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[Official Guidance]

Text of PBGC Request for OMB Approval of New 'Cessation of Operations' Reporting Forms

"Section 4062(e) of [ERISA] imposes reporting obligations in the event of a 'substantial cessation of operations.' ... PBGC is proposing a new form series that would be used to fulfill these reporting obligations. An employer or a plan administrator would file Form 4062(e)-01 to notify PBGC of the occurrence of a substantial cessation of operations and request a determination of the employer's liability. An employer would file Form 4062(e)-02 to notify PBGC that it made the election to pay annual additional contributions to a plan. An employer would file Form 4062(e)-03 to notify PBGC that it paid an annual additional contribution, received a funding waiver from the IRS, or is no longer obligated to pay annual additional contributions. Finally, an employer would file Form 4062(e)-04 to notify PBGC that it failed to pay an annual additional contribution to the plan."
Pension Benefit Guaranty Corporation [PBGC]


Earn Your Certificate in Retirement Plans This Fall

Sponsored by International Foundation of Employee Benefit Plans [IFEBP]

The Certificate in Retirement Plans provides an overview of defined benefit and defined contribution plans, Social Security, basic investment principles, 401(k) plans and the legal and regulatory environment surrounding plans today.

Editor's Pick Implementing Recent Hardship Distribution Rule Changes from a TPA's Perspective (PDF)

"The primary purpose of the distribution form is to have the hardship distribution request processed, whereas the [separate hardship distribution application (HDA)] is designed only to avoid having the participant provide copies of financial information, medical bills, etc., to the plan sponsor, who, in turn, had to try to determine if the documentation properly supported the hardship distribution request.... The participant is responsible for maintaining the source documentation and the plan sponsor can rely on the details provided without receiving copies of that source information."
Blue Benefits Consulting, Inc. and The Retirement Advantage, via Journal of Pension Benefits

How Much Should a New Retirement Plan Committee Member Know?

"The court's decision focused on one aspect of the case: the liability of 'new' plan committee members for actions that predated their involvement on the committee, but continued after their involvement. The court, in a decision that will likely be viewed favorably by new committee members, excluded them from liability for committee moves that predated their participation, at least to the extent they lack 'actual knowledge' of imprudence." [Fuller v. SunTrust Banks, Inc., No. 11-784 (N.D. Ga. Jul. 16, 2019)]
National Association of Plan Advisors [NAPA]

When Income Is the Outcome: Reducing Regulatory Obstacles to Annuities in 401(k) Plans (PDF)

41 pages. "[The authors] explore legislative and regulatory reforms that could encourage workers to annuitize more of their 401(k) and other defined contribution balances upon retirement. [They] propose changes that would create an appropriately pr otective fiduciary safe harbor for plan sponsors selecting annuity providers, increase the portability of annuities, and reform the required minimum distribution rules relating to retirement income." [Also available: 9-page policy brief.]
J. Mark Iwry, William Gale, David John, and Victoria Johnson, for the Brookings Institution

Technical Explanation of the Rehabilitation for Multiemployer Pensions Act of 2019

41 pages. "This document ... provides a technical explanation of H.R. 397, the 'Rehabilitation for Multiemployer Pensions Act of 2019,' scheduled for consideration on the floor of the House of Representatives on July 24, 2019 ... The bill described is as ordered reported by the Committee on Education and Labor and the Committee on Ways and Means, with modifications."
Joint Committee on Taxation [JCT], U.S. Congress


ftwProposal Pro - Illustrate and Propose the Best Plan Options

Sponsored by Wolters Kluwer

ftwProposal Pro helps you illustrate the best plan options. Intuitive and easy to use - the compare features, customization options, ability to run complex calculations and create 3-5 separate proposals simultaneously saves you time! Learn more!

