Retirement Plans Newsletter

July 16, 2019

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Client Service Manager
LT Trust Company
in CO

Plan Administrator
Noble-Davis Consulting, Inc.
in Solon OH / Telecommute

Benefits Specialist
Kennedy Krieger Institute
in Baltimore MD

Statistician (Health)
Centers for Medicare & Medicaid Services, U.S. Department of Health and Human Services
in Woodlawn MD / Telecommute

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[Official Guidance]

PBGC Clarifies Guidance on Mergers and Transfers between Multiemployer Plans

"PBGC notes that clarification is needed in the second example of how a plan can demonstrate that financial assistance is necessary to mitigate the adverse effects of the merger on the merged plan's ability to remain solvent. This example in the preamble states that, 'while not a threshold, a possible demonstration may be based on stochastic modeling showing that the merged plan's probability of insolvency within 30 years of the merger exceeds 65% without the requested financial assistance.' The percentage in this example should be 35% (not 65%)."
Pension Benefit Guaranty Corporation [PBGC]

[Advert.]

SPARK Forum - November 3-5, 2019 -- The Breakers, Palm Beach, FL

Sponsored by SPARK

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.


[Guidance Overview]

Proposed IRS Regs Would Eliminate 'One Bad Apple' Rule for Multiple Employer Defined Contribution Plans

"The IRS had considered expanding these proposed regulations to tax-qualified defined benefit plans as well, but, because of additional complexities that would be associated with applying these proposed regulations to defined benefit plans, elected not to do so. The IRS did, however, solicit comments regarding the possible extension of these rules to tax qualified defined benefit plans."
The Wagner Law Group

Conduct a Self-Audit to Avert ERISA Plan Fiduciary Liability (PDF)

"The scope of a fiduciary self-audit will vary depending on an organization's needs and types of benefit plans, and must be tailored to the situation. A self-audit ... will require development of a road map to collect the requisite materials such as plan documents, meeting minutes, plan reports, plan investment and fee information, investment, trust and service provider agreements and all other necessary plan information."
Epstein Becker Green

Sponsors Want More Financial Wellness Offerings from Advisers

"Being less optimistic than advisers about participants' retirement readiness, plan sponsors also want guidance about alternative plan designs and cite increasing defined contribution (DC) plan participation as their biggest challenge[.]"
PLANSPONSOR; free registration may be required

401(k) Loan Usage Declines

"The use of 401(k) loans reached a nine-year low of 22.5 percent in 2018 and continued a steady six-year decline of nearly 10 percent ... [T]he percentage of participants who took a hardship withdrawal fell for the ninth consecutive year, declining from 1.9 percent in 2010 to 1.3 percent in 2018. However, both loan balances and the average amount of hardship withdrawals increased."
Wolters Kluwer; free registration required

SEC Guidance Regarding Broker-Dealers and Investment Advisors

"[A]lthough several commenters recommended that the SEC take the position in the final regulation that state regulation of the activity of broker-dealers would be preempted by Reg BI, the SEC declined to do so.... FINRA has indicated that it will need to review and likely modify its guidance to broker-dealers.... [W]ith the SEC guidance finalized, the focus switches again to the DOL, which has indicated that it intends to reissue regulations by year end, supplementing the SEC guidance, with regard to fiduciary investment advice."
The Wagner Law Group

The ESOP Landscape: Valuation Scrutiny and Tax Reform

"ESOP fiduciaries need to be cognizant of the impact of the reduction in corporate income taxes when determining the fair market value of ESOP plan assets. Such fiduciaries should also carefully review their ESOP valuation methodologies for reasonableness in light of these tax law changes to determine whether any changes are needed to protect against potential DOL scrutiny.... ESOP fiduciaries should ensure that they understand the valuation methodologies and assumptions being used, and that projections and assumptions are not based on conflicting interests."
Alvarez & Marsal

Crafting Retirement Income That is Stable, Secure, and Sustainable

"This paper presents a 3-S model framework for retirement income. The 3-S model seeks retirement income that is simultaneously stable, secure, and sustainable. Categorizing income sources for retirement as Agreement-based (Time Bound 3-S), Mortality-based (Risk Pooled 3-S), or Historically based portfolio income (Probabilistic 3-S). This paper asserts that any of these three categories is definitionally capable of offering stable, secure, and sustainable retirement income."
Jason Branning and M. Ray Grubbs, via SSRN

[Opinion]

You'd Be Better Off Just Blowing Your Money: Why Retirement Planning Is Doomed

"The concept of retirement has robbed the public of the responsibility and accountability required with personal finance.... People fund retirement plans blindly. They don't focus on cash flow, they focus on accumulation. And when it's time for cash flow, they're heavily disappointed.... [H]ow, if it has been failing for so long, are we still buying into this? This retirement plan notion, that focuses on accumulation and setting money aside; and then one-day, someday, you might actually retire. It hasn't worked and it won't work."
Garrett Gunderson in Forbes

Executive Compensation
and Nonqualified Plans

Know Your Options: Comparing NQSOs And ISOs

"While since the 1990s many companies have come to favor other equity grants, such as restricted stock units (RSUs) and performance shares, stock options remain a major form of equity compensation. Companies can grant two types: nonqualified stock options (NQSOs), the more common variety, and incentive stock options (ISOs), which offer some tax benefits but also raise the complexities of the alternative minimum tax (AMT)."
myStockOptions.com

Selected Discussions
on the BenefitsLink Message Boards

Final K-1 Goes Negative: Include the Partner in 401(a)(4) Nondiscrimination Testing?

Partnership plan. One partner essentially has retired but his final K-1 for 2018 is a negative number. Should he still be in the 401(a)(4) testing for the year? Perhaps the relevant question is, "Did he perform any service in 2018?"
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Press Releases

Abacus Wealth Partners is Certified for Fiduciary Excellence
Centre for Fiduciary Excellence [CEFEX]

OneDigital Acquires Valley Benefits
OneDigital Health and Benefits

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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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