Retirement Plans Newsletter

April 1, 2019

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Senior Plan Compliance Associate
BOK Financial
in Houston TX / Tulsa OK / Scottsdale AZ

Experienced Plan Consultant
Randall + Hurley
in Liberty Lake WA / Telecommute

Retirement Plan Consultant
M2B Retirement Consulting
in Wexford PA

ESOP Consulting Operations Director - #222698
Principal
in Des Moines IA

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Webcasts, Conferences

Finding Winning Opportunities In Every Phase Of Life
April 18, 2019 in GA
Worldwide Employee Benefits Network [WEB] - Atlanta Chapter

Be Secure: Corporate & Individual Responsibilities of Data Protection
April 30, 2019 in TX
Worldwide Employee Benefits Network [WEB] - Dallas Chapter

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Discussions

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[Guidance Overview]

PBGC Proposes Simplified Methods for Withdrawal Liability Calculations

"While the proposed rule is not yet effective, multiemployer pension plans and their contributing employers alike should consider the potential impact of these simplified methods on withdrawal liability calculations.... [T]he simplified methods are optional and plans could continue to use alternative methods that are not specified in the PBGC's regulations.... PBGC is accepting public comments on the proposed regulation through April 8, 2019."
Proskauer Rose LLP

[Guidance Overview]

PBGC Now Offers Pre-Filing Consultation for 4010 Filers

"PBGC now offers a pre-filing consultation for ERISA 4010 filers, especially first-time filers, looking for guidance on filing requirements. PBGC staff will provide an overview of the process, share helpful tips on how to use the e-filing software, and provide insights on how to avoid common filing errors."
Pension Benefit Guaranty Corporation [PBGC]

Federal District Court Opinion: ERISA Does Not Preempt CalSavers Mandatory IRA Program (PDF)

16 pages. "Eligible employers are required to adhere to the administrative requirements of CalSavers, but because the Program only applies to employers without existing retirement plans, no ERISA plans are ' governed ' or 'interfered' with because of the statute.... Eligible employers are not required to make any promises to employees -- they simply remit payroll deducted payments to the Program and otherwise have no discretion regarding the funds. Such ministerial duties fall outside of scope of conduct that Congress intended to regulate in enacting ERISA.... CalSavers does not govern a central matter of an ERISA plan's administration, nor does it interfere with nationally uniform plan administration. On this basis, the Court finds that CalSavers is not preempted by ERISA." [Howard Jarvis Taxpayers Assoc. v. The California Secure Choice Ret. Savings Prog. (CalSavers), No. 18-1584 (E.D. Cal. Mar. 28, 2019)]
U.S. District Court for the Eastern District of California

Oracle Granted Partial Summary Judgment in 401(k) Fees/Investment Option Case

"The court rejected the plaintiffs' claims that ERISA's six-year statute of repose should be tolled because of fraud or concealment, and found no genuine issue of fact that the defendants prudently managed the plan's recordkeeping fees.... Although there have been a number of high-profile settlements, defendants increasingly are walking away with judgments in their favor on most, if not all, of the claims asserted." [Troudt v. Oracle Corp., No. 16-175 (D. Colo. Mar. 1, 2019)]
McDermott Will & Emery

Why 401(k)/403(b) Lawsuits Are Far from Over -- and How to Prevent Them

"[T]he cost-inefficiency of actively managed mutual funds, as well as the associated issue of 'closet' indexing, are going to have to be addressed by both the investment and financial services industries. With the string of recent questionable dismissals of 401(k)/403(b) fiduciary breach actions, the time for the ERISA plaintiff's bar has come to fully address the issue."
The Prudent Investment Fiduciary Rules

Bipartisan Retirement Security Bill Introduced in House

"The SECURE Act will include provisions to remove restrictions on an employer's ability to band together in a Multiple Employer Plan (open MEPs).... [The Act] would expand access to lifetime income products provided by insurers.... Additional ... provisions ... include measures to require employers to allow long-term, part-time workers to participate in their workplace 401k plan, and a measure which would increase the current required minimum distribution age limit from 70-1/2 to 71[.]"
Insured Retirement Institute [IRI]

Editor's Pick Multiemployer Plans: Current Pension Plan Issues, Legislation and Agency Guidance (PDF)

37 presentation slides, from ABA EBC 2019 Midwinter Meeting. Topics: [1] Financial assistance to insolvent multiemployer plans; [2] Projections report; [3] Final rule -- mergers and transfers; [4] Safe-harbor solvency tests; [5] Changes; [6] Dueling court decisions on Segal Blend and withdrawal liability ; [7] Successor withdrawal liability; [8] Joint Select Committee on Solvency of Multiemployer Plans; [9] Pending legislative proposals.
Employee Benefits Committee [EBC], American Bar Association

