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June 19, 2019 logo logo
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Installation Coordinator
July Business Services
in Waco TX / Telecommute

Benefits Advisor (Spanish) (Recent Graduate)
Employee Benefits Security Administration, U.S. Department of Labor
in San Francisco CA / Seattle WA / Telecommute

Benefits Advisor (Spanish)
Employee Benefits Security Administration, U.S. Department of Labor
in San Francisco CA / Seattle WA / Telecommute

Benefits Advisor (Recent Graduate)
Employee Benefits Security Administration, U.S. Department of Labor
in San Francisco CA / Seattle WA / Telecommute

Retirement Plan Administrator
Leading Retirement Solutions
in Seattle WA

401(k) Pension Administrator
Capital Retirement Plan Services, Inc
in Canonsburg PA

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Employee Benefits Symposium
September 8, 2019 in LA
ISCEBS [International Society of Certified Employee Benefit Specialists]

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[Guidance Overview]

Editor's Pick A Close Look at the SEC's New Regulation Best Interest and Related Rules and Guidance

"Although the components of the broker's duty to retail customers is similar to and to some extent based on the Financial Industry Regulatory Authority's suitability rule, ... Regulation BI provides a greater level of detail around avoiding or remediating conflicts of interest, as well as other elements of the duty.... Existing brokers must file Form CRS through Web CRD by June 30, 2020, and deliver a copy to retail investors no later than July 30, 2020."
Goodwin Procter

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[Guidance Overview]

Fiduciary Duties: The SEC Weighs In Again (PDF)

"[T]he Final Interpretation recognizes that disclosures should be 'clear and detailed enough for the client to make an informed decision to consent' and notes that whether a client has provided informed consent will depend on the facts and circumstances, including the sophistication of the client.... The SEC's recognition of the important differences between retail and institutional clients will likely be important to the application of the Final Interpretation."
Debevoise & Plimpton LLP

The SEC's New Investment Advice Rules Are Here

"BDs and RIAs who provide participant level advice services to retirement plans will be reviewing the rule and working quickly to evaluate and implement any necessary changes. Many have been preparing since the draft rule came out last year. If you have participant advice built into your plan, we recommend you: [1] Request the advice provider comply with the new regulations. [2] Determine if the advice provider appears to be taking proper action. [3] Document this process in your fiduciary files."

Will the SEC's Regulation Best Interest Have a Significant Impact?

"For broker/dealers, this rule raises questions about how to advise on rollovers, and how to demonstrate to a regulator that a rollover is in the best interest of the client. For instance: The benefit of a rollover may in part be due to the value of advice or asset-allocation recommendations that match a client's goals.... [In] some cases moving assets to a higher-cost IRA from a lower-cost, employer-sponsored plan might make sense if the advice adds more value to the customer than it costs.... [B]rokers may need tools to help evaluate the cost of the employer plan versus the value of putting the individual into an IRA, which offers more flexibility and potential for advice but at higher costs."

Settlement of MFS Excessive Fee Suit Includes Plan Design Changes

"The lawsuit had alleged that MFS defendants seeded the company's own retirement plans primarily with MFS investment offerings, without investigating whether plan participants would be better served by investments managed by unaffiliated companies.... Beyond the monetary payment to the plan, ... the plans' qualified default investment alternative options will be one or more target-date funds that are unaffiliated with MFS ... [and] MFS will retain a third-party investment consultant ... to provide an annual evaluation of the plans' investment lineup and review the plans' investment policy statement."
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Valuation and UBTI Issues of IRA Direct-Owned Real Estate

"[D]irect-owned IRA real estate increases the likelihood of running afoul of the prohibited transaction rules. IRA owners, for instance, are prohibited from personally using their IRA-owned real estate, or performing even the smallest of repairs on the property themselves. Purchasing or leasing such properties personally is also off-limits, even when such arrangements are done as an 'arms-length' transaction at a fair market value/rate. But the list of potential challenges doesn't stop there."
Nerd's Eye View

State and Local Government Contributions to Statewide Pension Plans: FY 2017 (PDF)

"[On] a dollar-weighted basis, the percentage of required contributions that was paid by public employers increased for the fifth consecutive year, while pension costs continued to grow at a slower pace than previous years.... Pension spending levels, however, vary widely among states and are actuarially sufficient for some pension plans and insufficient for others."
National Association of State Retirement Administrators [NASRA]

Independent Contractor Agreements Do Not Guarantee Protection from CalPERS Membership and Funding Requirement

"[An Oct. 1, 2018 decision] issued by the CalPERS Board of Administration illustrates why public employers should be careful about classifying someone as an independent contractor just because they are retained through a third-party agency."
Liebert Cassidy Whitmore

Retirement Planning Assumptions to Avoid

"[1] You can always keep working.... [2] You'll need only 70-80% of your pre-retirement income ... [3] You'll be in a lower tax bracket once you retire.... [4] The stock market will save you.... [5] There's always Social Security."
Charles Schwab


Broker-Dealers' New Power Tactic: Threatening to Quit States Altogether in Order to Thwart State Fiduciary Rules for Advisors

"Threats by Morgan Stanley and their cohorts and lobbyists to pick up their toys and go home if states seek to impose on them a higher standard of fiduciary care are not being made from strength.... What if Nevada, New Jersey or Massachusetts calls their bluff and says, in effect, don't let the door hit you in your posterior on the way out? Some of those deactivated brokers might become RIAs or join a new brokerage firm with hardly a consumer complaint."

