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May 13, 2019 logo logo
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Automatic Rollover IRA Sales Specialist
PenChecks Trust
in San Diego CA / Telecommute

Management and Program Assistant (Pathways Intern)
Pension Benefit Guaranty Corporation
in Washington DC / Telecommute

Actuary- DH
Pension Benefit Guaranty Corporation
in Washington DC / Telecommute

Manager - North America Benefits
Air Products and Chemicals, Inc
in Allentown PA

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[Guidance Overview]

IRS Opens Determination Letter Program to Cash Balance Plans and Merged Plans

"The IRS will not impose any sanctions on a plan for a document failure relating to implementation of the final hybrid plan regulations that [is] discovered during the determination letter application review process. Any other document failures discovered during the review process will get the benefit of a limited penalty ... Qualified plan mergers that took place in 2018 are still eligible for submission prior to December 31, 2019 (assuming a calendar year plan). No sanctions will be imposed related to the merger amendment. For other document failures, the same rules apply as for hybrid plans."
Nelson Mullins


Give Your Plan Participants Peace of Mind for Retirement

Sponsored by International Foundation of Employee Benefit Plans [IFEBP]

Ready or Not: Your Retirement Planning Guide will help employees prepare for a satisfying and comfortable retirement. This book covers a wide range of topics that will help your plan participants feel prepared and confident going into retirement.

Editor's Pick Financial Statement Issues May Make Plan Terminations Problematic Even for Some Overfunded DB Plans

"When a sponsor terminates an overfunded DB plan and buys annuities to settle plan liabilities ... [1] Plan liabilities may have to be written up, reducing net worth. [2] That write-up typically will have to be run through the income statement, generating a (non-recurring) expense and reducing net income. [3] Unrecognized losses may also have to be run through the income statement.... [4] Any 'pension income' generated by the plan surplus will disappear -- reducing future net income. These financial hits -- particularly for earnings sensitive companies -- may make the cost of terminating an overfunded plan prohibitive."
October Three Consulting

St. Joseph Pension Receiver Seeks ERISA Coverage and PBGC Protection

"In an interim report to Rhode Island Superior Court Judge Brian Stern ..., receiver Stephen Del Sesto said that he asked the [DOL] to have the plan covered retroactively to July 2017, before he became the receiver, and tendered an initial premium payment to the PBGC.... The receiver is also overseeing several lawsuits against the plan sponsors and the Diocese of Providence in federal and state courts."
Pensions & Investments

2019 ERISA Advisory Council Issue Statement: Permissive Transfers of Uncashed Checks from ERISA Plans to State Unclaimed Property Fund (PDF)

"The 2019 Council's objective is to review the treatment and procedures utilized by state unclaimed property funds, which may vary significantly between states.... [T]he purpose of the review is to explore whether there are circumstances in which voluntary transfers of uncashed distribution checks to a state unclaimed property fund advances the [DOL's] goal of reuniting Missing Participants with their retirement savings."
Advisory Council on Employee Welfare and Pension Benefit Plans, Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

Going It Alone with Retirement Planning Software

"Many so-called retirement models concentrate almost solely on investment results. Those are investment models, not retirement models. A comprehensive retirement plan will consider many factors including Social Security maximization, annuitization, life insurance, estate planning, taxes, and others."
The Retirement Cafe


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Editor's Pick Present Law and Background Relating to Challenges in the Retirement System

65 pages. "The Senate Committee on Finance has scheduled a public hearing on May 14, 2019, on Challenges in the Retirement System. This document ... provides a discussion of present law and data." Topics: [1] Present law: Tax-favored employer-sponsored retirement plans; Defined contribution plans; Individual Retirement Arrangements (IRAs); and Early distributions and required minimum distributions. [2] Data relating to retirement savings: Overview; General data on qualified retirement plan participation; Data related to Social Security benefits as a source of retirement income; and Assets held outside of qualified plans and IRAs.
Joint Committee on Taxation [JCT], U.S. Congress

California Governor Boosts School Pension Cost Relief Plan

"In addition to using non-Proposition 98 state money to pay part of school rates, the governor's plan would spend $2.3 billion over four years to pay down the school district share of CalSTRS debt, saving more than $7 billion over three decades. With state aid to get over the hump of the last two years of rising CalSTRS rates, struggling school districts would then face rates, under current projections, that drop slightly and remain stable for more than two decades."

Highlights from the Social Security Trustees Annual Report

"[T]he Trustees Report includes a few suggestions on how to resolve this pending depletion of the Trust Funds.... If changes are made immediately, any one of the following permanent changes would make the OASDI Trust Fund solvent for the next 75 years. [1] The payroll tax ... would need to increase from 12.4%1 to 15.18%, an increase of 2.78%. [2] Benefits scheduled to be paid to all current and future beneficiaries would have to be reduced by 17%. [3] Benefits scheduled to be paid to anyone who becomes eligible for benefits in 2018 or later would have to be reduced by 21%.... If action is deferred until 2034, the year the OASDI Trust Fund is scheduled to be depleted, either of the following permanent changes would ensure solvency through the 75-year period: [1] Increase the payroll tax from 12.4% to 16.27%, an increase of 3.87%. [2] Reduce the amount paid to all beneficiaries by 23%."
Robert W. Baird & Co.

Benefits in General

2019 ERISA Advisory Council Issue Statement: Improving the Financial Statement Audit Process (PDF)

"[T]he focus of this inquiry is on increasing the knowledge and understanding of the plan administrators that procure financial statement audit services and on improving the procedures that such plan administrators implement in selecting an auditor, preparing for the audit, communicating with the auditor before, during, and after the audit, and adopting changes in the plan's documentation, operations, policies, or procedures based on the results of the audit."
Advisory Council on Employee Welfare and Pension Benefit Plans, Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

Selected Discussions
on the BenefitsLink Message Boards

Start New 401(k) Within 12 Months of Terminating a Profit Sharing Plan?

Company terminated PSP recently and wishes to put in a new 401(k) Plan in its stead. Does the 12-month rule apply to terminated PSPs in the same way that it applies to 401k Plans? That is, are they allowed to setup a 401k within 12 months of terminating a PSP?
BenefitsLink Message Boards

Mid-Year Change to EACA -- Adding Auto-Escalation

Can an EACA arrangement be amended for auto escalation any time during a plan year or must the auto escalation be effective as of the beginning of a plan year? It has been an EACA arrangement but did not previously have an auto escalation feature and they want to add one.
BenefitsLink Message Boards

Remarriage After Designation of Beneficiaries

Participant divorces his Wife. Participant then names their children as beneficiaries of his 401(k) plan. Then the participant marries another person. Three years later, he dies. Does the second wife have any spousal right to the death benefit? That is, does the participant's subsequent marriage supercede his previous designation of the children?
BenefitsLink Message Boards

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Press Releases

NAPA Welcomes Jania Stout as 2019 President
National Association of Plan Advisors [NAPA]

Most Popular Items in the Previous Issue

De-Risking Pitfalls: Annuity Contracts, Plan Terminations and the Excise Tax on Surplus Assets (PDF)
Groom Law Group, via Bloomberg Tax Management Compensation Planning Journal

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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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