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May 31, 2019 logo logo
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Defined Benefit Plan Administrator
Northeast Professional Planning Group, Inc
in Red Bank NJ / Tarrytown NY

DC Plan Administrator
Northeast Professional Planning Group, Inc.
in Red Bank NJ / NY

Retirement Plan Services Division Head
1st Source Bank
in South Bend IN

Retirement Plan Administrator
Rogers Wealth Group
in Fort Worth TX

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

Employee Benefits Security Administration, U.S. Department of Labor
in Kansas City MO / Telecommute

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[Official Guidance]

Text of IRS Proposed Regs: Withholding on Certain Distributions under Section 3405(a) and (b)

15 pages. "[S]takeholders have requested clarification regarding the application of Notice 87-7 and section 3405(e)(13)(A) in the following situations: [1] The payee provides the payor with an Army Post Office (APO), Fleet Post Office (FPO), or Diplomatic Post Office (DPO) address. [2] The payee provides the payor with a residence address located within the United States but provides payment instructions that request delivery of the designated distribution to a financial institution or other person located outside of the United States. The proposed regulation includes rules that would address these situations[.]"
Internal Revenue Service [IRS]


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[Guidance Overview]

IRS Regs Address Withholding on Retirement Payments Made Outside the U.S.

"[T]hese regulations address required withholding for payments made to destinations outside the United States, or made to a U.S. financial institution by a person with no U.S. address.... The proposed regulations are not intended to replace rules that apply to an eligible rollover distribution (ERD) from an employer-sponsored retirement plan... Also, these regulations do not alter the general rule that withholding may be waived for employer plan payments that are not ERDs[.]"

RESA and SECURE Act's 'Non-MEP' Fintech Alternative May Have Greater Impact Than MEP Provisions

"These rules are based upon old DOL regulations called 'Group Insurance Arrangements' (or GIAs) for welfare plans ... which permit unrelated employers on the same insurance platform to file a single Form 5500. Under the proposed statutory language, retirement plans participating in a group arrangement could rely upon a single annual report filed by the common Plan Administrator, subject to requirements similar to that required of the GIA ... [T]his arrangement will be more welcome in the TPA community than a MEP."
Business of Benefits

Supreme Court Won't Review Dismissal of Chevron Fiduciary Case

"The participants' complaints were dismissed twice by a U.S. District Court in Oakland, Calif., and by the 9th U.S. Circuit Court of Appeals in San Francisco.... The participants sued Chevron Corp. and its retirement plan investment committee in February 2016, saying the 401(k) plan should have offered a stable value fund instead of a money market fund." [White v. Chevron Corp., No. 17-16208 (9th Cir. Nov. 13, 2018, unpub.; cert. denied May 28, 2019)]
Pensions & Investments

Changes in Savings Needed to Cover Health Expenses in Retirement (PDF)

"Between 2018 and 2019, the savings needed to fund insurance premiums and drug expenses have risen 5 percent for some cohorts and have fallen 11 percent for others. The main reason for the predicted annual decrease in needed savings for some is related to the adjustment that is made each year to re-establish the baseline for out-of-pocket spending associated with prescription drug use."
Employee Benefit Research Institute [EBRI]

Current Population Survey: Checking in on the Retirement Plan Participation and Retiree Income Estimates

"[T]he U.S. Census Bureau redesigned the CPS questionnaire in 2014 ... The survey redesign resulted in lower retirement plan participation estimates -- which some policy advocates have misinterpreted as actual changes in the employment-based retirement plan system.... This study finds: [1] The overall percentage of workers participating in a retirement plan leveled off ... [2] The survey estimates do not conform to trends in another government survey ... [3] The ratio of participation within demographic groups remained the same after the redesign ... [4] The survey redesign did not fully capture retiree income."
Employee Benefit Research Institute [EBRI]

Legal Protections for State Pension and Retiree Health Benefits

"[S]tate laws vary significantly with respect to: [1] The source of protection for employee retirement benefits. [2] The aspects or features of pension benefits that are protected. [3] The participants who are entitled to such protection.... And in each state, these protections vary by source, be it the state constitution, statutes, or court decisions.... Understanding how retirement benefits are protected is crucial for policymakers as they explore options to manage their state's increasing pension costs."
The Pew Charitable Trusts

Puerto Rico Board Asks for Investigation of Delinquent DC Transfers

"Puerto Rico's oversight board is asking the U.S. Department of Justice and the Puerto Rico Secretary of Justice to investigate local government employers for failing to transfer payments to employees' defined contribution accounts.... Puerto Rico Act 106-2017 provides for prison terms and penalties against head of government entities failing to remit the employee contributions, and the conduct may also violate Title 18 of the U.S. Code, board officials said."
Pensions & Investments

Inspector General of the PBGC: Semiannual Report to Congress (PDF)

Covers Oct. 1, 2018-Mar. 31, 2019; 49 pages. "The Corporation continues to demonstrate overall improvements in internal control, as evidenced by the results of the FY 2018 Financial Statement Audit and the relatively low number of open, or unimplemented, OIG recommendations. There were 75 open audit recommendations at the end of this reporting period. This number previously had been as high as 209 and averaged over 170 for the period FY 2011 to FY 2015."
Office of Inspector General, Pension Benefit Guaranty Corporation [PBGC]


