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Retirement Plans Newsletter July 10, 2019 |
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Webcasts, Conferences 401(k) Testing: Testing Techniques, HCE Determination and Compensation Options
Missing 401(k) Plan Participants: Gone But Not Forgotten
Voluntary After-Tax Employee Contributions [2019]
Executive Compensation for Tax-Exempt Organizations: New 4960 Rules and IRS Notice 2019-09 Guidance
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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]
PBGC Adds Web Page for Published Notices to Participants (NTP) "At times, PBGC places ads in local and national newspapers to inform participants that the agency is taking responsibility for their plan.... Publication of these ads end any expectation that participants will earn further benefits under their pension plan. [PBGC's] latest ads are curated on this page."
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[Advert.]
ERISApedia.com -- The Leading ERISA Technical ReSource
What are you waiting for? It's all here, and easy to use. Nationally recognized authors. Continuously updated. Fully-linked Code/Reg/Other. Unrivaled customer support. Contact us 612-605-2266. sales@erisapedia.com |
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[Official Guidance]
PBGC Updates Coverage Form and Instructions "PBGC's new form and instructions for requesting a determination about whether a plan is covered under title IV of ERISA has been approved by OMB and is now available for use. This form was created to streamline and simplify the coverage determination process. The instructions explain that in limited circumstances, under a one-year pilot program, employers may also use the form to request an Opinion Letter about whether a plan in the process of being created is likely to be covered by PBGC. PBGC's Coverage webpage has been updated accordingly."
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[Guidance Overview]
Implementation Considerations for Form CRS (PDF) "[T]he initial Form CRS relationship summary may be electronically filed with the SEC as early as May 1, 2020 but must be filed no later than June 30, 2020. In addition to this filing requirement, the initial Form CRS relationship summary must be delivered to all existing retail investor clients on an initial, one-time basis within 30 days after the date the firm is first required to file its Form CRS relationship summary with the SEC.... [B]roker-dealers and investment advisers will need to document the delivery of the Form CRS relationship summary, even to prospective clients."
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2019 Defined Contribution Plan Sponsor Survey "Most plan sponsors feel a high level of responsibility for employee financial wellness (74%) but less than half of those surveyed take proactive measures (41%) to position participants for success.... The percentage of plan sponsors offering automatic features has increased since 2013.... Many are overlooking key target date fund evaluation criteria."
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High Earners Face Retirement Challenges "The words highly compensated employee have a wonderful ring to them ... But for these high-ranking individuals in the top decile of U.S. earners, the prestige also brings some heady challenges around saving for retirement -- or whatever you call what comes after a career. And the higher an individual's compensation, the more severe the potential retirement income gap can be."
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[Advert.]
SPARK Forum - November 3-5, 2019 -- The Breakers, Palm Beach, FL
Join us at the retirement services industry's leading event for top marketing, sales, administration and record keeping professionals. Comprehensive agenda includes topics for Record Keepers, 401(k) Plan Providers, Financial Advisors and Cyber Security Professionals. |
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"Published by S&P Dow Jones Indices, the semi-annual report measures the percentage of actively-managed funds that outperform their market index benchmark over specific periods of time, net of fees.... [The year-end 2018 SPIVA Scorecard ] found only a small percentage of actively-managed funds outperform the market over time. The takeaway for 401(k) fiduciaries? There is a very good chance that low-cost passively-managed index funds and ETFs that seek to match -- not beat -- the market will offer superior investment returns over the long term."
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Fidelity Says It's Entitled to Alleged 'Secret Payments' in 401(k) Plans "Fidelity ... [asked] a federal court to dismiss a lawsuit alleging the fees caused the Boston-based firm to profit at the expense of customers' retirement savings and breached its fiduciary duty.... [T]he fee is nothing more than an 'arm's length' payment negotiated with certain money managers, and such compensation negotiations don't mean Fidelity is acting as a fiduciary, the firm said. Fidelity negotiated its 'infrastructure fees' with asset managers on the FundsNetwork platform in 2017." [Wong v. FMR LLC, No. 19-10335 (D. Mass. defendant's memo in support of motion to dismiss filed Jul. 1, 2019)]
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Pension Funding Update: June 2019 Investment Results "Discount rates continued to fall in June, while equity markets rebounded strongly. Discount rates fell around 20 basis points -- again! Equity markets rallied close to 7% for the month! Overall, plans would have seen a modest improvement in their funding level[.]"
