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Retirement Plans Newsletter April 3, 2019 |
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Jobs
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Webcasts, Conferences New ERISA Regulations for Disability Claims and Appeals
Everything You Need to Know about Beneficiary Forms
Advanced RMDs
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Discussions |
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This Newsletter:
BenefitsLink Health & Welfare Plans Newsletter:
Message Boards Digest:
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Plan Document Assistant Team Leader|
House Ways and Means Committee Passes Retirement Legislation "[T]he Ways & Means Committee passed H.R. 1994, the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019, legislation that expands opportunities for Americans to increase their retirement savings and improves the portability of lifetime income options from one plan to another." [Also online: text of the bill and section-by-section summary.]
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ASC CE Webcast: Rehires in Qualified Plans
Rehired employees often cause significant difficulties in administering qualified plans. Learn many of the unique issues facing plan sponsors and recordkeepers in applying the eligibility and distribution rules for rehired employees. Register Here! |
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Retirement Legislation with Bipartisan Support Could Lift IRA Age Caps, Help Small Employers "The potential shifts include letting savers contribute to a traditional IRA even when they're above the current age cap of 70-1/2, as well as offering a new $500 tax credit of for employers to defray start-up costs for new 401(k) plans. The bills also aim to boost the use of annuities, and the Senate measure would try to increase the use of multiple employer plans, or MEPs, which allow small employers to team up to improve their offerings for their workers."
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DC Participants Sue Boeing in Stock-Drop Case Following 737 Max Crashes "The lawsuit, filed March 31 in U.S. District Court in Chicago, alleges that defendants failed to protect its DC plans and their participants. Specifically, [the suit alleges that] Boeing failed to publicly disclose safety problems with its 737 MAX aircraft even as plan participants purchased and held Boeing shares at an inflated price in their retirement savings accounts[.]" [Burke v. Boeing, No. 19-2203 (N.D. Ill. complaint filed Mar. 31, 2019)]
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Putnam Investments Reply Brief on Petition for Writ of Certiorari (PDF) 19 pages. "This Court should couple its review of the loss-causation question with the related legal question concerning how to prove loss: whether a mechanical index-fund comparison suffices in every case, irrespective of plan-specific facts. The loss-causation and loss questions affect virtually every ERISA fiduciary-breach case, and the persistent [Circuit] split drives decisions about whether, and where, to file suit." [Putnam Investments, LLC v. Brotherston, No. 17-1711 (1st Cir. Oct. 15, 2018; cert. pet. filed Feb. 11, 2019, No. 18-926)]
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Oracle Granted Partial Summary Judgment in 401(k) Fees and Investment Options Case "The Oracle decision continues the judicial push-back on plaintiffs' theories in 401(k) and 403(b) cases. Plaintiffs have been largely unsuccessful in convincing courts that ERISA requires competitive bidding, that cheapest is best, and that courts should not consider alleged fiduciary actions that were not reflected in meeting minutes.... Fiduciaries who have a thorough process in place to monitor fees and investment options, and who retain expert advisors to assist with that process, are well positioned to defend against claims of fiduciary imprudence and disloyalty." [Troudt v. Oracle Corp., No. 16-175 (D. Colo. Mar. 1, 2019)]
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401(k) Investment Advice: Pros and Cons of Three Basic Forms "Fund-based investment advice is delivered by a mutual fund -- usually a Target-Date Fund (TDF). There is no easier way for 401(k) participants to access professional advice. To do so, they just need to invest 100% of their account in the TDF that best matches their estimated retirement date.... [Advisor-based] advice can be delivered in-person and highly-customized to meet individual investment goals -- factors that can help motivate 401(k) participants to keep their retirement savings on track.... Algorithm-based ('robo') advice is delivered by a computer algorithm -- a set of rules that construct investment portfolios based on investor responses to risk tolerance and time horizon questions."
