Retirement Plans Newsletter

June 4, 2019

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Jobs

Retirement Plan Administrator
Estate & Pension Advisory Board
in Cherry Hill NJ

Retirement Plan Administrator
Premier Plan Consultants
in San Diego CA

Retirement Plan Administrator
Prime Pensions, Inc.
in Florham Park NJ

Retirement Account Analyst
Alerus Financial
in Bedford NH

Team Leader Retirement Plan Administrator
Hills Pension Associates, Inc.
in Carver MA / Telecommute

Client Services Manager
Newport Group
in Fresno CA

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Webcasts, Conferences

Form 5500 Update: Best Practices for the 2018 Filing Season
June 20, 2019 in NY
Worldwide Employee Benefits Network [WEB] - New York Chapter

Annual Conference & Exposition
June 23, 2019 in NV
SHRM [Society for Human Resource Management]

Financial Health in the Workplace: Defining and Implementing the Right Financial Wellness Program
July 25, 2019 in TX
Worldwide Employee Benefits Network [WEB] - Dallas Chapter

IRA Institute
September 2, 2019 WEBCAST
Ascensus

Ascend Conference
September 9, 2019 in FL
Ascensus

OD Works! The Bermuda Triangle of Leave Laws: Just When You Thought it was Safe to go Back in the Water
September 17, 2019 in FL
Ogletree Deakins

►See 153 Upcoming Webcasts and Conferences

►See 1551 Recorded Webcasts


Discussions

New Topics on the BenefitsLink Message Boards

New Comments and Topics

All Topics, Grouped by Forum


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[Guidance Overview]

IRS Expands Determination Letter Program for Certain Hybrid and Merged Plans

"[S]tatutory hybrid plans -- defined benefits plans (such as cash balance or pension equity plans) that typically express a participant's accumulated benefit as the current balance of a hypothetical account maintained for the participant or the current value of an accumulated percentage of the participant's final average compensation -- are permitted to submit an application for a determination letter during the 12-month period beginning September 1, 2019 and ending August 31, 2020.... IRS also will begin accepting determination letter applications from merged plans beginning September 1, 2019. Submissions from merged plans will be accepted on an ongoing basis during an eligibility window based on the date of the merger."
Slevin & Hart, P.C.

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IBM's Surprise Loss in 401(k) Stock Fight Heads to Supreme Court

"The Second Circuit's decision marked a rare win for employees in a series of ERISA cases that, in the aftermath of the Supreme Court's 2014 decision in Fifth Third Bancorp v. Dudenhoeffer, have been almost universally dismissed.... IBM asked the Supreme Court to intervene, saying the Second Circuit's decision defied Dudenhoeffer and broke from recent rulings of the Fifth and Sixth circuits." [IBM v. Jander, No. 18-1165 (2d Cir. Dec. 10, 2018; cert. pet. granted June 3, 2019)]
Bloomberg Law

The Fiduciary Duty to Investigate Conflicts-of-Interests with 'Zero' and 'Negative' Fee Funds

"[A] diligent fiduciary will nonetheless seek to kick the tires most thoroughly on 'Zero' and 'Negative' fee funds. It starts by analyzing the very motivation behind these financial product marketing innovations.... It may be easier to hide the unsustainability of the 'Zero' fee fund business model ... but it's virtually impossible to conceal it with 'Negative' fee funds.... Even during the period when the 'Zero' or 'Negative' fees are in effect, a good fiduciary knows that investment decisions cannot be made by fees alone."
Fiduciary News

Consider Retirement Plan Mandates When Expanding to New States

"[M]any employers -- especially employers that currently offer 401(k) or pension plans to their employees -- may quickly dismiss these laws as not applicable. However, as employers add small employee groups, resulting from multistate expansion through organic growth or acquisitions, they should be aware of state-run retirement plan mandates to ensure compliance and avoid the accumulation of penalties."
Foley & Lardner LLP, via National Law Review

Pension Finance Update, May 2019

"Pension finances got clobbered in May, due to falling stock markets and lower interest rates, giving back gains enjoyed earlier in the year. Both model plans ... lost ground last month: Plan A lost 6% and is now down almost 2% for the year, while Plan B lost close to 2% and is now basically flat through the first five months of 2019."
October Three Consulting

