Retirement Plans Newsletter

April 10, 2019 logo logo
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Retirement Plan Administrator
PlanTech, LLP
in Birmingham AL / Telecommute

Compensation and Workforce Planning Manager
George Mason University
in Fairfax VA

Client Service Associate
Beneco Systems, LLC
in Scottsdale AZ

Retirement Plan Administrator
ERISA Services, Inc.
in Knoxville TN / Telecommute

Retirement Plan Relationship Manager
ERISA Services, Inc.
in Knoxville TN / Telecommute

Retirement Plan Compliance Officer
ERISA Services, Inc.
in Knoxville TN / Telecommute

Defined Benefit Plan Administrator
Northeast Professional Planning Group, Inc
in Red Bank NJ / Tarrytown NY

401k Plan Administrator
National TPA
in CT / MA / NY / RI

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[Guidance Overview]

The DOL's Temporary Enforcement Policy: Potential Traps for the Unwary

"[F]or advisors who are fiduciaries, the loss of the BIC Exemption -- which permitted the receipt of 'conflicted compensation' when an advisor satisfied best interest and disclosure requirements -- is problematic. Fortunately, the DOL recognized that problem and provided relief in Field Assistance Bulletin 2018-02 ... [T]he FAB relief doesn't provide relief for prohibited transactions resulting from discretionary investment decisions.... The relief afforded by the FAB applies only to DOL and IRS enforcement of the prohibited transaction rules. It does not prevent claims by plan fiduciaries, participants or IRA owners."
Drinker Biddle


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DOL Continues Active Enforcement, Terminated Vested Participant Investigations Increase

"[E]nforcement action recoveries ... nearly doubled from $352.0 million in 2016 to $682.3 million in 2017.... From fiscal year 2017 to 2018, ... enforcement action recoveries ... again increased (by 61%) from $682.3 million in 2017 to $1.1 billion in 2018.... [T]he most significant portion of these recoveries come from one EBSA enforcement initiative: the Terminated Vested Participant Project (TVPP)."
Morgan Lewis

Wells Fargo Sells Retirement Plan Unit for $1.2 Billion

"Principal Financial signed a $1.2 billion deal on Tuesday to acquire Wells Fargo's institutional retirement and trust business. The unit serves 7.5 million retirement customers across the United States, offering 401(k), pension, employee stock ownership and other services used by employers.... The Wells Fargo business had $827 billion in assets under administration at the end of the year."

Parties Propose $23.65 Million Settlement in Anthem 401(k) Excessive Fee Lawsuit

"[W]hile it's not unusual -- at least for suits brought by the Schlichter law firm -- to call for changes in plan administration and process, this settlement includes some fairly specific directives and timeframes for the Anthem fiduciaries.... This wasn't a situation where the fiduciaries ignored the counsel of an advisor who told them they were paying too much for record keeping fees, or where the plan fiduciaries had taken no action following their review of that fund menu ... [H]ere what seems to have made the fund charges unreasonable was simply that that they were not the cheapest option available."
National Association of Plan Advisors [NAPA]

Editor's Pick Recent Cases on Multiemployer Plan Withdrawal Liability (PDF)

29 pages; ABA EBC 2019 Midwinter Meeting Report. Outline of recent litigation involving multiemployer plans.
Employee Benefits Committee [EBC], American Bar Association


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.

Editor's Pick Specialized Types of Retirement Income Plans: Recent Developments (PDF)

12 pages; ABA EBC 2019 Midwinter Meeting Report. Outline of statutory and regulatory developments for ESOPs, 401(k) plans, IRAs, and Section 457 plans.
Employee Benefits Committee [EBC], American Bar Association

Editor's Pick The Long Bull Market Has Failed to Fix Public Pensions

"There is a simple reason why pensions are in such rough shape: The amount owed to retirees is accelerating faster than assets on hand to pay those future obligations. Liabilities of major U.S. public pensions are up 64% since 2007 while assets are up 30% ... Here is how it got that way[.]"
The Wall Street Journal; subscription may be required

