Retirement Plans Newsletter

April 5, 2019

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[Official Guidance]

Text of PLR 201911002: Loan Program to Facilitate Purchase of Shares Under 423(b) Employee Stock Purchase Plan (PDF)

"Taxpayer expects to adopt ... an employee stock purchase plan under section 423(b) of the Code [under which] a Plan participant may purchase Taxpayer shares at the end of the offering period for an amount equal to 85% of the fair market value of the Taxpayer stock ... The exercise price will be paid through salary reduction amounts and/or the proceeds of a loan from Taxpayer or a Third Party, unrelated to Taxpayer.... Taxpayer is requesting a ruling that offering the Loan (on the conditions described above) to Plan participants will not prevent the Plan from meeting the requirements under section 423(b)[.]"
Internal Revenue Service [IRS]

[Guidance Overview]

Not Quite Gone, Far from Forgotten: The Current Status of the DOL Fiduciary Rule

"The relief granted under the two new class exemptions (Best Interest Contract Exemption and Principal Transactions Exemption), which were vacated along with the rule itself, can still be relied upon pursuant to a DOL (and follow-on IRS) nonenforcement policy ... The DOL indicated in its most recent regulatory agenda that it intends to take regulatory action in conjunction with the 'best interest' rule currently pending at the [SEC]. It is unclear at this time what the nature of that action will be."
Morgan Lewis

Second Circuit Throws Potential Lifeline to Plaintiffs in ERISA Stock-Drop Lawsuits (PDF)

"The Second Circuit panel appears to have simply applied a lower pleading standard than other circuit courts faced with stock-drop claims.... In adopting a more plaintiff-friendly approach, the Jander panel issued a reminder that 'the standard [at the motion to dismiss stage] is plausibility -- not likelihood or certainty,' which could be the panel's attempt to distinguish its opinion from those circuits that have applied a stricter pleading standard." [Jander v. Ret. Plans Comm. of IBM, No. 17-3518 (2d Cir. Dec. 10, 2018)]
Miller & Chevalier, via The Investment Lawyer

California's Mandatory Retirement Program for Private Employers Survives Preemption Challenge

"The court found that the CalSavers program does not interfere with ERISA, because it does not apply to any employer that sponsors an ERISA plan. So, there is no overlap between the state rules and the federal law.... If not overturned on appeal, this decision should open the door for other interested states to enact similar legislation." [Howard Jarvis Taxpayers Assoc. v. The California Secure Choice Ret. Savings Prog. (CalSavers), No. 18-1584 (E.D. Cal. Mar. 28, 2019)]
Ferenczy Benefits Law Center

Judge Finds CalSavers Not Preempted by ERISA

"Citing Supreme Court decisions, the district court explained that ERISA preempts a state law that actually 'governs ... a central matter of plan administration' or 'interferes with nationally uniform plan administration.' But because CalSavers applies only to employers without ERISA retirement plans, the state law does not 'govern' or 'interfere with' any ERISA plan." [Howard Jarvis Taxpayers Assoc. v. The California Secure Choice Ret. Savings Prog. (CalSavers), No. 18-1584 (E.D. Cal. Mar. 28, 2019)]
Mercer

Maryland Fiduciary Bill Fades Away

"The Maryland Senate Finance Committee has overwhelmingly voted to recommend the rejection of a pending fiduciary bill.... [The Maryland Financial Consumer Protection Commission] had recommended extending fiduciary duty in Maryland to all financial professionals who provide investment advice, arguing that fiduciary protections at the federal level are currently being reevaluated and were considered likely to be pared back under the Trump administration."
National Tax-Deferred Savings Association [NTSA]

Congress Makes Headway on Retirement Legislation

"Both the House and Senate have rolled out retirement plan legislative proposals that recycle many previous initiatives. With bipartisan approval in both chambers, hopes are high that 2019 will be the year for action. The proposals include coverage and nondiscrimination relief for closed defined benefit plans, enhancements for 401(k) plans, multiple employer pension plans, lifetime income disclosures for defined contribution plans, and more."
Buck

Bipartisan Retirement Legislation Passes House Ways and Means Committee

"Key features affecting employer plans: Closed plan testing relief.... Open MEPs.... More time to retroactively adopt retirement plans.... Updating safe harbor DC plan rules.... Reduced PBGC premiums for CSEC plans.... Lifetime income encouraged in DC plans.... Converting 403(b) custodial accounts into IRAs.... Expanded coverage of part-time workers.... Penalty-free withdrawals for birth or adoption of a child.... Consolidated Form 5500 for similar plans.... Clarification of church plan requirements."
Mercer

Different Cultural Groups Have Varying Expectations for Retirement

"While 61% of Asian Indians calculated how much savings they need to retire, the most of any group surveyed, just 35% of Indian families have an actual retirement plan in place. Korean respondents were the least likely to both calculate how much they need to retire (39%) as well as to create a clear plan for retirement saving (20%), the survey showed.... Twenty-five percent of African Americans and 26% of Chinese respondents plan to retire at age 60 or younger -- more than any other groups -- and only 10% of Koreans said the same, the least of any group. Koreans were more than twice as likely as any group to plan to retire later than age 70 or to say they don't ever expect to fully retire."
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Benefits in General

Sixth Circuit Reverses District Court, Says American Fidelity Insurance Agents Are Not 'Employees' Under ERISA

"[T]he Sixth Circuit reversed the district court and held that a putative class of insurance agents for American Family Insurance Co. were properly classified as independent contractors under ERISA and, therefore, not entitled to ERISA benefits. The ruling helped to quell insurance industry uproar resulting from the district court's decision in 2017, much to the dismay of the several thousand current and former American Family agents who had argued the insurer misclassified them as independent contractors to avoid paying them ERISA-required benefits." [Jammal v. American Family Ins. Co., No. 17-4125 (6th Cir. Jan. 29, 2019]
Carlton Fields

Selected Discussions
on the BenefitsLink Message Boards

Timing of Deferrals for Self-Employed and Partners

Is it acceptable for salary deferrals to be funded well after the end of the plan year for self-employed individuals, i.e. sole proprietors? It's an ERISA plan, not a solo 401(k) plan.
BenefitsLink Message Boards

What Are Revenue-Sharing Payments to Third-Party Administrators?

Can someone tell me how to easily explain to a client what a revenue sharing payment is and how it's generated and paid to the TPA. We receive basis points on assets but I need to explain exactly how that affects the participant accounts.
BenefitsLink Message Boards

May (or Must) a Qualified Plan Allow Incoming Rollovers from Roth IRAs?

A participant is upset that his employer's qualified plan doesn't allow for a Roth IRA to be rolled over into the plan. How to respond?
BenefitsLink Message Boards

Participant Won't Accept a Required Minimum Distribution ... Now What?

A participant in the cash balance plan refuses to cash his RMD. He even sent the check back to the plan. How to proceed? I know the IRS has issued guidance about missing participants with respect to uncashed RMDs, but in this case the participant simply refuses to cash his check.
BenefitsLink Message Boards

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Press Releases

Most Popular Items in the Previous Issue

Fiduciary Litigation Update (PDF)
Employee Benefits Committee [EBC], American Bar Association

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David Rhett Baker, J.D., Editor and Publisher  davebaker@benefitslink.com
Holly Horton, Business Manager  hollyhorton@benefitslink.com

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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