Retirement Plans Newsletter

May 8, 2019 logo logo
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Retirement Plan Administrator for DC Plans
Ingham Retirement Group
in Miami FL / Telecommute

Mid-Level Pension Administrator
Robin S. Weingast & Associates, Inc.
in Garden City NY

Employee Benefits Security Administration, U.S. Department of Labor
in Washington DC / Telecommute

Auditor - Recent Graduate
Employee Benefits Security Administration, U.S. Department of Labor
in Fort Wright KY / Telecommute

Employee Benefits Investigator (Recent Graduate)
Employee Benefits Security Administration, U.S. Department of Labor
in Fort Wright KY / Telecommute

Benefits Advisor
Employee Benefits Security Administration, U.S. Department of Labor
in Chicago IL / Telecommute

Investigative Assistant
Employee Benefits Security Administration, U.S. Department of Labor
in Chicago IL

Senior Policy Advisor
Centers for Medicare & Medicaid Services, U.S. Department of Health and Human Services
in Washington DC

Health Insurance Specialist (Technical Advisor)
Centers for Medicare & Medicaid Services, U.S. Department of Health and Human Services
in Woodlawn MD / Telecommute

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[Guidance Overview]

IRS Reopens Determination Letter Program for Certain Plans

"For sponsors of individually designed cash balance and other statutory hybrid plans, [Rev. Proc. 2019-20] provides an important but time-limited opportunity to confirm whether their plan documents are fully compliant with the final cash balance regulations, including the IRS' requirements for using a 'market rate of return' for a plan's interest crediting rate.... Sponsors of traditional defined benefit plans that may be considering converting to a cash balance or other hybrid formula should consider whether it may make sense to effectuate the conversion on or before August 31, 2020, in order to take advantage of this limited opportunity from the IRS."
Groom Law Group


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[Guidance Overview]

IRS Expands Determination Letter Program to Hybrid and Merged Plans

"The window for hybrid plans provides an opportunity for plan sponsors of these plans to obtain a review of all provisions related to the final hybrid plan regulations, which were not fully addressed in the most recent remedial amendment cycle. Note that the scope of the IRS review of a merged plan will not be limited to the merger-related amendment, and the review of a hybrid plan will not be limited to review of the plan provisions impacted by the final hybrid plan regulations."
Stinson Leonard Street

Do ERISA Fiduciaries Have the Burden of Proof on Loss Causation?

"There is a deep circuit split on who bears the burden of proving loss causation on ERISA breach of fiduciary duty claims. The Supreme Court has now invited the U.S. Solicitor General to submit the United States position on the issue in connection with a petition for a writ of certiorari from a First Circuit decision finding that the burden of proof shifts to the breaching fiduciary to disprove causation once a plaintiff proves loss." [Putnam Investments, LLC v. Brotherston, No. 17-1711 (1st Cir. Oct. 15, 2018; cert. pet. filed Feb. 11, 2019, No. 18-926)]
Seyfarth Shaw LLP

University Settles Claims Involving Use of Retirement Plan Participant Data for Cross-Selling by Recordkeeper

"As the Vanderbilt settlement indicates, plan participants have become increasingly aware of the vulnerabilities associated with handling their data, as well as how their data is being used by plan vendors. In addition to monetary compensation, the Vanderbilt settlement stipulates that vendors such as recordkeepers cannot use employee participant data to market or sell products unrelated to the retirement plan to the participants, unless the participants initiate."
Jackson Lewis, via Lexology; free registration required

A New Fight Breaks Out Over 401(k) Fees

"On average, the fees 401(k) participants pay for investments and administrative services fell from 0.65% of assets in 2009 to 0.51% in 2015 ... That has meant millions of dollars in lost revenue for asset managers and record-keepers ... In response, some 401(k) administrators are pursuing new sources of revenue."
The Wall Street Journal; subscription may be required


Check Out's Upcoming CE Webinars

Sponsored by Wolters Kluwer

Upcoming webinars feature 5500 experts Linda T. Fisher and Mary B. Andersen, Charles Brown from EGPS, and Sarah Simoneaux! Topics: Form 5500 industry update, defined benefit documents, service provider communication best practices and more! VIEW NOW

Switching 401(k) Providers? Avoid These Costly Surprises

"[1] Your current retirement vendor may charge you to switch to a new 401(k) provider.... This is common practice in the 401(k) industry.... [2] Before you sign with a new plan, ask if they will prorate the first quarter's fees based on the actual time you are in the plan.... [3] Make sure you are paying attention to both the employer expenses as well as the employee expenses."

