Retirement Plans Newsletter

May 22, 2019

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Account Manager
Pentegra
in NC / OH / Telecommute

Sr. Pension Actuarial Consultant
Nyhart
in San Diego CA

Healthcare Actuary
Nyhart
in Indianapolis IN

Retirement Account Administrator
Alerus Financial
in Arden Hills MN / Albert Lea MN / East Lansing MI / Troy MI / Bedford NH

Assistant Administrator
Sunwest Pensions
in Tempe AZ

Manager, COB / COBRA
1199SEIU Benefit and Pension Funds
in New York NY

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[Official Guidance]

PBGC Regulatory Agenda, Spring 2019

Proposed Rules: [1] Valuation Assumptions and Methods: Interest and Mortality Assumptions for Asset Allocation in Single-Employer Plans and Mass Withdrawal Liability Determination in Multiemployer Plans; [2] Benefit Payments; [3] Miscellaneous Corrections, Clarifications, and Improvements; [4] Administrative Review; [5] Multiemployer Plan Guaranteed Benefits; [6] PBGC-Approved Arbitration Procedures -- Multiemployer Plans; [7] Release of Official Information and Testimony by PBGC Employees; [8] Benefits Payable in Terminated Single-Employer Plans: Assumptions for Determining Lump Sum Amounts; [9] Examination and Copying of Pension Benefit Guaranty Corporation Records; [10] Filing and Issuance Rules; and [11] Improvements to Rules on Recoupment of Benefit Overpayments. Final Rules: [1] Methods for Computing Withdrawal Liability, and [2] Adjustment of Civil Penalties.
Pension Benefit Guaranty Corporation [PBGC]

[Advert.]

Legal Analytics help ERISA Litigators Win

Sponsored by Lex Machina

Join our complimentary webcast on May 30, unveiling the first ERISA Litigation Report with valuable trends and insights such as ERISA case timing, resolutions, damages, remedies, and findings.


Best Practices for Plan Sponsors: Lessons Learned from Litigation -- the Anthem Case

"The recent settlement of the Anthem case is a good example of the importance of using appropriate share classes and of other practices in selecting investments and monitoring service providers. This article discusses the complaint, the settlement and risk management for plan sponsors and their fiduciary committees."
FredReish.com

The IRS Determination Letter Program Reopens (a Little) for More Business

"The IRS clarifies in [Rev. Proc. 2019-20] that this determination letter opportunity cannot be used to avoid [VCP] user fees for any document failures discovered during the review.... If the failure meets a specific 'good faith' standard, it will only be subject to the reduced VCP sanctions. With respect to statutory hybrid plans, failures related to the final hybrid plan regulations are not subject to such sanctions. For merged plans, a failure related to the merger amendment itself is likewise not subject to sanctions."
Findley

Using Behavioral Finance to Drive Retirement Outcomes, Part 2

"As an industry, incredible amounts of time and money have been spent trying to educate people and get them to better balance short-term and long-term rewards with little incremental impact being made.... [W]orkers with income in the bottom quartile were projected to have to replace 82% of their pre-retirement income. Social Security was projected to contribute 59% and 23% needed to come from personal retirement savings. To replace that 23% of income, these workers needed total savings rates of between 9% and 11%."
Greenspring Advisors

Retirement Plan Participants' Trust in Providers: Much Room for Improvement

"[O]verall satisfaction with providers has declined by 24 percentage points in the past six years to a new low.... Only 25% of participants feel that they can always trust their employer. As to which factors build their trust, participants said satisfaction with the education provided, transparent fees, receiving relevant information, viewing their provider as if they were a partner and believing that the information the provider gives them is in their best interest."
PLANSPONSOR; free registration may be required

[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.


Interest Rates: Where to From Here?

