General

Attorney-Client Privilege in the Employee Benefit Plan Context

"[A]dvice provided to fiduciaries from lawyers has to be turned over to participants if they want or if they need it in any particular proceeding.... When a fiduciary has to act for participants the ultimate client here is the participant. The fiduciary's acting solely for the interest of the participant.... [W]hile we call it a fiduciary exception, it's not really an exception; what it is, is a way to identify who the client is that holds the privilege and in this case ... the fiduciary's a look-through vehicle to the participant."
Proskauer Rose LLP

Editor's Pick Sharing Plan Expenses with Sponsors/Parties in Interest/Related Parties, and Appropriate Uses for Plan Assets (PDF)

47 presentation slides, from ABA EBC 2019 Midwinter Meeting. "Key issue is how to distinguish the cost of arriving at a settlor decision (not payable from plan assets) from the cost of implementing it (plan may pay). In general, activities leading up to establishment of a plan, adoption of a discretionary amendment or initiation of a plan termination are 'settlor' in nature. Activities after that are 'fiduciary' to the extent that they relate to plan administration or to compliance with ERISA, IRC or other legal requirements applicable to the plan."
Employee Benefits Committee [EBC], American Bar Association

Editor's Pick What ERISA Practitioners Need to Know About Accounting for Benefit Plans (PDF)

38 presentation slides, from ABA EBC 2019 Midwinter Meeting. Topics include: [1] Practice tips. [2] What does a Balance Sheet/ statement of Net Assets look like? [3] What does the Income Statement/Statement of Changes in Net Assets Available for Benefits look like? [4] What does a DB plan's Actuarial Information look like? [5] What does a health plan's Benefit Obligations look like? [6] Uses of financial statements in ERISA practice and litigation. [7] Statutory basis for audit requirement. [8] Questions DOL identified that a fiduciary should ask the plan auditor. [9] Investment valuation: what's required. [10] Investment valuation: issues for fiduciaries. [11] Investment valuation: what should trustees/investment committees do periodically?
Employee Benefits Committee [EBC], American Bar Association

Selected Discussions
on the BenefitsLink Message Boards

Frozen Hybrid/Cash Balance Plans; Compliance with Interim Amendments, Particularly Vesting

Must frozen hybrid defined benefit plans comply with interim amendments by implementation/execution of said interim amendments if said interim items stood due subsequent to the freezing of the hybrid plan? Section 701(b)(2) of PPA added IRC Section 411(a)(13) which provides a special vesting requirement for hybrid plans. Hybrid plans must provide for 100 percent vesting of employer contributions after three years of service. (

Does this vesting requirement only apply to accrued benefits ensuing subsequent to the effective date of IRC Section 411(a)(13)/Section 701(b)(2) of PPA? Must all accrued benefits stand applied to this vesting schedule? One ponders the situation for other interim amendments.
BenefitsLink Message Boards

How to Use SCP to Correct ADP Problem Due to Failure to Provide Deferral Opportunity for Any of the NHCEs?

The SCP program suggests for a non-safe harbor 401k plan that an acceptable correction for a missed deferral opportunity is a QNEC equal to 50% of the ADP for that group. If the only two eligible NHCEs were left out in the first year of eligibility then my conclusion is that the ADP percentage for the group is 0 and the QNEC is [0] Hence, the ADP test is failed and the HCE deferrals must be returned or recharacterized. Does this seem a reasonable interpretation?
BenefitsLink Message Boards

IRS Website Survey -- Legit?

Client sent a fax of a request to complete an online survey at I don't like the looks of it, but I could be wrong. Has anybody seen this or completed it?
BenefitsLink Message Boards

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Press Releases

Most Popular Items in the Previous Issue

Arbitration: What's Different About ERISA? (PDF)
Employee Benefits Comittee [EBC], American Bar Association

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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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