Is Your Defined Benefit Plan Ready to Terminate?

"If your plan has a Projected Benefit Obligation (PBO) calculated yearly and the assumptions are conservative and up-to-date, chances are that the plan is financially ready (or nearly ready) when it is funded in a range of 105% to 120% of PBO.... Operational readiness ... means you: Know where to find participants (with high accuracy); Can demonstrate (on an individual level) how each participant's benefit was calculated -- for those not-in-pay status; Have complete beneficiary information; Have identified all potential alternate payees under the plan.... Plan design changes, such as closing the plan to new hires or freezing benefit accruals, are one step in the path-to-termination.... Clean data is key ... Not being able to complete the plan termination process in a timely manner can be costly."

PBGC's Single-Employer Guarantee Outcomes (PDF)

30 pages. "[1] A substantial majority (84 percent) of participants received 100 percent of the vested benefits they had earned under their plans. [2] 16 percent of vested participants had benefits reduced by one or more of the limitations considered in the current study.... 89 percent of reductions in the value of plan benefits were concentrated in just 10 plans. [3] 59 percent of the plans in this study had at least one participant whose benefits were reduced by one or more primary limitation provisions."
Pension Benefit Guaranty Corporation [PBGC]

Retirement Confidence Up, But Concerns Remain

"[T]wo-thirds of American workers (67%) feel confident in their ability to retire comfortably ... The share of workers reporting that they feel either very or somewhat confident has increased compared with last year (64% in 2018).... 41% of workers with a major debt problem say they are very or somewhat confident about having enough money to live comfortably in retirement, compared with 85% of workers who indicate debt is not a problem."
PLANSPONSOR; free registration may be required

Editor's Pick Social Security Primer

18 pages. "This report provides an overview of Social Security financing and benefits under current law. Specifically, the report covers the origins and a brief history of the program; Social Security financing and the status of the trust funds; how Social Security benefits are computed; the types of Social Security benefits available to workers and their family members; the basic eligibility requirements for each type of benefit; the scheduled increase in the Social Security retirement age; and the federal income taxation of Social Security benefits." [Report R42035, updated May 7, 2019]
Congressional Research Service [CRS]

Benefits in General

[Guidance Overview]

'Tax Cuts' Act Raises the Tax on Funds Generating UBTI (PDF)

"The tax code now requires that the trust or VEBA calculate gains and losses of each 'trade or business.' In the absence of regulations or additional guidance from the Treasury Department or the IRS providing otherwise, the IRC now appears to require that a trust or VEBA treat each investment fund as a separate trade or business. Therefore, the ability to calculate gains and losses on a net basis is lost. Further, the trust or VEBA may not use future NOLs generated by one fund to offset gains generated by another fund."
Groom Law Group, via planadviser

Selected Discussions
on the BenefitsLink Message Boards

IRS Pension Plan Burden Survey: Are Your Clients Responding?

Are people responding to this? I have a client who has received 3 reminders to complete this "voluntary" survey. Please advise what you are doing.
BenefitsLink Message Boards

Late Date of Adoption Agreement Signatures by Most of the Trustees

A plan was established in 2016. The TPA provided an adoption agreement effective January 1, 2016. One trustee signed it December 19, 2016 and the rest signed it 1/1/17. Contributions were not taken until 2017. What can the plan do to remedy this? They are moving to another recordkeeper, and the shortcomings like this with their current provider are why.
BenefitsLink Message Boards

SNHEC with Match and PS?

With a SHNEC provision, I know that discretionary matches above 4% are subject to ACP testing. If they also want to fund PS, how much of a margin could they have and still pass?
BenefitsLink Message Boards

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Press Releases

Most Popular Items in the Previous Issue

Overpayments ... If It Comes Back, It's Yours
Ferenczy Benefits Law Center

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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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