Retirement Plans Newsletter

June 13, 2019 logo logo
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Senior Auditor - PBGC
Pension Benefit Guaranty Corporation
in Washington DC / Telecommute

Quality Assurance Manager
Nova 401(k) Associates
in Houston TX / Dallas TX / Austin TX / Scottsdale AZ / Telecommute

Assistant Team Leader
Nova 401(k) Associates
in Houston TX / Dallas TX / Austin TX / Scottsdale AZ / Telecommute

Retirement Plan Analyst (DC Administrator)
Trinity Pension Consultants, Inc.
in Akron OH

Actuarial Analyst
Newport Group
in Chicago IL

Retirement Plan Services Administrator
Hancock Whitney Bank
in Gulfport MS

Account Manager / Client Service - 401k Plans
ABG Retirement Plan Services
in Peoria IL / Telecommute

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Webcasts, Conferences

Employee Benefit Communication: Think Like a Marketer

Is an ESOP Right for You?
August 13, 2019 WEBCAST
National Center for Employee Ownership [NCEO]

Third Quarter 2019 Washington Update
August 13, 2019 WEBCAST
ASPPA [American Society of Pension Professionals & Actuaries]

Washington Update with Will Hansen, American Retirement Association's Chief of Governmental Affairs Officer
August 15, 2019 in IL
ASPPA Benefits Council [ABC] of Chicago

Legislative and Regulatory Policies Update
September 16, 2019 in MI
ASPPA Benefits Council [ABC] of Detroit

Executive Compensation National Institute 2019
November 7, 2019 in DC
American Bar Association Joint Committee on Employee Benefits [JCEB]

►See 136 Upcoming Webcasts and Conferences

►See 1558 Recorded Webcasts


New Topics on the BenefitsLink Message Boards

New Comments and Topics

All Topics, Grouped by Forum

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[Official Guidance]

Text of PBGC Interest Rate Update for Benefits Payable in Terminated Single-Employer Plans, July and Third Quarter 2019

"The July 2019 lump sum interest assumptions will be 0.75 percent for the period during which a benefit is in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. In comparison with the interest assumptions in effect for June 2019, these assumptions represent a decrease of 0.25 percent in the immediate rate and are otherwise unchanged...The third quarter 2019 interest assumptions will be 2.92 percent for the first 25 years following the valuation date and 3.07 percent thereafter. In comparison with the interest assumptions in effect for the second quarter of 2019, these interest assumptions represent an increase of five years in the select period, a decrease of 0.15 percent in the select rate, and an increase of 0.02 percent in the ultimate rate."
Pension Benefit Guaranty Corporation [PBGC]

[Guidance Overview]

SEC Finalizes Broker-Dealer Standard of Conduct Rule

"[Regulation Best Interest] will significantly change the standard of conduct rules for brokers and thus is likely to change how brokers and their affiliates interact with plan participants.... [R]etirement plan fiduciaries generally have a legal obligation under ERISA to monitor the conduct of plan service providers. That duty to monitor may extend to monitoring compliance with federal securities laws.... [This article reviews] the new standard of conduct rules for brokers, focusing on how it will apply to broker interaction with plan participants."
October Three Consulting

[Guidance Overview]

The Final Reg BI Package: What to Know and What's Next

"[T]he changes from the proposals to finalization were limited.... [T]he SEC elected not to define [the term 'best interest'] in the final rule text ... [The SEC also] did not ... adopt a uniform standard of conduct for broker-dealers and investment advisers.... [T]he Chairman and the final rule release cited to the now-vacated fiduciary rule by the [DOL] and the positive working relationship between the staffs of the SEC and DOL.... As a result of this collaboration, one of the enhancements from the proposal ... involved the SEC's increasing focus on retirement accounts and specifically rollovers:"
Drinker Biddle

[Guidance Overview]

SEC Rulemaking Package, Part 4: The 'Solely Incidental' Broker-Dealer Exclusion

"In general, a broker-dealer's advice about the value and characteristics of securities or the advisability of transacting in securities falls within the 'solely incidental' Exclusion 'if the advice is provided in connection with and is reasonably related to the broker-dealer's primary business of effecting securities transactions.' While the determination is based on a fact-and-circumstances analysis, the Interpretation provides guidance regarding the application of the Exclusion in the context of: [1] exercising investment discretion over customer accounts, and [2] account monitoring."
Spencer Fane

[Guidance Overview]

IRS Issues Proposed Regs Clarifying What Foreign Pension Funds Are Eligible for Tax Exemption on U.S. Real Property Investments

