Retirement Plans Newsletter

July 29, 2019

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Defined Benefit Plan Administrator
Northeast Professional Planning Group, Inc
in Red Bank NJ / Tarrytown NY

Retirement Plan Consultant
Ubiquity Retirement and Savings
in San Francisco CA / AZ / CO / DC / FL / IL / KY / MA / NC / NJ / NV / NY / OR / SC / TX / Telecommute

Auditor
Employee Benefits Security Administration, U.S. Department of Labor
in Washington DC / Telecommute

Retirement Plan Administrator
APC
in Plainview NY / Telecommute

Retirement Plan Consultant
First American Bank
in Elk Grove Village IL

Defined Benefit Operations Specialist
Transamerica
in MA

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[Official Guidance]

Text of DOL Final Regs: Definition of Employer Under Section 3(5) of ERISA -- Association Retirement Plans and Other Multiple-Employer Plans

135 pages. "This document contains a final regulation ... that expands access to affordable quality retirement saving options by clarifying the circumstances under which an employer group or association or a professional employer organization (PEO) may sponsor a multiple employer workplace retirement plan.... The final regulation does this by clarifying that employer groups or associations and PEOs can, when satisfying certain criteria, constitute 'employers' within the meaning of ERISA for purposes of establishing or maintaining an individual account 'employee pension benefit plan' within the meaning of ERISA. As an 'employer,' a group or association, as well as a PEO, can sponsor a defined contribution retirement plan for its members (collectively referred to as 'multiple employer plans' or 'MEPs' ...). Thus, different businesses may join a MEP, either through a group or association or through a PEO.

"The final regulation also permits certain working owners without employees to participate in a MEP sponsored by an employer group or association. The final rule primarily affects groups or associations of employers, PEOs, plan participants, and plan beneficiaries.... [It] may affect banks, insurance companies, securities broker-dealers, record keepers, and other commercial enterprises that provide retirement-plan products and services to ERISA plans and plan sponsors....

"This final regulation is effective [Sept. 30, 2019]."
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

[Official Guidance]

Text of DOL Request for Information: Open MEPs and Other Issues Under Section 3(5) of ERISA

16 pages. "The document mainly seeks comments on whether to amend our regulations to facilitate the sponsorship of 'open MEPs' by persons acting indirectly in the interests of unrelated employers whose employees would receive benefits under such arrangements. The term 'open MEP' in this document refers to a single defined contribution retirement plan that covers employees of multiple unrelated employers. The information received in response to the questions in this document may form the basis of future rulemaking under ERISA. This request for information was triggered in part by public comments received on a related rulemaking action under section 3(5) of ERISA ... This document also solicits information on other issues raised by these commenters, but which were considered beyond the scope of that final rule."
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

[Guidance Overview]

DOL Provides Form 5500 Transition Relief for MEP Filings

"For plans that satisfy the requirements of the transition relief, the DOL will not reject the Form 5500 (or Form 5500-SF) or seek to assess penalties with regard to those filings solely due to the failure to comply with the Section 103(g) reporting requirements. Form 5500/5500-SF filings for 2014-2017 do not have to be amended to take advantage of this relief."
FIS Relius

[Guidance Overview]

DOL Fact Sheet: Final Rule on Association Retirement Plans (ARPs) and Other Multiple-Employer Plans (MEPs)

"The Final Rule will help strengthen retirement security for American workers ... ARPs and MEPs exist now, but the Final Rule offers new options ... The Final Rule includes a regulatory safe harbor for PEO MEPs ... ARPs and other MEPs have many possible benefits ... MEPs will increase retirement savings ... Request for Information on 'Open MEPs' "
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

Code Section 410(b) Coverage Testing Concerns in Corporate Transactions

"When plans cannot be aggregated, they must be tested separately for purposes of Section 410(b) coverage testing, which is where ... testing failures [can occur] -- especially where the buyer is significantly larger than the acquired company."
Ogletree Deakins

Key Steps for an Investor Preparing to Retire

"[1] Determine your health care coverage needs.... [2] Boost retirement savings.... [3] Assess your investment risk exposure.... [4] Analyze your income needs.... [5] Build your bucket list."
U.S. News & World Report