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"In [two recent] cases, petitioners argued that they held a vested right to a benefit no longer available under the plan.... However, both state supreme courts held that these benefits were not part of the participants' accrued benefits ... and therefore, the participants did not have any entitlement or right to receive them.... Broadly, the cases demonstrate a reluctance by state courts to expand the understanding of participants' vested rights in public pension systems beyond annuity payments."
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DB Plan Termination Readiness Assessments: Lessons Learned "Sponsors are discovering that they are closer to plan termination than they thought. Many accelerate their time frame for termination once they understand what the potential barriers are and develop a clear strategy for dealing with problem areas. [Two case studies provide] real-life readiness assessments."
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Rationality and Choices At and During Retirement: Mutually Exclusive? "No one lives forever. So why, 18 years into retirement, have individuals generally spent only 20% of their nest egg? Why, if people want to conserve their assets, do nearly half of Americans take Social Security benefits at the earliest possible age of 62 -- receiving only about 70% of the full benefit available at age 67?"
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Annuity Market Pricing Approaches (PDF) 22 pages. "The purpose of this study is to provide retirement actuaries with a resource on group annuity pricing. No resource is needed for individual annuities, prices for which are readily available on websites. Since the difference between group and individual annuities is primarily due to mortality and expenses, a method could be developed to get group annuity rates from individual rates from these websites."
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"There is a gap in the life expectancy at birth as estimated by the Social Security Administration (SSA) and by the Human Mortality Database (HMD) The gap is attributable to differences in mortality risks at ages 65 and above only. It is not due to differences in methods but to differences in the data ... Further investigation is necessary to determine whether the gap results from mortality risks which are genuinely different in the two datasets or whether it results from reliability issues in the sources of data."
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Benefits in General |
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5-page outline, from ABA EBC 2019 Midwinter Meeting. Topics: [1] Attorney-client privilege: internal investigations, fiduciary exception; [2] Accountant-client privilege; [3] Governmental privileges: Deliberative process privilege, informant privilege, Presidential communications privilege, FOIA exemptions involving privilege.
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FASB Amends Master Trust Reporting Requirements for Employee Benefit Plans "This guidance will reduce diversity in disclosures relating to master trust interests in employee benefit plan financial statements and provide the users of these financial statements with more information, especially when a plan has a specific (divided) rather than proportionate (undivided) interest in a master trust."
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Selected Discussions |
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Excess Assets in DB Plan: Allocating to Participant-Spouse of Business Owner Have a 3 participant DB that terminated and has excess assets (about $40k). Our document indicates that the excess can be allocated in any non-discriminatory manner. In this case it's a husband and wife plan with one younger employee. The husband and wife are each 70. The wife has participated for over 10 years but has had very small accruals (I think 1% of pay for the past 10 years). The business owner would like to be able to allocate most of the excess to his wife. Would there be any problem with attempting to do that and using accrued to date for 401(a)(4) testing?
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New Comparability Plan: Compensation for 401(a)(4) Purposes When Participant Enters Mid-Year A 401(k) Safe Harbor Non-Elective, with New Comparability PS has different eligibility for the 401(k)/Safe Harbor portion and the PS portion. If someone enters the Plan mid- Plan Year for PS purposes, do I use full year compensation or PS Participation Date compensation for (a)(4) testing purposes?
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Terminated Participant's Vested Balance Is More than $200 But Less Than $1,000 A terminated participant has a vested account balance of less than $1,000. Per the terms of the plan, mandatory distributions of account balances are made to terminated participants whose vested account balances are $1,000 or less. The distribution will be made as soon as administratively feasible. The vested amount is >$200, so must the participant sign an election form?
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Press Releases |
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Marsh & McLennan Agency to Acquire Centurion
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ERISA Partner Patrick Menasco Joins Goodwin in Washington, D.C.
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OneDigital Acquires Northwestern Benefit in Biggest Acquisition in Company History
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Most Popular Items in the Previous Issue |
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DOL's Proposed Change in Overtime Rules Will Affect Retirement Plans
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Which Plan Documents Should You Be Keeping?
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Connect
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BenefitsLink.com, Inc.
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Lois Baker, J.D., President
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager
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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