"The key to this foreign pension fund exemption is to be a 'qualified foreign pension fund' or 'QFPF'. Entities all of the interests of which are held by a qualified foreign pension fund ('qualified controlled entities' or 'QCEs') are also treated as QFPFs.... The principal clarifications in the proposed regulation definitions of QFPF and QCE include: [1] Indirect ownership of qualified controlled entities ... [2] Multiple QFPF owners ... [3] Creditor interests in a qualified controlled entity ... [4] De minimis ownership of a qualified controlled entity by non-QFPFs not allowed ... [5] Anti-avoidance rule -- selling a corporation holding U.S. real property to a QFPF or QCE ... [6] Establishment to provide retirement or pension benefits ... [7] Five percent limitation and related parties ... [8] Annual reporting requirement ... [9] Tax deduction or exemption requirement ... [10] No safe harbors."
Groom Law Group

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What the SECURE Act Could Mean for Businesses

"In order for a plan to be treated as a MEP or what would be called a 'pooled employer plan,' a 'pooled plan provider' (PPP) would have to be selected and be responsible for performing all necessary administrative duties to ensure compliance with regulations such as ERISA and the IRS Code. The PPPs would serve as a fiduciary and administrator, and be subject to registration, audit and examination by regulators."

Proposed Regs Address Foreign Pension Exception to FIRPTA

"The proposed regulations address section 897(l), which provides that a qualified pension fund (or a qualified controlled entity) is not treated as a nonresident alien individual or foreign corporation for purposes of FIRPTA. Under the proposed regulations, a qualified pension fund that has a gain or loss from the disposition of [U.S. real property interests] would be exempt from taxation."

Inflation and Retirement Annuities

"The only retirement contract that both insures against longevity risk and hedges against inflation is a life annuity that is linked to the consumer price index (CPI).... An annuity that is not linked to the CPI [a 'nominal annuity'] ... is measured in units that are different from Social Security, so it would be a mistake to add the two in computing a replacement ratio.... The vast majority of income annuities sold are fixed in nominal dollars.... The purpose of this article is to explore the reasons behind this puzzle and to suggest ways to solve it."
Professor Zvi Bodie, via SSRN

Lawmakers Take Another Crack at Solving Multiemployer Pension Plan Problems

"[The] House Education and Labor Committee approved H.R. 397 ... The 26-18 vote on June 11 was on party lines. If eventually approved, the measure would help those financially ailing plans with 30-year repayable federal loans to shore up their assets and value, at affordable interest rates. The loans would come from a trust fund in the Treasury Department and plans seeking aid would have to prove the money would keep them solvent and able to provide current benefits."
People's World

Employers Help Workers Build Household-Emergency Funds

"A growing number of employers are helping workers start emergency savings accounts, reflecting concern over the impact money problems are having on productivity levels and workers' ability to retire. Companies ... are encouraging employees to fund emergency accounts, in some cases by offering them cash and other incentives. Others are diverting a portion of employees' paychecks into rainy-day funds related to their 401(k) plans."
The Wall Street Journal; subscription may be required


Giving 403(b) a Bad Name

"[T]he public K-12 403(b) market is a mess; the polar opposite from the rest of 403(b)s. High fees, too many recordkeepers, and far too many investments are the norm for these plans.... [T]he school districts are generally small and have no staff allocated to providing proper oversight to their 403(b) or any other voluntary benefits. For the most part, these 403(b) plans are voluntary and supplemental to a state retirement system that is in place, so they are quite low on the totem pole in terms of allocated resources."
Cammack Retirement Group

Executive Compensation
and Nonqualified Plans

[Guidance Overview]

Section 4960 Excise Tax: What Tax-Exempt Employers Need to Know

"Not just for tax exempt organizations ... Once a covered employee, always a covered employee ... Remuneration paid means remuneration vested ... Exclusion for remuneration for medical and veterinary services ... Excess parachute payments ... No grandfathering for amounts credited prior to effective date ... No indexing ... Positions deemed not in good faith."
Thompson Coburn

How Should Boards Handle Involuntary CEO Retirement?

"[I]nvoluntary retirement scenarios are kind of uncharted territory.... Companies should consider incorporating an involuntary retirement provision in new employment agreements, new award agreements or long-term incentive plans going forward. Make it transparent, explicit up front, and set the expectation that if there's a termination that meets these qualifications, it might be handled a different way than an involuntary termination."
Meridian Compensation Partners, LLC

Selected Discussions
on the BenefitsLink Message Boards

Section 4980 (Excess Assets in a Terminating Plan) -- Too Good to Be True?

I continue to struggle with the excess assets issue in a terminating pension plan. The rules under 4980 seem to permit the maximum 415 lump sum to be exceeded.
BenefitsLink Message Boards

EACA: Where to Start Auto-Deferrals After Rehire?

A participant was covered under an EACA. He was in the plan a few years and his auto-deferral went from 3 to 4 to 5%. Then he left. When he comes back, I know he is automatically eligible for the plan and enters immediately. But at what rate? The initial 3%? Or his former 5%?
BenefitsLink Message Boards

5500-EZ Late Filing -- $500 Flat Fee?

Has anyone used the penalty relief program ($500 flat fee)? Experience? We had someone use it, filed/paid in January, and they've received two letters so far saying "we need more time," implying they're researching it.
BenefitsLink Message Boards

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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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