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Defined Benefits Analyst
Retirement Planning Services

Counsel - ERISA & CIT Matters
M&T Bank
in New York NY / Buffalo NY / Wilmington DE

Senior Plan Administrator
My Benefits, LLC
in Atlanta GA

Retirement Plan Services Sales Representative
F&M Trust
in Chambersburg PA

Supervisory Actuary -DH
Pension Benefit Guaranty Corporation
in Washington DC / Telecommute

Benefits Attorney
Air Line Pilots Association
in Herndon VA

Actuary (Pathways Recent Graduate)
Pension Benefit Guaranty Corporation
in Washington DC / Telecommute

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[Official Guidance]

Text of PBGC Interim Final Rule: Privacy Act Regulation; Exemption for Insider Threat Program Records

"This rule amends PBGC's regulation on Disclosure and Amendment of Records Pertaining to Individuals under the Privacy Act to exempt from disclosure information contained in a new system of records for PBGC's insider threat program. The exemption is needed because records in this system include investigatory material compiled for law enforcement purposes."
Pension Benefit Guaranty Corporation [PBGC]


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[Official Guidance]

Text of PBGC Notice of New System of Records

"The new system of records will cover records about individuals, retrieved by personal identifier, which are compiled and used by PBGC's Insider Threat and Data Loss Prevention teams, to administer PBGC's insider threat and data loss prevention programs. Because records in this system include investigatory material compiled for law enforcement purposes, elsewhere in this issue of the Federal Register PBGC has published a final rule to exempt this system of records from certain requirements of the Privacy Act."
Pension Benefit Guaranty Corporation [PBGC]

[Official Guidance]

Draft 2019 IRS Form 5329: Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts (PDF)

"If you only owe the additional 10% tax on early distributions, you may be able to report this tax directly on Schedule 2 (Form 1040 or 1040-SR), line 6, or Form 1040-NR, line 57, without filing Form 5329." [Draft as of July 5, 2019.]
Internal Revenue Service [IRS]

[Official Guidance]

Draft 2019 IRS Form 8880: Credit for Qualified Retirement Savings Contributions (PDF)

"You cannot take this credit if either of the following applies. [1] The amount on Form 1040 or 1040-SR, line 8b; or Form 1040-NR, line 35, is more than $32,000 ($48,000 if head of household; $64,000 if married filing jointly). [2] The person(s) who made the qualified contribution or elective deferral (a) was born after January 1, 2002; (b) is claimed as a dependent on someone else's 2019 tax return; or (c) was a student." [Draft as of July 5, 2019.]
Internal Revenue Service [IRS]

[Guidance Overview]

One Bad Apple Won't Spoil the Pie: New MEP Rules Proposed

"Hopefully, the final regulations will simplify the required procedures and clarify the extent to which ... the procedures may be applied to pre-existing qualification violations. There is also a question whether, in the absence of a statutory exception to the 'one bad apple' rule, regulations alone can override the general statutory requirement to treat the MEP as a unified plan, or whether a statutory amendment of the type that would be made by the SECURE Act is required."
Cohen & Buckmann, P.C.

[Guidance Overview]

IRS Issues Proposed Regs on Retirement Plan Distribution Withholding for Recipients with Non-U.S. Addresses (PDF)

"The proposed regulations do not apply to retirement plan distributions that are considered to be 'eligible rollover distributions' ... which are subject to mandatory federal income tax withholding at a 20% rate unless the payee elects to directly roll over the distribution to another tax-qualified plan or IRA. Additionally, the proposed regulations do not apply to nonresident aliens, who generally remain subject to a tax withholding rate of 30%."
Roberts & Holland LLP

Puerto Rico Church Pension Plan Not Eligible for Federal Bankruptcy Protection (PDF)

"The [First Circuit Bankruptcy Appellate Panel] held that the Catholic School Employees Pension Trust was not a 'business trust' eligible to file a bankruptcy petition. This decision could affect other troubled church plans that might be considering bankruptcy as an option and that would face the same gating issue under the Bankruptcy Code ... [T]he decision raises policy concerns that cut across various pension and retirement programs." [In re Catholic School Employees Pension Trust, No. PR 18-011 (1st Cir. BAP Apr. 18, 2019)]
The Wagner Law Group, via American Bankruptcy Institute

District Court Holds that Detrimental Reliance Is Not Needed for Class-Wide Relief in ESOP Case

"Defendants argued that each putative Subclass member will need to show detrimental reliance on the alleged misrepresentations. Plaintiffs retorted that the Supreme Court's decision in Cigna Corp. v. Amara eliminates the need for detrimental reliance for ERISA Section 404 misrepresentation claims where the participants seek reformation and surcharge. [Cunningham v. WaWa, Inc., No. 18-3355 (E.D. Pa. Jul. 2, 2019)]
Kantor & Kantor

IRS Proposes Relief From 'One Bad Apple' Rule for DC Multiple-Employer Plans

"While DOL's rule would stop short of allowing open MEPs, legislation pending in Congress ... would permit unrelated employers to offer DC open MEPs known as 'pooled employer plans.' The bill includes relief from the one-bad-apple rule that would require excising a noncompliant participating employer from the MEP, similar to the new IRS proposal."


