Retirement Plans Newsletter

April 18, 2019 logo logo
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Account Manager
Major Retirement Services Provider
in MA

Employee Benefits Attorney
Krieg DeVault
in Indianapolis IN

Sales Director - Retirement Income Solutions
in New York NY / Tampa FL / Saint Louis MO

Plan Administrator for Retirement Plans
TPA Firm

Retirement Plans Specialist
The First National Bank in Sioux Falls
in Sioux Falls SD

Senior Defined Contribution Plan Administrator
United Retirement / MGA Consultants
in Ellicott City MD

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Webcasts, Conferences

What's All the Buzz About? Cutting Through the Noise to Find the Right Benefits Strategy
April 25, 2019 WEBCAST

Your Financial Future Starts Now
April 25, 2019 WEBCAST
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

"DB-ification" of DC Plans
May 8, 2019 WEBCAST
Conference of Consulting Actuaries

Employee Benefits Briefing
May 9, 2019 in CA
Nixon Peabody LLP

ERISA 403(b) Plans vs. Non-ERISA 403(b) Plans
May 16, 2019 WEBCAST

New ERISA Regulations for Disability Claims and Appeals
May 23, 2019 WEBCAST
Lorman Education Services

Financial Stress in America: The Cost to Companies and Their Employees
May 30, 2019 in TX
Qualified Plan Advisors

Getting It Right - Know Your Fiduciary Responsibilities Seminar
June 5, 2019 in MI
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

Benefit Plans in M&A: Transitioning Pension, Savings and Welfare Plans
July 16, 2019 WEBCAST

Complex Testing / Multiple Plans
July 18, 2019 WEBCAST
ASPPA [American Society of Pension Professionals & Actuaries]

►See 182 Upcoming Webcasts and Conferences

►See 1516 Recorded Webcasts


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[Guidance Overview]

Recently Issued IRS Snapshot Provides Guidance for S Corporation ESOPs

"[An IRS Issue Snapshot] provides several important reminders to S corporation ESOPs and ESOP practitioners regarding acceptable methods for complying with Section 409(p)'s requirements and preventing potential penalties.... [O]ne of the alternative methodologies, such as excluding allocations to potentially disqualified persons or expanding allocations to certain nonhighly compensated employees, can be used. The IRS cautions, however, that while these methods may be used, the methods must also satisfy all other applicable qualified plan requirements, including -- but not limited to -- nondiscrimination, anti-cutback and definitely determinable benefit rules."
Holland & Knight


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[Guidance Overview]

IRS Reverses Course on Retiree Lump-Sum Windows

"This de-risking strategy might be an appealing way to reduce pension funding risks for employers, as well as an opportunity to reduce premiums paid to the [PBGC].... As illustrated by the lack of IRS endorsement for these cashouts in Notice 2019-18, there are a myriad of potential compliance issues that need to be considered when offering a lump-sum cashout window to plan participants."
Reed Smith LLP

Capturing Value in 401(k) Recordkeeping Consolidation

"Given the US defined-contribution market's abundance of competitors, pricing pressure, and the IT-intensive nature of the business, it is no surprise it has gradually consolidated over the past decade ... [S]trategic acquisitions in the record-keeping space have not delivered their full potential and the economics fall short of pre-deal models.... [P]otential buyers should have a clear understanding of what is required to be successful and leverage a highly tailored approach to the M&A process, recognizing the uniqueness of the industry."

Tussey v. ABB Closes with $55 Million Settlement; Complex Case Changed Views of Fees, Fiduciary Duty

"Of the total settlement award, $20.8 million, or nearly 40 percent, will go toward attorneys' fees and litigation costs.... Three named class representatives in the two ABB 401(k) plans in the case will be awarded $25,000, and the remainder will be paid out to plan participants in the class period from December 29, 2000, through December 31, 2007. The settlement also requires ABB to conduct a search for recordkeeping services, rebate any revenue-sharing fees back to plan participants, and employ the 'loyal selection' of 401(k) investments going forward, according to a court document."
HR Daily Advisor

Part-timers Improperly Excluded from Your 403(b) Plan? There's Still Time to Correct That!