Benefits in General

DOL Requires Electronic Filing for Top Hat, Apprenticeship, and Training Benefits

"Failure to submit the top hat plan statement does not result in penalties but does subject the plan to expanded reporting and disclosure requirements. Similarly, welfare benefit plans that provide only apprenticeship or training benefits, or both, are exempt from reporting and disclosure if a notice is [submitted] to the DOL and the plan administrator discloses certain information to employees participating, or eligible to enroll, in the plan.... Effective August 16, 2019, the final regulations require electronic submission of these notices and statements through DOL's website."

IRS 2018-2019 Priority Guidance Plan, Third Quarter Update (PDF)

37 pages. Updated March 31, 2019; released June 17, 2019. Employee benefits items begin on page 14.
Internal Revenue Service [IRS]

Panel Discussion: Current Issues in Employee Benefits & Executive Compensation

"What EBEC issue has had the greatest impact on your clients in the past 12 months? ... What is the most interesting EBEC matter on your desk right now and what are the issues involved? ... Are there any EBEC issues that are on the horizon that could significantly impact your clients and/or your practice? Can you describe the potential impact?"
Thomson Reuters Practical Law

Executive Compensation
and Nonqualified Plans

Delaware Chancery Court Refuses to Dismiss Derivative Action Alleging Breach of Fiduciary Duty and Unjust Enrichment Related to Stock Option Repricing

"[T]he Delaware Chancery Court ruled that the plaintiff's derivative action largely survived a motion to dismiss because it is reasonably conceivable that several directors and officers of Anixa Biosciences, Inc. breached their fiduciary duties and were unjustly enriched by delaying the announcement of a key patent's issuance, permitting the repricing of the defendants' stock options for their benefit before the public announcement was made." [Howland v. Kumar, No. No. 2018-0804-KSJM (Del. Ch. June 13, 2019)]
Thomson Reuters Practical Law

Nonqualified Deferred Comp Plans: The 401(k) Excess Contribution Solution

"A 401(k) refund immediately becomes unplanned taxable income for the employees, and potentially a lost opportunity to collect company matching dollars for 401(k) savings.... Nonqualified deferred compensation plans (NQDC) can be designed to allow plan participants to defer an amount of their base salary equal to the refund, to create a tax neutral event for the year in which the refund occurs."
Fulcrum Partners LLC

Selected Discussions
on the BenefitsLink Message Boards

Trust Named as Beneficiary for Post-Retirement Death Benefit

Non-ERISA DB plan -- a public school. A participant who is retiring wants to receive her retirement benefit in an option that used her spouse's DOB as the basis to calculate the various optional forms of benefit. But, she wants to reflect their REVOCABLE trust as beneficiary. I know this wouldn't qualify under the RMD rules, but is it allowable under the "regular" rules? Is it allowable for the plan to calculate the retirement options using the spouse as measuring life, yet have the death benefits paid to a revocable trust (even assuming the spouse is sole beneficiary under the trust)?
BenefitsLink Message Boards

Terminated Plan Did Not Fund Safe Harbor Before Distributing All Plan Assets

A restaurant client had a safe harbor 401k. They terminated the plan in 2017. However, they were supposed to fund the 2017 safe harbor contributions prior to distributing all of the plan assets. They only funded about $5,000 of the $15,000 that was due for the participants. However, during 2018 they paid out all current account balances and the platform shows zero for the plan balance. What is the procedure for making the participants whole at this point? They're anxious to file the final return, but there are still contributions due participants. I don't think they have the funds to put into the plan.
BenefitsLink Message Boards

Is This a Document Failure or an Operational Failure?

Our client has a 401k plan. We (the TPA) just discovered an error in the way the client has been calculating deferrals. Prior to the EGTRRA restatement, bonuses were excluded for deferral purposes. When restating for EGTRRA, we (the TPA) did not code the adoption agreement correctly to exclude the bonus. So both the EGTRRA and PPA restatements were written to have deferrals deducted from bonus. The client has never deducted deferrals from bonus and that has been their intent for over 15 years. Do we have an operational failure or a document failure? Or is this a scrivener's error? What is the best way to correct? Do we have to go to VCP?
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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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