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2019 SSI Annual Report

"This report includes an Executive Summary as well as: [1] A comprehensive description of the SSI program; [2] 25 year projections of future recipients and program costs; [3] A historical summary of statutory changes to the SSI program; [4] Historical and current data relating to various aspects of the SSI program; and [5] Summaries of any relevant research on the SSI program by SSA or others."
U.S. Social Security Administration [SSA]

The Implications of Social Security's 'Missing Trust Fund'

"Paying full benefits to Depression-era workers essentially gave away the trust fund that would have accumulated, along with the interest on those contributions. To make up for the missing interest, costs are higher than in a funded system. Little rationale, however, exists for burdening today's workers for the long-ago decision of allowing Depression-era workers to retire with dignity. These additional costs could be funded more equitably through the income tax, rather than the payroll tax."
Center for Retirement Research at Boston College

[Opinion]

Confusing Annuity Options May Be Coming to Your 401(k)

"Among the two dozen or so rule changes is a provision that is strongly supported by insurance companies but has consumer advocates worried. It would eliminate some of the liability for employers who add annuities to the menu of options for their 401(k) plans -- including expensive and complex products that purport to offer the peace of mind of a guaranteed income stream."
The New York Times; subscription may be required

Benefits in General

Deal-Breaking M&A Issues Related to Employee Benefit Plans and Executive Compensation

"The list [in this article] is intended to facilitate the detection, negotiation, and resolution of possible employee benefit plan and executive compensation-related problems.... [S]ellers may defuse risks and streamline negotiations through proactive pre-sale planning.... [B]uyers may maximize their deal-related protections (and their post-closing alternatives) by assuring early stage attention to [these items]."
The Wagner Law Group

What is the Effect of Prohibited Transactions on the EBP Audit Opinion?

"If a prohibited transaction with a party in interest is not properly reported, the auditor will modify the auditor's opinion on the ERISA-required supplemental schedule if the effect of the transaction is material to the plan's financial statements. Conversely, if the effect of the prohibited transaction is not material to the financial statements, the auditor will include an additional discussion describing the prohibited transaction in an "Other Matters" paragraph in the auditor's report on the ERISA-required supplemental schedules."
Belfint Lyons Shuman

Executive Compensation
and Nonqualified Plans

Post-Proxy Season Considerations for Compensation Committees

"Hedging Policy: All companies will need to make a disclosure (and many will need to make additional disclosures).... [A]ll Companies/Boards should consider whether to eliminate certain provisions and requirements that were placed in the Charter only to satisfy the requirements of (now repealed) performance-based exception of Code Section 162(m).... The only reason for continuing to maintain a Compensation Committee that satisfies the requirements of Code Section 162(m) ... is if there are any unvested or unpaid performance-based awards outstanding and grandfathered."
Winston & Strawn LLP

Selected Discussions
on the BenefitsLink Message Boards

Adding a Provision for After-Tax Contributions

I have a client asking to include after-tax contributions (not a Roth) up to the DC maximum for two partners in a plan. Are there any ramifications for doing this?
BenefitsLink Message Boards

Sale of One Company in Brother-Sister Controlled Group

One of 2 brother/sister companies covered under a single 401k plan is about to be purchased. Buyer has a plan already and doesn't wish to merge or transfer. Wants to sponsor only one plan post-acquisition. Does the entire brother/sister plan need to be terminated before the acquisition in order to avoid the successor plan rule issues? Should it be separated into 2 plans and then terminate only the separate plan of the soon-to-be-acquired company?
BenefitsLink Message Boards

Direct Rollover from 401(k) to IRA: Custodian Not Happy with 'Payable To' Notation

Is it required that a direct rollover check from a 401k to an IRA have the verbiage "FBO Participant Name" in the Payable To? The receiving IRA Custodian has asked us to take the "FBO" off the check. This is a direct rollover via participant distribution request, not a trustee to trustee transfer.
BenefitsLink Message Boards

Participant Defaulted on Previous Loan, Now Wants Another One

I was looking through the loan regulations and couldn't put my finger on relevant guidance here. Is there anything in the regulations that limits (or prohibits) a participant who has defaulted on a loan previously from taking a subsequent loan?
BenefitsLink Message Boards

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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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