Pension Funds Face Challenges in Recruiting Investment Talent

"Competition is intensifying among corporate and public pension funds vying to attract the best investment talent they can afford. With assumed rates of return likely to remain low in the foreseeable future for all pension funds and scant chance of public pension plans receiving contributions from government sources to make up any shortfall, ... the capability of in-house investment teams to achieve the highest possible return is on the line."
Pensions & Investments

FAS87 ASC715 Discount Rates and Moody's Rates, Updated April 1, 2019

An unofficial monthly report as of March 29, 2019, of the Moody's Daily Long-term Corporate Bond Yield Averages and Moody's Daily Treasury Yield Averages (used as benchmarks by some corporate pension plans).
David Rigby, via BenefitsLink Message Boards

[Opinion]

The Downside of Mandatory Defined Contribution Plan Coverage

"[T]he top priority should be to continue to bring more U.S. workers into the retirement savings system. And then, once in it, have a series of opt-out defaults as many have already adopted for saving, followed by opt-out defaults for systematically withdrawing those assets once a person retires. That may be our best chance for delivering financial security."
Bruce E. Wolfe via The Wall Street Journal; subscription may be required

[Opinion]

American Academy of Actuaries Responses to House HELP Subcommittee Questions on Multiemployer Pension Crisis (PDF)

"[1] Have the changes to single employer plan funding rules, including the use of market rates to discount liabilities, under the Pension Protection Act of 2006 resulted in greater retirement security for participants of single employer plans? ... [2] How do multiemployer actuaries set the discount rate for multiemployer plan liabilities for funding purposes? ... [3] Dr. Naughton indicated that multiemployer plans have not collected 'actuarially sound' contributions from contributing employers. [a] What does that mean? [b] Is the system itself sound? [c] What should Congress consider to improve the viability of the system?"
American Academy of Actuaries

Benefits in General

Editor's Pick Ethics for Employee Benefits Lawyers (PDF)

50 presentation slides, from ABA EBC 2019 Midwinter Meeting. Topics: [1] Legal privileges; [2] Engagement letters; [3] Sexual harassment, Gender Bias; [4] Social media; [5] Advertising.
Employee Benefits Committee [EBC], American Bar Association

Shaping a Flexible Total Rewards Experience

"Don't make assumptions about employee preferences -- whether in their career paths or in how/where they work.... Technology supports flexibility and choice in Total Rewards across many dimensions: ... Leaders and managers must promote a culture that values flexibility, empowers employees and trusts them to do the right thing whether this involves pursuing a lateral career path, opting for a voluntary benefit or working on a flexible schedule."
Willis Towers Watson

Selected Discussions
on the BenefitsLink Message Boards

Plan Terminated, Assets Distributed in 2018 -- Residual Dividends Pop Up in 2019 -- Another 5500 Required?

A plan terminates in 2018 and all assets are paid by 9/30/2018. In March 2019, residual dividends hit a few accounts and are paid out to the participants. I was planning to file a final Form 5500-SF for 2018 with an ending balance of $0 (accurate). Do I need to file the final for 2019, instead? I realize it's not a ton of work, but still...
BenefitsLink Message Boards

Midyear Owner Exclusion from Safe Harbor Match?

Under the revised rules for amending a safe harbor plan midyear, the plan may not reduce the number of employees eligible to receive safe harbor contributions. What if the midyear amendment were to exclude only the owners from receiving the safe harbor match? Would that be possible? If so, I'm assuming this would need to be a prospective amendment (not effective as of 1/1/2019). Owners have not deferred yet in 2019 anyway.
BenefitsLink Message Boards

409A Issue: One Time/Form of Payment Required; Does This Design Comply?

Plan subject to 409A says executive will get five annual installments upon separation from service. If the executive separates and begins payments, but dies before receiving all five, the plan explicitly says the designated beneficiary will continue receiving the remaining annual installments in the same manner the participant would have received them. There is no election at any point. The plan further says that, if no beneficiary designation is on file, the remaining payments will be paid in one lump sum to the executive's estate. It seems to me that this would violate the one form of payment requirement by toggling the form of payment based on whether or not a beneficiary has been designated. Agree?
BenefitsLink Message Boards

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Press Releases

An Advisor Friendly HSA Solution
ABG Retirement Plan Services [ABG]

Most Popular Items in the Previous Issue

What ERISA Practitioners Need to Know About Accounting for Benefit Plans (PDF)
Employee Benefits Committee [EBC], American Bar Association

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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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