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Retirement Plans Newsletter June 6, 2019 |
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Webcasts, Conferences COBRA Continuation Coverage: The Top Five Issues for Employers
HSA Retirement Superhero in Disguise
Missing Participants: Concerns, Considerations and Practical Steps in Finding Them
Correcting Missed Elective Deferral Opportunities under EPCRS
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Discussions |
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This Newsletter:
BenefitsLink Health & Welfare Plans Newsletter:
Message Boards Digest:
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[Official Guidance]
Text of SEC Regulation Best Interest: The Broker-Dealer Standard of Conduct (PDF) 771 pages. "Regulation Best Interest enhances the broker-dealer standard of conduct beyond existing suitability obligations, and aligns the standard of conduct with retail customers' reasonable expectations by requiring broker-dealers, among other things, to: [1] act in the best interest of the retail customer at the time the recommendation is made ... and [2] address conflicts of interest by establishing, maintaining, and enforcing policies and procedures reasonably designed to identify and fully and fairly disclose material facts about conflicts of interest, and in instances where we have determined that disclosure is insufficient to reasonably address the conflict, to mitigate or, in certain instances, eliminate the conflict.... The standard of conduct draws from key principles underlying fiduciary obligations[.]"
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[Official Guidance]
Text of Final Rule on SEC Form CRS Relationship Summary; Amendments to Form ADV (PDF) 524 pages. "The relationship summary [on Form CRS] is intended to inform retail investors about: [1] the types of client and customer relationships and services the firm offers; [2] the fees, costs, conflicts of interest, and required standard of conduct associated with those relationships and services; [3] whether the firm and its financial professionals currently have reportable legal or disciplinary history; and [4] how to obtain additional information about the firm.... Retail investors will receive a relationship summary at the beginning of a relationship with a firm, communications of updated information following a material change to the relationship summary, and an updated relationship summary upon certain events. The relationship summary is subject to Commission filing and recordkeeping requirements."
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[Official Guidance]
41 pages. "On April 18, 2018 ... the Commission published for comment a separate proposed interpretation regarding the standard of conduct for investment advisers under the Advisers Act (Proposed Interpretation).... [It] is appropriate and beneficial to address in one release and reaffirm -- and in some cases clarify -- certain aspects of the fiduciary duty that an investment adviser owes to its clients under section 206 of the Advisers Act. After considering the comments received, [the SEC is] publishing this Final Interpretation with some clarifications to address comments."
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[Official Guidance]
27 pages. "[The SEC] is publishing an interpretation of section 202(a)(11)(C) of the Investment Advisers Act of 1940 ... which excludes from the definition of 'investment adviser' any broker or dealer that provides advisory services when such services are 'solely incidental ' to the conduct of the broker or dealer's business and when such incidental advisory services are provided for no special compensation."
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[Official Guidance]
25 pages. "This document contains proposed regulations regarding the exception from taxation with respect to gain or loss of a qualified foreign pension fund attributable to certain interests in United States real property. The proposed regulations also include rules for certifying that a qualified foreign pension fund is not subject to withholding on certain dispositions of, and distributions with respect to, certain interests in United States real property. The proposed regulations affect certain holders of certain interests in United States real property and withholding agents that are required to withhold tax on certain dispositions of, and distributions with respect to, such property."
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[Guidance Overview]
SEC Statement and Fact Sheet on Best Interest Rule and Interpretations "Individually and collectively, these actions are designed to enhance and clarify the standards of conduct applicable to broker-dealers and investment advisers, help retail investors better understand and compare the services offered and make an informed choice of the relationship best suited to their needs and circumstances, and foster greater consistency in the level of protections provided by each regime, particularly at the point in time that a recommendation is made." [Also available: statements of SEC Commissioners Elad L. Roisman and Robert J. Jackson Jr., and a
statement by Investor Advocate Rick Fleming.]
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SEC Approves Long-Awaited Investment Advising Regulation and Accompanying Guidance "The scope of Regulation Best Interest is modified to include account recommendations, including rollovers or transfers from workplace retirement plan accounts to IRAs and recommendations to take a plan distribution.... The consideration of cost is explicitly required as part of a broker-dealer's care obligation."
