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June 14, 2019 logo logo
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Retirement Account Analyst
Alerus Financial
in East Lansing MI

Senior Consultant
The Segal Group
in Trenton NJ

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[Official Guidance]

Text of IRS Notice 2019-40: Weighted Average Interest Rates, Yield Curves, and Segment Rates for June 2019 (PDF)

"This notice provides guidance on the corporate bond monthly yield curve, the corresponding spot segment rates used under Section 417(e)(3), and the 24-month average segment rates under Section 430(h)(2) ... In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under Section 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008 and the 30-year Treasury weighted average rate under Section 431(c)(6)(E)(ii)(I)."
Internal Revenue Service [IRS]

[Guidance Overview]

SEC Adopts Regulation Best Interest and Form CRS; Issues Investment Advisers Act Interpretations

"FINRA has indicated that it will need to review and possibly remove its own suitability standard for member broker-dealers.... [C]ertain U.S. states have proposed their own legislation ... [raising] preemption concerns, which the releases expressly declined to address ... [I]nterpretation and application of the rule will be determined by examination and surveillance teams of FINRA and the SEC.... [T]his approach can lead to inconsistent interpretations and applications of the rule, regulation by enforcement action, and informal, less transparent staff-level guidance."
Sidley Austin LLP

[Guidance Overview]

SEC Adopts Rules and Interpretive Guidance Designed to Enhance and Clarify the Obligations of Financial Professionals

"[T]he Commission acknowledged that the broker-dealer and investment adviser business models are inherently different and as a result, adopting a rule that would provide for a uniform fiduciary standard would not be in the best interest of retail customers.... [T]he Commission is undertaking significant retail investor educational efforts to help investors understand the differences between broker-dealers and investment advisers. This will include online videos explaining basic information."
Paul Hastings LLP

[Guidance Overview]

SEC Takes the Reins in Debate over Retail Advice Standards

"The SEC views Form CRS as the first layer in a 'layered disclosure' regime that should cross-reference additional disclosures for more detailed information.... In developing a layered disclosure approach, firms might consider leveraging existing customer disclosures ... and disclosures developed for other purposes ... Firms might also keep in mind the challenges in mapping and maintaining consistency among disclosures where changes and updates are made."
Morgan Lewis

What Employers Should Know When Their 401(k) or 403(b) Provider Broadens Services and Revenue Streams (PDF)

"Facing fierce competition and pressure on fees ... providers have largely focused on plan sponsors' interest in financial wellbeing ... offering the solutions or products to meet those demands.... Many, but not all, of these programs create additional revenue for providers either directly or indirectly.... [P]lan sponsors should ... engage in a prudent process that is documented to understand the fee structure, participant approach and determine if the ir provider's solution is in the best of interest of their workforce."

Appellate Court Affirms Award of 401(k) Plan Benefits Under QDRO Issued After Participant's Death

"A federal appellate court has upheld a trial court's determination that a deceased plan participant's former spouse is entitled to part of the participant's 401(k) plan benefit, even though the participant had remarried and the [QDRO] assigning benefits to the former spouse was issued after the participant's death." [Miletello v. RMR Mechanical, Inc., No. 18-30942 (5th Cir. Apr. 16, 2019)]
Thomson Reuters / EBIA

Ninth Circuit Rules ERISA Pension Plan Must Pay Survivor Benefits to Registered Domestic Partner

"[The] plan document specifically incorporated California law, which has long required that registered domestic partners be given the same rights, protections, and benefits under law as are granted to spouses. The terms 'spouse' and 'married' were not defined in the plan document.... The Court of Appeals held that the plan's incorporation of California law meant the term 'spouse' must include a domestic partner, and that neither ERISA nor the Code provided binding guidance that was inconsistent with that interpretation." [Reed v. KRON/IBEW Local 45 Pension Plan, No. 17-17176 (9th Cir. May 16, 2019; unpub.)]
Hanson Bridgett LLP

The Impact of Extreme Changes in Defined Contribution Plans on Retirement Income Adequacy in America

"[T]his Issue Brief provides a comprehensive exploration of the impact on retirement income adequacy ... if defined contribution retirement plans were completely eliminated.... The youngest age cohort (those currently ages 35-39) would suffer the most, with average retirement deficits increasing 23 percent from $49,182 to $60,253.... The Issue Brief then analyzes the opposite end of the ... spectrum by exploring the impact of a ... scenario where every employer ... is assumed to sponsor a defined contribution plan.... The youngest age cohort would benefit the most from this scenario, with average retirement deficits decreasing 24 percent from $49,182 to $37,506."
Employee Benefit Research Institute [EBRI]

Pension Funding Index, June 2019

"In May, the funded status of the 100 largest corporate defined benefit pension plans decreased by $65 billion as measured by the Milliman 100 Pension Funding Index (PFI). The deficit widened to $210 billion from $145 billion at the end of April due to a sharp decrease in the benchmark corporate bond interest rates used to value pension liabilities. As of May 31, the funded ratio fell to 87.9%, down from 91.4% at the end of April. This is the third largest monthly decline in dollars in the past five years."

Oregon Set to Penalize Noncompliant Employers Without Retirement Plans

"Now that OregonSaves - the country's first state-run retirement plan for employers who do not sponsor a qualified retirement plan - is in full swing, effective January 1, 2020, penalties of up to $5,000 per calendar year may be imposed on noncompliant employers."

CalSavers Moves to Dismiss Amended Complaint Challenging Program under ERISA

"The new motion challenges the amended complaint as not presenting any new arguments. It argues that CalSavers is not preempted by ERISA because it is not an employee benefit plan under ERISA nor does it require employers to maintain an ERISA plan."
Murphy Austin


Is ESG the True Fiduciary Path Forward?

"If the primary objective of fiduciary duty standards is to act in the best interests of 401k plan participants, then a fiduciary's duty is to do whatever is required to preserve participants' capital and purchasing power into the future.... Minimizing downside risk is the capital preservation portion of the equation, and today it's clear that the most dangerous long-term risks to purchasing power are in systemic threats to the economy itself.... [L]ong-term portfolio risk is avoided in not owning the causes of those threats, as their continuing growth is unlikely."
401(k) Specialist

Benefits in General

[Official Guidance]

Text of DOL Final Regs: Electronic Filing of Notices for Apprenticeship and Training Plans and Statements for 'Top Hat' Plans

13 pages. "This document contains final regulations that revise the procedures for filing apprenticeship and training plan notices and 'top hat' plan statements with the Secretary of Labor. The final regulations require electronic submission of these notices and statements, as opposed to paper filings. The final regulations will make filing these notices and statements easier and lower regulatory burdens on these plans. The final regulations also will enable the [DOL] to make reported data more readily available to participants and beneficiaries and other interested members of the public than in the past."
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

Selected Discussions
on the BenefitsLink Message Boards

ERPAs, do you put a Circular 230 blurb in your e-mail signature?

As an ERPA, do you put a Circular 230 blurb at the bottom of your correspondence? Just e-mails? I can't remember ever getting any paper correspondence with that disclaimer on it (nor can I remember I got any paper correspondence from an ERPA).
BenefitsLink Message Boards

Hardship to Purchase Primary Residence

Participant submitted a request for a hardship to purchase primary residence. The Buy/Sell Agreement lists the buyer as his wife. The mortgage will be in the wife's name. They are "legally married and will live together in this house. Question - although the house is in the wife's name, can the participant take a hardship for the expenses incurred regarding this purchase??
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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