"Employers that were not aware that employees once eligible to participate in a 403(b) plan must always be eligible, regardless of their current status as part-time employees, now have the chance to fix their plan and operations without penalty and without retroactive contributions. The fix applies generally to operations beginning with 2019 and to plan amendments made by March 31, 2020."

One Year to Go Until the 403(b) Restatement Deadline

"Not-for-profit organizations have an opportunity during the restatement period to align their retirement plan procedures with their written plan documents to help ensure that their retirement plans are following best practices. Changes may need to be made to the operations of the plan, the provisions in the plan documents or both."

Can a Cannabis Company Have Its Employees Participate in a 401(k) Plan?

"[Chief Counsel Memorandum 201504011] is the IRS's confirmation and clarification that, although a cannabis company cannot claim deductions for trafficking marijuana, it may take a cost-of-sales adjustment for indirect production-related business expenses.... Treasury regulations governing indirect expense explicitly provide that 'costs include contributions paid to or made under any . . . pension, profit-sharing . . . or other plan deferring the receipt of compensation.' "
AllThingsERISA at FisherBroyles

Editor's Pick The Spot Rate Method, Lump Sums, and Potential Audit Requirements

"The combination of lack of consensus on proper application of the new method, along with agreement that it is preferable and the change is irreversible, has on occasion led to some unfortunate results. Auditor requirements related to application of the spot-rate method may have adverse effects on an employer's pension cost, and if the change is irreversible then the employer is stuck with the bad effect."

Colorado Rolls Out a Welcome Mat for ESOPs

"[The] 'Commission on Employee Ownership' within the Colorado Office of Economic Development and International Trade ... will have a three-pronged approach: [1] establishing a network of technical support for companies wanting to convert to employee ownership by collaborating with accountants and attorneys to facilitate such conversions; [2] educating businesses and local leaders about the economic and community benefits of employee ownership; and [3] removing obstacles to the advancement and development of employee ownership."
Holland & Hart LLP

FINRA's Variable Annuity Enforcement Efforts in 2018 (PDF)

"In 2018, FINRA imposed more than four times the amount of fines compared with 2017. In 2018, FINRA settled 28 cases, imposing nearly $8.1 million in fines.... FINRA brought 23 VA cases in 2017, imposing $1.9 million in fines. Three of the 2018 settlements levied fines exceeding $750,000, which was the largest fine assessed in a VA case in 2017."
Eversheds Sutherland

Benefits in General

Global Benefits Governance and Operations Study, 2018-19 (PDF)

67 pages. "Increasing costs and risks posed by employer-sponsored benefits programs around the world continue to drive centralization trends in global benefits management. Yet companies struggle to make decisions in the absence of ready access to information and the necessary infrastructure to execute their benefits strategy. This new study explores best practice in global benefits management and offers insights into what companies can do to improve alignment of benefits with organizational strategy and better manage the costs and risks of global benefits."
American Benefits Council

Selected Discussions
on the BenefitsLink Message Boards

Any Way to Get Lower VCP Fee at This Point?

We submitted an anonymous VCP application in 2017 when the fee was $10,000. Under the latest procedure, the fee is only $3,500. Any way to apply the new fee schedule? The VCP process is ongoing.
BenefitsLink Message Boards

ADP Failure; Dividing Corrective Distributions Between Traditional and Roth Sources

Let's say the plan failed ADP testing and a participant has both Roth and Traditional sources. If the plan document doesn't state the order in which the corrective distributions should be done, how would you process the corrective distributions? Would you process it proportionately from each source or would you start with Traditional source first and then do Roth source if the amount exceeds Traditional source?
BenefitsLink Message Boards

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Press Releases

Most Popular Items in the Previous Issue

Evaluating the DOL Regs and Guidance on ERISA Bonding Requirements and Exploring Reform Considerations (PDF)
Advisory Council on Employee Welfare and Pension Benefit Plans, Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

Lifetime Income Solutions as a QDIA: Focus on Decumulation and Rollovers (PDF)
Advisory Council on Employee Welfare and Pension Benefit Plans, Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

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David Rhett Baker, J.D., Editor and Publisher
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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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