Revenue Sharing: Reasons for 401(k) Fiduciaries to Avoid It

"[1] Revenue sharing is difficult to total ... [2] Revenue sharing can outstretch service level ... [3] Revenue sharing limits investment options ... [4] Revenue sharing is often unfair ... [5] Revenue sharing is baked into fund expenses."
Employee Fiduciary

Current Issues Companies With 401(k) Plans Must Have On Their Radar

"Most plans must file Form 5500 by July 31 (or October 15 if an extension is properly obtained).... Failures happen. Find them and correct them consistent with the IRS's correction program.... Understand how your plan is handling hardship distributions in response to recent changes in the law."
Hawley Troxell

The Future of Retirement Plans: Variable Benefit Plans

"If we truly want to design a best-in-class retirement program, we should try to combine the most positive attributes of the DB and DC platforms into one new plan design.... A variable benefit plan is similar to a traditional DB plan, except that the investment risk and positive return is owned by the employees and not the plan sponsor."
Findley; free registration required

New Texas Law Enhances School District Role in 403(b)s

"The new law includes provisions that: [1] Repeal the requirement that an educational institution can only enter into a salary reduction agreement with an employee of the institution if the qualified investment product is registered with [the Teacher Retirement System (TRS)]. [2] Require that educational institutions that enter into a salary reduction agreement with employees ... require that contributions to eligible qualified investments be made by automatic payroll deduction and deposited directly in the investment accounts. [3] State that an insurance company is eligible to offer qualified investment products to the employees of educational institutions in Texas if the company satisfies [specified] criteria[.]"
National Tax-Deferred Savings Association [NTSA]

Editor's Pick How to Fix a Botched RMD to Avoid the 50% Penalty

"[T]he IRS ... has the option to decide to waive that punitive penalty for failing to take an RMD. However, it's important to note that the onus is on the taxpayer to reach out to the IRS, explain that their mistake was the result of a 'reasonable error,' and show how they are taking 'reasonable steps' to remedy the shortfall.... [A]lthough there is a way to waive the 50% penalty, the means for doing so can be just as confounding as the RMD rules themselves ... at least if the taxpayer hopes to have their penalty abated!"
Nerd's Eye View


The Real Problems with Using the 4% Rule to FIRE

"[U]sing the 4% Rule (as may be modified as suggested by Mr. Kitces) still has other potential problems, including: [1] It doesn't consider all sources of income or non-recurring expenses; [2] It anticipates at least 60% investment in equities; [3] It is a 'set-and-forget' strategy that doesn't automatically adjust for favorable or unfavorable experience (and therefore lifetime spending is overly dependent on the size of assets at retirement); [4] It needs to be adjusted for different lifetime planning periods."
Ken Steiner, FSA Retired

Benefits in General

Potential Changes to Annual Plan Audits for Large Employers Spark Concerns

"In its request to the council, which consists of 15 members appointed by the labor secretary to represent various interests in the retirement landscape, the DOL raised concerns about the 'commoditization' of plan audits.... Part of what the council is examining is how plan sponsors approach the audit process, said Srinivas D. Reddy, ... chairman of the council. Because the audit is mandated and does not provide a 'tangible benefit to the plan sponsor, but is adding cost,' the council is seeing whether plan sponsors are getting the full value of an audit, Mr. Reddy added."
Pensions & Investments

Executive Compensation
and Nonqualified Plans

International Employee Stock Plans: 2019 Mid-Year Developments (PDF)

"This White Paper highlights some recent developments in certain countries relating to employee stock plans offered by multinational companies to employees in such jurisdictions."
Jones Day

Selected Discussions
on the BenefitsLink Message Boards

Applying 415 Limit to Year of Plan Termination

A 401k plan is on a calendar year and ceases contributions in March. However, the effective date of the termination is in July. Which date is used to determine the pro rata 415 limit? If the employer had already ceased contributions with the intention to terminate, but did not make the effective date until several months after, aren't they essentially increasing the contributions allowed by the pro rata 415 limit?
BenefitsLink Message Boards

Different Contributions by Controlled Group Members in Same 401(k) Plan

Company A and Company B are members of a controlled group and they adopt one single 401(k) plan with a profit sharing discretionary component. Can each company pass a separate resolution to fund a different profit sharing percentage each year. For example, Company A at 3% and Company B at 0% (none)?
BenefitsLink Message Boards

Acceleration of Distributions for Terminated Participants Due to Hardship

In order to use hardship as a criterion for allowing acceleration of distributions for terminated participants, must the plan allow hardships as an in-service distribution option?
BenefitsLink Message Boards

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Most Popular Items in the Previous Issue

Fears of a Retirement Crisis Are Overblown
American Enterprise Institute, 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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