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PBGC Proposal Squashes Spin-Terms

"The proposed rule would codify PBGC's earlier guidance, eliminating the VRP exemption if a terminating plan engages in a spinoff that's not de minimis during the premium payment year.... The regulations currently permit prorating FRPs in a short plan year that is a terminating plan's final plan year. The proposed regulations would prohibit this proration if the plan earlier in the year engaged in a spinoff that was not de minimis."

Education Topics 401(k) Plan Sponsors Need to Ask About But Don't

"[1] Financial health beyond the 401(k) plan ... [2] The true cost of premature withdrawal ... [3] Emergency savings plans ... [4] How to find lost participants ... [5] Cybersecurity."
Fiduciary News

SEC Considers Allowing Private Equity and Hedge Funds in 401(k) Plans

"Currently, the SEC's rules state that participants must be 'qualified investors' to purchase alts and that only Series 7 advisors can sell them. The SEC is considering loosening the definition of a qualified investor, which could open the door to 401(k) participants."

The Forgotten Aspects of Reg BI

"Reg BI is fundamentally a disclosure rule, which means that fiduciary advisors (and, of course brokers) will have to meet new disclosure requirements.... [W]hat, exactly, are you going to have to disclose that you didn't have to before Reg BI went into effect?"
Bob Veres in Inside Information

Better Budgeting with 'Actuarial Budget Buckets'

"When selecting assumptions for future increases in your recurring expenses, it may be reasonable to assume, for example, that: [1] your current recurring essential non-health expenses will increase by assumed inflation in the future; [2] your current recurring essential health expenses will increase by a rate greater than assumed inflation; and [3] your current recurring discretionary expenses will increase by a rate lower than assumed inflation."
Ken Steiner, FSA Retired


Observations on Regulation Best Interest and the Continuing Fiduciary Wars

"What the SEC has done in issuing Regulation Best Interest is to broaden a broker/dealer's solely incidental exemption of the 1940 Act ... to such an extent that broker/dealers will be able to offer advisory services virtually indistinguishable from those offered by RIAs. In short, the exception -- in this case, exemption -- has swallowed the rule."
W. Scott Simon in Morningstar


Variable Annuities: ERISA Litigation's 'Next Big Thing?'

"While there are many prudence and cost-efficiency related issues relating to variable annuities overall, an emerging issue involves the plan sponsor's ability to carry out its fiduciary duties under ERISA.... Variable annuities usually include numerous sub-accounts as investment options. This increases the odds of finding sub-accounts that are not prudent and need to be removed."
The Prudent Investment Fiduciary Rules

Selected Discussions
on the BenefitsLink Message Boards

Can a 403(b) Plan (Non-Church Sponsor) Invest in ETFs?

Can a 403(b) plan (non-church sponsor) invest in ETFs? It's my understanding that some ETFs are considered mutual funds as long as it is a Registered Investment Company under Section 851(a) of the code. Can anyone confirm, with a cite?
BenefitsLink Message Boards

Asset Determination for Purposes of Amount of Required Fidelity Bond

While reviewing a plan's 2018 fidelity bond, I see that it is $30,000. Assets reported on the 5500-SF are $305,000 as of 1/1/2018, which includes $250,000 in assets and a $55,000 employer contribution that was not deposited until 2019. I could ask the client to increase coverage retroactively to meet the 10% requirement for 2018, but is this necessary if the assets actually invested in the plan were only $250,000?
BenefitsLink Message Boards

Beneficiary Is Estate -- Roll Into Inherited IRA?

We had an associate pass away with no designated beneficiary on file for the 401k. Per the order of succession in the plan document, the beneficiary is the associate's estate. The beneficiary of the estate is now wanting to transfer the money into an inherited IRA. Can the transfer to an inherited IRA occur because the beneficiary is an estate? If so, would it have to be setup in the name of the estate or can it be setup in the name of the beneficiary of the estate?
BenefitsLink Message Boards

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Press Releases

Most Popular Items in the Previous Issue

Tips and Strategies for Successful IRS and DOL Plan Audits (PDF)
McDermott Will & Emery, for Plan Sponsor Council of America [PSCA], Inc.
1298 Minnesota Avenue, Suite H
Winter Park, Florida 32789
(407) 644-4146

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, 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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