Retirement Plans Newsletter

April 26, 2019

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[Official Guidance]

Text of IRS Publication 4810: Specifications for Electronic Filing of Form 8955-SSA (PDF)

"What's New in 2018: [1] The most recent version of Form 8955-SSA and companion instructions can be found [on the IRS website]. [2] FIRE System Availability ... [3] All FIRE account PINs will be required to be 10 unique numbers.... [4] FIRE accounts are required to have an established secret phrase to assist in resetting of passwords for FIRE Systems." [Rev. Nov. 2018; last Updated Apr. 25, 2019.]
Internal Revenue Service [IRS]

[Advert.]

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.


[Official Guidance]

Treasury Department Notice of Multiemployer Pension Plan Application to Reduce Benefits: Sheet Metal Workers Local Pension Fund

"The Board of Trustees of the Sheet Metal Workers Local Pension Fund ... has submitted an application to reduce benefits under the plan in accordance with [MPRA]. The purpose of this notice is to announce that the application ... has been published on the website of the Department of the Treasury, and to request public comments on the application from interested parties, including participants and beneficiaries, employee organizations, and contributing employers of the Sheet Metal Workers Local Pension Fund."
U.S. Department of the Treasury

Settlement in Vanderbilt 403(b) Case Raises Questions About Use of Participant Data for Marketing

"[T]he settlement is one of the first under which a plan fiduciary agrees to place limits on a service provider's use of plan data.... Given that the law firm representing the plaintiffs is very active in the ERISA class action field, it is quite possible that similar claims constructed around the value of plan and participant information could surface in future complaints."
Groom Law Group

Withdrawal Liability Assessments: How to Identify Possible Default Defendants

"On preliminary motions, the Judge permitted a trial on a withdrawal liability default claim that a company alleged not to be party to a collective bargaining agreement mandating fund contributions nonetheless is jointly and severally liable on a controlled group basis, or on an alter ego, single employer or joint employer relationship basis. This occurred even though the company had different owners, filed separate tax returns, maintained separate bank accounts and kept separate financial records, and even though the court cited no evidence of an intent to avoid withdrawal liability." [Trustees of the National Retirement Fund v. Fireservice Management LLC, No. 17-4003 (S.D.N.Y. Apr. 17, 2019)]
Seyfarth Shaw LLP

IRS Summarizes Issues for S Corporation ESOPs and Section 409(p)

"There are no prescribed correction methods for a violation of 409(p). Loss of S Corporation status and excise taxes are some of the consequences of a violation.... The Issue Snapshot is a reminder that the only prescribed method for preventing a nonallocation year is the 'transfer method,' which directs the plan administrator to transfer a formulated number of shares, for any participant who would otherwise become a disqualified person, to a non-ESOP account."
Williams Mullen

[Advert.]

Fiduciary Protection for Default Investments in 401(k) and Other Retirement Plans

Sponsored by Lorman and BenefitsLink

Apr. 30 webinar. Review basic fiduciary standards and duties, and how ERISA Section 404(c) may relieve fiduciaries of these duties for a participant's directed investment. BenefitsLink discount.


Morgan Stanley Settles CalPERS/CalSTRS Lawsuit Alleging Bad Investments

"One of the world's largest investment banks has agreed to put $130 million into the nation's biggest public pension system to settle accusations it knowingly sold bad investments that caused the retirement fund for millions of workers to lose money.... From 2003-07, Morgan Stanley sold California's two largest pension systems bundles of thousands of mortgage loans. But according to [the California Attorney General], the financial giant did not adequately assess those loans to remove the risky ones and lied about it to the pension systems."
Los Angeles Times

Editor's Pick A Stress Test of Philadelphia's Retirement System

"As of 2017, ... the [Philadelphia] retirement system was 43 percent funded.... [This] brief assesses whether recent reforms will allow the city's pension promises to be kept in a fiscally sustainable way, whether the plan will more effectively manage the risk of market volatility and underperformance as a result, and how future retirement system costs will affect Philadelphia's budget. To illustrate the range of outcomes that cities face ... the brief also presents summary data for [Baltimore, Chicago, Houston, and Pittsburgh]."
The Pew Charitable Trusts

Benefits in General

[Guidance Overview]

Editor's Pick Unrelated Business Income Tax Filings for 2018 Complicated by Tax Cuts and Jobs Act of 2017

"TCJA 2017 added section 512(a)(6) to the Code to provide that tax-exempt organizations that carry on more than a single unrelated trade or business must first determine UBTI separately for each unrelated trade or business.... Since the UBTI rules allow an exempt organization to offset gross income with deductible expenses that are directly related to producing such income, the identification of expenses associated with different trades or businesses will now have heightened significance because such expenses cannot be offset against income from other trades or businesses."
Buck

Proposed Overtime Rule May Affect Employee Benefit Plans

"If retirement plan sponsors pay more overtime to more employees, both [DB] and [DC] plans that recognize overtime in their definition of earnings may see increased costs ... [A] plan's NHCE accrual rates and deferral/contribution percentages may fall if the plan excludes overtime from the pay used to determine benefits but includes overtime in the pay used for nondiscrimination testing.... Employers should check to see if eligibility for any health or fringe benefits (such as adoption or education assistance, employee discount programs, or group term life insurance) is conditioned on an employee's exempt or nonexempt status."
Mercer

Editor's Pick Department of Labor EBSA Enforcement Results and Priorities

"The 2018 statistics reveal that EBSA continues to focus on its national priorities and major cases in which it can accomplish the biggest impact and recovery. Left unsaid by EBSA is our experience that EBSA is demanding higher amounts in order to settle audit findings.... While EBSA's published statistics focus on how many cases it closed and resolved, Euclid's internal monitoring of EBSA enforcement of multi-employer plans has found that the agency initiated more audits in 2018 than 2017.... While the focus on missing participants is more well known, EBSA has increased its investigative focus on health plans, including ACA and mental health compliance."
Euclid Specialty Managers

Selected Discussions
on the BenefitsLink Message Boards

VCP Correction for SIMPLE IRA: What Are 'Excess Amounts'?

I've discovered (hiding in plain sight) a VCP correction for a SIMPLE IRA maintained by an employer who became an ineligible employer by exceeding the 100 employee limit in 2 prior years. The correction appears to allow the contributions to stay in the SIMPLE IRA accounts but also appears to require an additional sanction of at least 10% of the "excess amounts" plus loss of the employer deduction for the "excess amounts." My question is, what are the "excess amounts"? If none of the contributions exceeded the employee deferral limits or the employer contribution limits, does that mean we have no "excess amounts" and no additional sanction?
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Lois Baker, J.D., President  loisbaker@benefitslink.com
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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