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Retirement Plans Newsletter April 25, 2019 |
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Jobs
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Webcasts, Conferences Fiduciary Focus: Is 401(k) Loan Risk on Your Radar?
IRA Institute
Getting It Right - Know Your Fiduciary Responsibilities Seminar
Hardship Withdrawals from 401(k), 403(b) and 457(b) Plans
Prohibited Transactions
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Discussions |
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This Newsletter:
BenefitsLink Health & Welfare Plans Newsletter:
Message Boards Digest:
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Senior Auditor|
[Guidance Overview]
New Jersey to Require Certain Employers to Participate in 'Auto-IRA' Program "Employers will be ... required to automatically enroll their employees in the New Jersey Secure Choice Savings Program if they: [1] Employed no fewer than 25 employees at all times in New Jersey in the prior year; [2] Have been in business for at least two years; and [3] Have not offered a qualified retirement plan ... Implementation of the Program and the beginning of employee enrollment are to occur by March 28, 2021[.]"
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[Advert.]
There's Still Time to Join Us at Washington Legislative Update!
How will the new Congress affect your benefit plan? Attend this conference to learn from experts on how your plans may be impacted by proposed legislation. Join us next month to access a direct pipeline to what's happening on the Hill. |
![Sponsored by International Foundation of Employee Benefit Plans [IFEBP]](https://benefitslink.com/bnrs/2019/IFEBP_WashUp_top.jpg "Sponsored by International Foundation of Employee Benefit Plans [IFEBP]")
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[Guidance Overview]
IRS Expands Plan Self-Correction Program "Although the new guidance allows plan sponsors to correct plan document failures without formal IRS approval, they have a limited time period in which to do so. This underscores the importance of periodically reviewing plan documents and catching errors quickly.... Because operational failures based on a misunderstanding of plan document provisions can sometimes continue for extended periods of time, and SCP is available for long-term errors only if those errors are 'insignificant,' there may be additional pressure on the boundaries of that standard."
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[Guidance Overview]
Enhancements to EPCRS Are Great News for Plan Sponsors "The IRS has rightly concluded that an expansion of the self-correction process will promote voluntary compliance for retirement plans and reduce the costs and burdens of compliance on employers. And the IRS intends to offer examples on its website that will help plan sponsors identify significant versus insignificant operational failures, which may also expand the use of the self-correction procedure."
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IRS Modification of User Fees for VCP Submissions Will Negatively Impact Small Plans "Many larger plans will welcome these changes as they can reduce the VCP user fee from $15,000 to $3,500 (a decrease of over 75%) ... Small plans should consider the new fee schedule when determining the benefit of correcting plan errors under VCP. The self-correction program (SCP) under EPCRS is still available, with no user fee, to correct certain operational errors."
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Why Do Employees Cash Out Their 401(k)/403(b) When They Leave? "[T]aking a withdrawal should be as easy as internet shopping. Whether it is via chat, telephone, messaging, etc., there should be a big flashing warning to participants considering this option: 'Do You Know There Are a Lot of Tax/Wealth Accumulation Consequences to This Withdrawal? Are You Certain You Wish to Proceed?' Otherwise, individuals who move from job to job have ample opportunity to cripple their retirement at each step along the way."
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The Need to Investigate Collective Trusts (PDF) "Some recent Court decisions have taken different approaches to the issue of a plan fiduciary's obligation to consider collective trusts and insurance company separate accounts as alternative investments to mutual funds.... Although the failure to consider collective trusts and separate accounts may not be a breach of fiduciary duty, it may be an evolving best practice for the applicable plan fiduciary to at least consider such alternatives."
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"This interactive tool allows the user to explore seven policy options that could be used to improve the Social Security program's finances and delay the trust funds' exhaustion. Four options would reduce benefits, and three options would increase payroll taxes. The tool allows for any combination of those options. It also lets the user change implementation dates and choose whether to show scheduled or payable benefits.... The tool also shows the impact of the options on different groups of people."
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2019 Analysis of PBGC Premium Burden for Plan Sponsors (PDF) 36 pages. "While many sponsors have taken big steps to reduce premiums, hundreds of plans continue to leave easy money on the table.... [C]lose to $60 million in premiums could have been saved in 2017 -- and over $500 million between 2010 and 2017 -- by adopting very modest changes to contribution timing and recording. If we include large voluntary year-end contributions in the analysis, missed savings between 2010 and 2017 total $1.2 billion."
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Benefits in General |
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[Official Guidance]
"The Treasury Department's Office of Tax Policy and the Service use the Priority Guidance Plan each year to identify and prioritize the tax issues that should be addressed through regulations, revenue rulings, revenue procedures, notices, and other published administrative guidance.... Please submit recommendations by Friday, June 7, 2019, for possible inclusion on the original 2019-2020 Priority Guidance Plan."
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[Opinion]
New on the Supreme Court Docket: ERISA and 'Damages' in Equity "[On April 22] the Supreme Court called for the views of the Solicitor General on Putnam Investments, LLC v. Brotherston, a case about the burden of proving causation for losses in ERISA suits. There is a 6-4 circuit split about whether the ERISA plaintiff or the fiduciary defendant has the burden of persuasion regarding whether the fiduciary defendant's breach caused the loss.... [T]here are at least three reasons to think the fiduciary defendant has this burden."
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Selected Discussions |
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Adding Distribution Options to a 457(b) Plan The plan currently allows only lump sums 60 days after date of termination. All current participants are active with no plans to leave or retire. Is there any problem with adding the ability to defer the distribution of an account following termination of employment, or adding installment options? All of those pesky rules that make this essentially impossible in a 409A context don't seem to apply here.
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Can 5% Owner Avoid RMDs at 70-1/2 by Selling Some or All of His Ownership? A 5% owner of a law firm is approaching age 70 and would like to be bought out of his ownership share in order to avoid the otherwise required minimum distributions from his 401(k) plan. Would this work? For example, is there a "lookback" period the IRS has on a situation like this? Also, is there a separate IRS table for calculating RMDs from a 401(k) as opposed to an IRA?
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Can I Stretch Out My Payments from My Employer's Nonqualified Deferred Comp Plan? I am an employee who has a sum invested in an unfunded NQDC plan with my employer. The plan document states distribution triggered by separation will be distributed in 5 annual (yearly) payments. For obvious reasons I would prefer distribution to be extended to smaller annual payment over a greater time period. If in principle both the employee and employer agree to this, can it be done?
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Press Releases |
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Retirement Advisors Invited to Participate in the 2019 "Marketing Effectiveness Survey"
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TRA Introduces Julie Costello, New Regional Sales Consultant
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Most Popular Items in the Previous Issue |
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Corrections Made Easier: IRS Expands the Self-Correction Program
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Triple Stack Match Formula Can Maximize Contributions Without Discrimination Testing
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Connect
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BenefitsLink.com, Inc.
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Winter Park, Florida 32789
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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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