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CBO Cost Estimate for H.R. 397: Rehabilitation for Multiemployer Pensions Act of 2019 "This estimate is for the discussion draft of H.R. 397 dated July 8, 2019 ... That legislation would provide funds for 30-year loans and new financial assistance (in the form of grants) to financially troubled multiemployer pension plans.... Plans would apply for both the loan and grants jointly. Certain plans would be required to apply. The loans and grants would be available only to plans that are currently financially troubled, as described in the bill; other plans would be eligible only for financial assistance that is available under current law."
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[Opinion]
Congress Is Coming for Your IRA "The Secure Act is widely expected to pass the Senate by unanimous consent. While ostensibly helping Americans save for retirement, the bill would actually reduce the value of all retirement savings plans: individual retirement accounts, 401(k)s, Roth IRAs, the works. The main problem with the Secure Act is that it eliminates the stretch IRA, the fixed star in the financial-planning firmament since 1999."
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[Opinion]
The Case for New Public Pension Accounting Standards (PDF) 48 pages. "This report presents a critique of the existing accounting rules for public pension funds as formulated in the various statements of [GASB], and some suggestions about different directions that might help policy makers make better decisions about the pension plans they manage."
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[Opinion]
SCOTUS Ruling May Have Implications for DOL Fiduciary Rule "Kisor would seem to leave in place the courts' traditional deference to reasonable senior agency interpretations of ambiguous regulations that pertain to their area of focus. But that has implications for a potential revisiting of the Labor Department's fiduciary rule.... The [DOL] has indicated that it intends to reconsider a new fiduciary standard. If so, it stands to reason that 5th Circuit's opinion will be a factor in shaping it -- and, in the aftermath of Kisor, it seems likely that the [DOL] would be mindful to more closely observe its customary statutory territory." [Kisor v. Wilkie, No. 18-15 (S. Ct. Jun. 26, 2019)]
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Benefits in General |
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[Official Guidance]
110 pages, Jul. 9, 2019. "This Statement on Auditing Standards (SAS) addresses the auditor's responsibility to form an opinion on the financial statements of employee benefit plans (EBPs) subject to [ERISA].... It also addresses the form and content of the auditor's report issued as a result of an audit of ERISA plan financial statements. This SAS applies to audits of single employer, multiple employer, and multiemployer plans subject to ERISA.... This SAS is effective for audits of ERISA plan financial statements for periods ending on or after December 15, 2020. Early implementation is not permitted."
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[Official Guidance]
100 pages; Jul. 9, 2019. "This SAS requires the auditor to read and consider the other information because other information that is materially inconsistent with the financial statements or the auditor's knowledge obtained in the audit may indicate that a material misstatement of the financial statements or that a material misstatement of the other information exists, either of which may undermine the credibility of the financial statements and the auditor's report thereon."
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Executive Compensation |
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"[T]he Delaware Chancery Court held that the plaintiff successfully pled, for purposes of surviving a motion to dismiss, that a company's board of directors breached its fiduciary duty to the company by approving sizable equity grants to several directors in violation of the company's equity incentive plan, that several board members and entity defendants were unjustly enriched by the equity grants, and that the board breached its duty of candor by making faulty disclosures when seeking stockholder approval for amendments to the company's incentive award plan in connection with the equity grants." [Reith v. Lichtenstein, No. 2018-0277 (Del. Chanc. Jun. 28, 2019)]
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Selected Discussions |
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HCE Waiver of Self-Correction Funds? We have a client for whom we are doing a self-correction. Salary deferrals were not deducted from bonus wages per terms of the Plan plus the applicable matching contributions. However, an HCE doesn't want to be part of the correction -- wants to waive any funds he is otherwise due under the correction measure. The question is [1] can we allow this....have him sign a waiver? and [2] would this put the Plan in a worse position upon audit for not correcting the failure in full and in accordance with IRS Guidelines. Is there even a waiver option discussed in the IRS guidelines on correction?
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Coverage Testing of Multiple Plans: How to Handle Intragroup Transfers by Employees? Three employers are members of a controlled group (A, B, C) and they each sponsor a 401(k) plan with different features. Each plan passes coverage separately -- but barely. Let's say an employee transfers mid-year from Employer/Plan A to Employer/Plan C, is that employee considered in Plan A only or Plan C only or both plans for coverage purposes?
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A participant would like to prepay the remaining semi-monthly payments for the remainder of the year. Assume 6 months (12 payments) being made in a lump sum right now to cover all payment from 7/15/2019-12/31/2019. Assume the participant loan program allows for these ad hoc payments and sponsor is OK with it. Is this acceptable from an IRS standpoint or is it a violation of 72(p)?
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Press Releases |
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Most Popular Items in the Previous Issue |
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Final Report on Connecticut Pension Sustainability (PDF)
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Benefit and Compensation Issues in Employment and Separation Agreements
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David Rhett Baker, J.D., Editor and Publisher
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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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