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Inspector General of the DOL: Semiannual Report to the Congress (PDF)

Covers Oct. 1, 2018-Mar. 31, 2019; 102 pages. "EBSA did not conduct effective oversight of the TSP for three reasons ... [1] EBSA lacked an ongoing process for assessing changes in risks to the TSP over time ... [A] robust method for prioritizing audits would ensure limited resources are used most effectively.... [2] EBSA 's oversight was not transparent.... EBSA did not post its audit reports and recommendations to a public forum, such as its website ... [3] EBSA lacked sufficient legal authority to require the Federal Retirement Thrift Investment Board to act on its recommendations."
Office of Inspector General, U.S. Department of Labor [DOL]

America's Largest Musicians' Union Announces Pension Cuts

"Trustees of the American Federation of Musicians and Employers' Pension Fund (AFM-EPF) announced the evening of May 24 that they will apply to the U.S. Treasury for a reduction in member benefits, due to the AFM-EPF's 'critical and declining' status -- meaning the fund is projected to run out of money in 20 years.... Approximately 50,000 AFM members participate in the pension fund, and it's estimated that 20,000 of them will eventually see a reduction in their pension benefits."
National Public Radio [NPR]

GAO Report: Retirement Security -- Some Parental and Spousal Caregivers Face Financial Risks

"About 10% of Americans per year cared for an elderly parent or spouse from 2011 through 2017. These family caregivers may risk their long-term financial security if they have to work less or pay for caregiving expenses such as travel or medicine.... Spousal caregivers at or near retirement age had less in retirement assets or Social Security income than non-caregivers. Experts and studies identified ways to potentially improve caregivers' retirement security, such as increasing their Social Security benefits." [GAO-19-382, pub. May 1, 2019, released May 31, 2019]
U.S. Government Accountability Office [GAO]


Rep. Tim Ryan's Good Idea: Pay Pensions Before General Creditors in Bankruptcy

"On May 20, Rep. Tim Ryan (D-OH) introduced the Prioritizing Our Workers Act of 2019 ... [T]he bill would require that pension benefits owed to workers be honored before other creditors of a bankrupt company are paid back. Such a change to bankruptcy law faces formidable political obstacles and would have substantial effects on financial markets.... Ryan's proposal moves in the right direction from the standpoints of both economics and fairness[.]"
Charles Blahous, Manhattan Institute for Policy Research

Benefits in General

Highlights from the Lex Machina 2016-2018 ERISA Litigation Report

"From 2010 to 2018, ERISA case filings declined from nearly 9,000 cases to about 6,600 cases. Delinquent Contribution case filings have seen a significant decline from nearly 4,400 cases in 2010 to over 1,900 cases in 2018.... The Northern District of Illinois has the most case filings by nearly 650 cases ... Judges in the District of South Carolina are the top four most active ERISA judges from 2016 through 2018.... In ERISA cases overall, 74% resolved with a likely settlement.... Over the three-year period from 2016 to 2018, courts awarded over $1 billion in Approved Class Action Settlement damages."
Lex Machina; free registration required to view full report

Can Employees Release ERISA Fiduciary Breach Claims?

"[A] federal district court ... determined that a general release that stated 'by signing this document you are releasing all known claims' without mentioning ERISA prevented a participant from suing an ESOP trustee for fiduciary breach. The decision contains a good discussion of the factors to be reviewed in determining whether such a release is valid and enforceable." [Innis v. Bankers Trust Co. of South Dakota, No. 16-650, (S.D. Ia. Apr. 30, 2019)]
Cohen & Buckmann, P.C.

Selected Discussions
on the BenefitsLink Message Boards

Termination of IRS Audit Assessment: Form 872T?

Client has extended a number of statute-of-limitation time limits in current audit. A former advisor was involved over last few years of TEGE audit. TEGE auditor now wants to extend 3 years of audit (2014, 2015 and 2016) to June 2021. I have been trying to obtain copies of which extension form was used: either 872-A or 872-H (to extend time for Trusts). [1] Does a termination form 872-T apply to both of these extension forms? [2] Where do I find form 872T? I have tried searching IRS web sites and others, but without success.
BenefitsLink Message Boards

Predecessor Recordkeeper Wants Us to Give Us a Stale Check

I've got a plan that transferred to us from another recordkeeper last year. The prior recordkeeper just came to us stating that they had a stale check attributable to this plan and asking us to confirm wire instructions to move the funds to us. This is the first time I've seen a recordkeeper attempt to transfer stale check assets to a successor provider, but maybe it's more common than I think. Are other providers accepting stale checks in situations like this and how are you handling this? Are there any issues rejecting the stale check being transferred?
BenefitsLink Message Boards

Tiny Amounts of Interest on Late Deferral Deposits

Have you ever calculated the earnings on a series of slightly late deposits (between a few days and 6 weeks each) for a client and found that some participants are only going to get a very little bit of money? Some will get a few bucks but many will get less than a dollar. The toughest part to figure out is what to do when the participant has already terminated employment and been paid out. How does our client manage to pay someone as little as 13 cents after they are gone?
BenefitsLink Message Boards

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Regional Leader Goes National
Northeast Professional Planning Group [NPPG)]

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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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