"Understanding the dynamics that drive interest rates ... allows investors and pension sponsors to make informed decisions on how to deploy their bond portfolios and what to expect from their long-term, interest rate-sensitive liabilities. This article examines: [1] What are the drivers of short- and longer-term interest rates; [2] How those drivers impacted 2018 and 2019 year-to-date interest rates; and [3] What is likely for interest rates for the rest of 2019 and 2020?"
River and Mercantile Solutions

Recognizing the Importance of Employee Ownership, More States Move Forward with Pro-ESOP Initiatives

"Taking cues from Colorado, Missouri, Pennsylvania, Iowa, New Jersey, and Virginia, all of which have recently enacted legislation supporting and encouraging the establishment of ESOPs, the states of Texas, Indiana, and Nebraska are now moving forward with their own pro-ESOP initiatives."
Morgan Lewis

Senate Reintroduces Expansive Retirement Bill

"The Retirement Security and Savings Act of 2019 (S1431) ... would [1] let sponsors of 401(k), 403(b), governmental 457(b) and SIMPLE plans match their workers' student loan payments as if the payments were salary reduction contributions.... [2] make a number of changes to the Code Section 401(a)(9) rules for required minimum distributions (RMDs) ... [3] relax the rules for qualified longevity annuity contracts (QLACs) and commercial annuities to encourage retirees to choose those income-preserving options.... [4] expand the self-correction program (SCP) under IRS's Employee Plans Compliance Resolution System (EPCRS)."
Mercer

Navigating the Social Security Earnings Test When One Spouse Is Retired

"The decision of when to begin taking Social Security benefits is one of the most important questions for many retirees. Unfortunately, thanks to the maze of Social Security rules individuals must navigate, it is often also one of the most complex. And while many retirees are aware that claiming Social Security benefits 'early' can lead to a reduced benefit, research has shown that fewer individuals understand the Earnings Test rules that can also impact benefits when a young (pre-Full-Retirement Age) worker decides to claim benefits while also still working."
Nerd's Eye View

Multiemployer Pension Funded Status Falters in 2018 (PDF)

"The estimated investment return for our simplified portfolio for the 12 months ending December 31, 2018, was about -5%, resulting in double-digit losses compared to plans' investment return assumptions. The average investment return assumption dropped from 7.34% in our Fall 2018 study to 7.26%. The aggregate funded percentage for multiemployer plans is estimated to be 74% as of December 31, 2018, down from 81% as of June 30, 2018."
Milliman

[Opinion]

Editor's Pick Things You Probably Didn't Know About Retirement Savings

"[1] People are saving more than ever.... [2] Retirement savings are higher than they ever have been.... [3] Retirees say that they're doing fine.... [4] The poverty rate for retirees is falling.... [5] Coverage by traditional pensions was not that high in their 'golden age.' ... [6] Social Security benefits are more adequate than you think.... [8] The way Social Security is fixed can have a significant effect on the economy.... [9] U.S. retirement plan assets are far larger than other countries'.... [10] Seniors' out-of-pocket health spending is not eating that much more of their incomes.... [11] Pension plans are not a bellwether.... [12] Retirement inequality has not worsened due to the shift from traditional pensions to 401(k)s.... [13] The real gap in retirement savings is in government."
National Association of Plan Advisors [NAPA]

Benefits in General

[Official Guidance]

Text of IRS Regulatory Agenda, Spring 2019

Benefits-related items include: Determination of Line of Business for Purposes of No-Additional-Cost Service and Qualified Employee Discount Fringe Benefits; Further Guidance on the Application of Section 409A to Nonqualified Deferred Compensation Plans; Deferred Compensation Plans of State and Local Governments and Tax-Exempt Entities; Additional Rules Regarding Pension Plan Funding and Benefit Restrictions; Collectively Bargained Welfare Benefit Funds; Guidance on Rules Applicable to IRAs Under Sections 408 and 408A; Spousal IRAs, SEPs and IRA Technical Changes; Requirements for Employee Stock Ownership Plans; Minimum Vesting Standards; Stage Withholding on Certain Retirement Plan Distributions Under Section 3405(a) and (b); Definition of Church Plan; Application of Various Provisions of Section 2711 of the Public Health Service Act, the [ACA], and the Internal Revenue Code to Health Reimbursement Arrangements; Voluntary Employees' Beneficiary Association (VEBA) Regulations ; Notice to Participants of Consequences of Failing to Defer Receipt of Qualified Retirement Plan Distributions; Expansions of Applicable Election Period and Period for Notices.
Internal Revenue Service [IRS]