CalPERS Loss Triggers More Debt Payment Reform

"Investments earning 6.7 percent during the fiscal year that ended June 30 might seem like a good return ... [CalPERS] currently needs earnings of at least 7 percent to balance its books for the year. So the small loss, .3 percent, creates a new layer of debt to add to the many layers of debt from previous years with investment losses.... [U]nder a reform adopted by the CalPERS board last year new debt from investment losses will be paid off over 20 years instead of 30 years[.]"
Calpensions

DOL Announces Rule to Strengthen Retirement Security for Millions of American Workers

"By expressly permitting these new plan arrangements, the rule enables small businesses to offer benefit packages comparable to those offered by large employers. The Department expects the plans to reduce administrative costs through economies of scale and to strengthen small businesses' hand when negotiating with financial institutions and other service providers. The final rule effective date is September 30, 2019."
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

[Opinion]

Proposed Bay State Financial Advice Rule Is 'Misguided'

"In comments filed with the Massachusetts Securities Division, IRI asserted that the recently finalized Regulation Best Interest announced in June by the [SEC] will address the concerns underlying the state's proposed regulation. IRI also explained that, while the underlying goals are aligned, the Massachusetts proposal is fundamentally inconsistent and incompatible with the SEC rules."
Insured Retirement Institute [IRI]

[Opinion]

American Benefits Council Letter to Massachusetts Secretary of the Commonwealth, Objecting to Proposed Fiduciary Standard

"The proposal contains an exemption for any person acting as an ERISA fiduciary to a plan or its participants or beneficiaries. But ... if a broker-dealer is providing recommendations to an ERISA plan or participant, but not acting as an ERISA fiduciary, the proposal imposes a fiduciary duty on that broker-dealer. This is ... preempted by ERISA, and would have a very significant effect on ERISA plans if it were not preempted."
American Benefits Council

Benefits in General

Fifth Circuit Finds Limitations Period for Miscalculation Claim Began to Accrue Upon Notice of Benefit Calculation

"[T]he best practice is to evaluate the insurance company's calculation of the monthly benefit at the outset ... [C]laims administrators ... would best protect their interests if they clearly and simply lay out the benefit calculation and all factors they considered at the time they approve a claim for benefits. They should also give appeal rights with these written determinations." [Faciane v. Sun Life Assurance Co. of Canada, No. 18-30918 (5th Cir. Jul. 25, 2019)]
Kantor & Kantor

Selected Discussions
on the BenefitsLink Message Boards

Using 2019-19 EPCRS for Retroactive Amendment of Definition of Compensation

Self correction by amendment. We meet all other requirements. The only "issue" -- it so happens there are predominantly HCEs. Taxable Fringe Benefits were taken into account when they should not have been. We want to amend retroactively to 2018 as the correction to include TFB. Is that a problem? There's nothing in the new "correction by amendment" that is problematic. It references section 6.02 for correction principles, but it seems I can check off all those boxes too (i.e., it is consistent with general principles).
BenefitsLink Message Boards

Handling a Bloated Forfeiture Account

Plan sponsor (with high employee turnover) eliminated 401(k) plan's fixed matching contribution effective January 15, 2018 and, after payment of expenses, has over $6,000 in the forfeiture account. Document provides that match forfeitures be used to reduce match for the plan year in which they occur and to pay expenses. Sponsor will continue to pay expenses from the account, but it may take a few years. Does anyone think there would be an issue? It's not like the account accumulated over a period of several years. We're following the terms of the plan. Not sure what else we can do.
BenefitsLink Message Boards

Plan Terminated But Small Amount of Money Remains in Trust

We have a plan that was terminating PYE 06/30/19. They moved money to checking account and paid everyone out. Then without consulting us, instead of closing the account they kept it open and put in an additional $250 to cover bank fees. They now have about $167 remaining. Technically, it seems we would have to have them clear out the account and file a final 5500 for PYE 06/30/20. Any suggestions as to how you would handle this?
BenefitsLink Message Boards

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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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