Planning for a 40-Year Retirement Is Possible

"86% of respondents confessed to anxiety about funding their retirement lifestyle through their retirement account investments ... [S]ix in 10 said $10,000 more per year of guaranteed retirement income would help ease their minds.... 75% of survey respondents said guaranteed income every year for life would give them greater levels of happiness and satisfaction in retirement."
PLANSPONSOR; free registration may be required


Amicus Brief of Employer Organizations Supporting Supreme Court Review of Second Circuit Stock Drop Case

"The [Second Circuit decision] creates a Circuit split by holding that Dudenhoeffer's context-sensitive pleading standard can be satisfied by mere generalized allegations that the harm of an inevitable disclosure of an alleged fraud generally increases over time. If left to stand, the decision would make it significantly easier for plaintiffs to survive a motion to dismiss and proceed into costly discovery when bringing baseless claims challenging a company's decision to offer an employee stock ownership plan (ESOP) among the investment options in an ERISA plan." [Jander v. Ret. Plans Comm. of IBM, No. 17-3518 (2d Cir. Dec. 10, 2018; cert. pet. filed Mar. 4, 2019)]
Chamber of Commerce of the United States of America, American Benefits Council, and ERISA Industry Committee [ERIC]

Benefits in General

Estimates of the Financial Effects on the Social Security (OASDI) Program Assuming Enactment of the 'New Parents Act of 2019' (PDF)

"[If] enacted, this Bill would have a negligible effect on the long-range OASDI actuarial balance (that is, less than 0.005 percent of taxable payroll). In early years (through 2032), when parental leave benefits would be paid but few eligible parents would have experienced the effects of a delayed [Normal Retirement Age/Earliest Eligibility Age] or reductions to their OASDI benefits, this provision would result in more cost to the OASI Trust Fund. In years after 2032, when we project that no parental leave benefits would be paid, the OASI and DI Trust Funds would see a reduction in benefit cost compared to current law[.]"
Office of the Chief Actuary, U.S. Social Security Administration [SSA]

Executive Compensation
and Nonqualified Plans

Market Benchmark Pay Data in Context

"[M]any companies will review market benchmark pay data in the next few months. When used appropriately, market benchmark data provides a valuable tool to help make informed pay decisions, but should not be used without appropriate context. Consideration must be given to other individual and company-specific factors in evaluating where the executive should fall relative to the benchmark. [This article describes] a few key considerations for the effective use of market pay data."
Meridian Compensation Partners, LLC

Selected Discussions
on the BenefitsLink Message Boards

Consider Regular Contributions to Be Catch-Up Contributions?

I recently started a new job as benefits manager. Our recordkeeper (a public company) says their testing department typically reclassifies regular (non-catch-up) contributions as catch-up contributions in order to help our test results. Anyone ever seen/heard of this?
BenefitsLink Message Boards

Overzealous Auditors: A Trend?

Is it an industry trend for pension plan auditors to go nuclear and penalize a plan sponsor with all kinds of notes for seemingly minor data discrepancies such as one participant's date of birth off by a year (out of 400 total participants), or a gender being incorrect on 3 participants?
BenefitsLink Message Boards

Merged MP into PS; Effect on In-Service Withdrawals

Can money from a money purchase plan that has been merged into a PS plan be withdrawn in-service?
BenefitsLink Message Boards

Plan Sponsor (Mom) Wants to Pay Off Loan to a Participant (Son)

A client called this morning to say that she (owner of the company sponsoring the plan) wants the company to pay off an existing participant loan. The participant happens to be her son who of course is Key and HCE by virtue of his relationship to his parents, the owners. He is currently making payroll deducted payments but "the company" wants to pay his loan off for him in 4 quarterly installments beginning now. What would be the legal and administrative issues?
BenefitsLink Message Boards

Projected Limits for Next Year: Going Up

CPI-U released today (Apr. 10) -- 254.202, a huge spike from last month (February was only 252.776). At that rate the 415 limit will be $57,000 and the comp limit will be $285,000. The rates used to determine the limits (July -- August) never have been less than the March value, so even at this early date, it's looking like the limits will increase.
BenefitsLink Message Boards

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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, 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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