[Official Guidance]

DOL Regulatory Agenda, Spring 2019

Proposed Rules (EBSA): [1] Fiduciary Rule and Prohibited Transaction Exemptions, [2] Grandfathered Group Health Plans and Grandfathered Group Health Insurance Coverage, [3] Improving Effectiveness of and Reducing the Cost of Furnishing Required Notices and Disclosures. Final Rules (EBSA): [1] Amendment of Abandoned Plan Program 1210-AB47, [2] Electronic Filing of Apprenticeship & Training Plan Notices, and Top Hat Plan Statements, [3] Adoption of Amended and Restated Voluntary Fiduciary Correction Program, [4] Health Reimbursement Arrangements and Other Account-Based Group Health Plans, [5] Definition of an 'Employer' Under Section 3(5) of ERISA -- Association Retirement Plans and Other Multiple Employer Plans.
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

More Than Half of Small Businesses Plan to Offer New Benefits in 2019

"More than half of small businesses (56 percent) plan to offer new benefits to their employees in 2019, according to recent research from small business consultant Clutch. Small businesses offering new benefits are most likely to offer paid time off (19 percent), health benefits (15 percent), and retirement benefits (11 percent)."
Wolters Kluwer; free registration required

Independent Contractor or Employee? DOL, NLRB Weigh Online Marketplaces

"In the burgeoning gig economy, some businesses may need to assess whether a particular worker is an employee or an independent contractor to determine ... whether certain workers are employees eligible for ERISA-covered benefit plans or [are] independent contractors excluded from those plans.... [DOL Opinion Letter FLSA2019-6] and [an April 16, 2019] NLRB memorandum may provide a guide ... However, given the potential for litigation, the varying tests applied by other federal agencies and courts, and the divergent standards under some state laws, employers should work with legal counsel to make these determinations."
Mercer

Earnings and Employment Data for Workers Covered Under Social Security and Medicare, by State and County, 2016

"The data show, by sex and age, the number of wage and salary workers and self-employed persons, the amount of their taxable earnings, and the amount they paid in Social Security and Medicare contributions."
U.S. Social Security Administration [SSA]

Selected Discussions
on the BenefitsLink Message Boards

Alternate Payee Dies Before QDRO Payment Begin

Alternate Payee died before receiving payment from a 401(k). The QDRO states that if alternate payee dies, it is to be paid to the alternate payee's estate. The mother of the alternate payee seems to have control of the estate per a court. Alternate payee has a 4-year-old child. Regarding payment to the alternate payee's "estate" -- does that mean there are no rollover options and that we are required to withhold taxes?
BenefitsLink Message Boards

How to Make an ADP Refund When Account Balance Has Been Paid Out Already?

A plan has failed the ADP test. Several HCEs terminated and rolled their money out before the refunds were calculated, so their balance is $0. What's the fix?
BenefitsLink Message Boards

Outstanding Participant Loan at Time of Rollover

Participant terminated 12/31/2018. In March of 2019 he took a lump sum payment and rolled his benefit to his new employer's plan. At the time of distribution he had an outstanding loan balance. The recordkeeper issued two 1099-Rs -- one for the rollover and one for the offset loan amount. Under the Tax Cuts and Jobs Act, does the participant have until 4/15/2020 to fund the "outstanding" loan amount to an IRA or his new employer's plan as a rollover contribution? Any restrictions on funding the outstanding loan balance by the due date of tax return?
BenefitsLink Message Boards

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How to Understand and Review Form 5500
Retirement Management Services, LLC

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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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