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Third Circuit Carries on the Judicial Debate Over Level of Specificity Needed in ERISA Fee Complaint "A new Third Circuit decision has allowed an ERISA fee complaint to stand even though there were no specific allegations of fiduciary errors in the process of selecting investment options and fees. This development is yet another in the line of decisions that decide if the federal door to discovery will be opened or closed at the complaint stage of the litigation. Expect judges to differ and more such decisions to issue." [Sweda v. Univ. of Penn., No. 17-3244 (3d Cir. May 2, 2019)]
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BlackRock Employees Seek Class Certification in $100M ERISA Suit "Employees of BlackRock Inc. urged a California federal judge on Monday to allow them to proceed as two classes in their lawsuit alleging the investment firm violated [ERISA] and cost retirement plan participants more than $100 million. [Plaintiffs] asked U.S. District Judge Haywood Gilliam to certify one class of employees who participated in BlackRock's collective trust investment funds and another class who participated in the company's 401(k) plan, known as the BlackRock Retirement Savings Plan."
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IRS Updates Error Correction Guidelines for EPCRS "[C]orrective methods are detailed in the tables [in this article].... [In Rev. Proc. 2019-19 on April 19, 2019, the IRS] issued additional correction methods which may reduce the cost of correction for elective deferral errors that are discovered and corrected quickly. The automatic enrollment correction is a subset of the traditional deferral election failure and if all standards ... are not met, the correction defaults to the traditional deferral election method."
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House Passes the SECURE Act, Senate Will Consider -- 401(k) Plans Would Be Affected in Big Ways "In its current form, the SECURE Act is an amalgamation of a number of pension-related proposals that have been offered on and off during the course of the past several years. In fact, the Senate presently has a similar bill before it that was introduced last year, entitled the Retirement Enhancement Securities Act (RESA). Many of RESA's provisions could eventually make their way into the SECURE Act, and, of course, the SECURE Act might also be significantly modified through committee or other Congressional action before being finalized."
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Sweeping 403(b) Changes in Portman-Cardin Legislation Leave Unanswered Questions "The Portman-Cardin Bill, the Retirement Security and Savings Act of 2019, introduces sweeping changes to 403(b) plans by expanding their investment universe. These changes, however, also required modification to the Securities Laws otherwise applicable to 403(b) plans in order for them to work.... A few things are conspicuously absent from the statute ... Who is the shareholder? ... Unitization under 403(b).... Distributed annuities."
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Growing Number of Lawsuits Claim 'Old' Mortality Tables Deprive Participants of Benefits "Two plaintiffs' law firms ... have now filed seven lawsuits in federal courts ... against the pension plan sponsors -- MetLife, American Airlines, PepsiCo, U.S. Bancorp, Rockwell Automation, Anheuser-Busch, and, the latest, Huntington Ingalls -- as well as against the plans' fiduciaries. The lawsuits typically allege that the plans calculate the amounts of non-single life annuity forms of benefits (such as a joint-and-survivor, preretirement survivor or certain-and-life annuities) using mortality table assumptions that are not reasonable, resulting in lower benefits that what the plaintiffs are entitled to under ERISA."
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"[T]he percentage of private-sector wage and salary workers participating in an employment-based defined benefit (DB) pension plan plummeted by 71 percent since 1979 ... [T]he percentage of private-sector wage and salary workers participating in DB plans decreased from 38 percent in 1979 to 11 percent in 2017. Correspondingly, the percentage participating in defined contribution (DC) plans went from 17 percent to 46 percent (some workers participated in both types of plans)."
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Selected Discussions |
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Combining Accounts of Two 401(k) Plan Participants A 401(k) plan has 10 participants. The owner, the owner's wife (who is no longer employed) are 100% vested, and have individual IRAs. The owner died a few months ago. Is there a way to roll his account into his widow's account, either directly or indirectly?
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Medical Practice Acquires Another Medical Practice Six doctors own a practice (Company A) that sponsors a 401(k) plan. They are acquiring a new practice (Company B), which will be owned 80% by Company A and 20% by a surgeon at Company B. This will be a controlled group, I believe, because Company A owns at least 80% of Company B, so the employees of Company B can be part of the current plan with no problems. Correct?
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Press Releases |
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Intelligent Capitalworks is Certified for Fiduciary Excellence
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Anthem, Inc. to Acquire Beacon Health Options
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Most Popular Items in the Previous Issue |
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DOL Updates Model SAR for Pension Plans, Model Notice of Waiver of Financial Statement Audit
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DB Plan Sponsors Beware: The End of Interest Rate Relief Is Coming
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Connect
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BenefitsLink.com, Inc.
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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 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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