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August 30, 2019 logo logo
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Senior Pension Administrator - Combo DB / DC Plans
Primark Benefits
in Burlingame CA / Telecommute

Employee Benefits Compliance Associate
Slevin & Hart, P.C.
in DC

Retirement Plan Associate / Financial Advisor
Garcia Wealth Management Group
in Templeton CA

Manager, Actuarial Services Group
University of California Office of the President
in Oakland CA

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[Official Guidance]

Orphan and Inactive Participants in Multiemployer Plans, 2015 Plan Year Reporting (PDF)

34 pages; Aug. 2019. "This supplement to PBGC’s Data Tables examines and analyzes the data reported by multiemployer pension plans on participants whose employer has withdrawn from the plan. ... Orphan participants in the ongoing plans that reported plausible non-zero values for orphans totaled 1.6 million, which accounts for 24 percent of participants in those plans and 16 percent of the 10.3 million participants in all multiemployer plans. The estimated range for the total number of orphan participants (defined as participants whose most recent employer no longer contributes to the plan) is 1.6 million to 2.5 million participants, after adjusting for missing reporting."

Pension Benefit Guaranty Corporation [PBGC]


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.

Defined Benefit Plan Actuarial Equivalence Litigation: A Formidable Threat or an Unfounded Theory?

"All nine lawsuits generally allege that the plans used unreasonable actuarial assumptions when converting the plans’ normal forms of retirement benefit ... to an alternative form of benefit ... [so that] some retirees who are participants in the companies’ defined benefit pension plans have lost part of their vested retirement benefits in violation of ERISA section 203(a). The plaintiffs also claim that the plans’ fiduciaries breached their duties in using these alleged outdated mortality tables."

Trucker Huss

Attorney Jerry Schlichter Rattles Fidelity in MIT 401(k) Lawsuit

"Jerry Schlichter, who has won $450 million for employees claiming retirement plan mismanagement ... has included Fidelity Chairman and CEO Abigail Johnson on a preliminary list of witnesses he wants to call at trial, contending that she has direct knowledge of a quid-pro-quo arrangement between MIT and Fidelity involving donations to the university."

The Business Journals

Ninth Circuit Overturns Precedent and Sends ERISA Claims to Individual Arbitration

"In a case of first impression, the Ninth Circuit overturned 35 years of precedent and ruled that ERISA class action claims brought on behalf of an ERISA plan are subject to individual arbitration. The Court also enforced the arbitration agreement’s class action waiver and sent plaintiff’s putative ERISA class action to individual arbitration with relief limited to plaintiff’s individual plan losses." [Dorman v. The Charles Schwab Corp., No. 18-15281 (9th Cir. Aug. 20, 2019; also unpub. memo. opinion)]


The Beginning of the End for 401(k) Class Actions? Ninth Circuit Enforces Individual Arbitration

"This Ninth Circuit decision will likely be the subject of a petition for rehearing and possibly a petition for certiorari at the Supreme Court.... [It] is the second Ninth Circuit arbitration decision impacting ERISA plans in the past 13 months. This may lead employers to consider adding arbitration provisions with class waivers to their employee benefit plans.... The potential downside to such provisions is that requiring individual arbitration could result in multiple arbitrations regarding the same issues." [Dorman v. The Charles Schwab Corp., No. 18-15281 (9th Cir. Aug. 20, 2019; also unpub. memo. opinion)]

Ogletree Deakins


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Deep Dive Into the SEC's Investment Advice Rule Package (PDF)

"[T]he SEC's investment advice rule ... which were first proposed in 2018 and passed by the SEC in June, go fully into effect June 30, 2020. One part of the four-part package in particular -- Regulation Best Interest, or Reg BI -- will greatly impact how retail consumers receive financial advice. This edited transcript explores Reg BI, as well as the other elements of the rule package."

Groom Law Group, via Journal of Financial Planning

The Reality of Workers' Emergency Savings: Evidence from the Survey of Consumer Finances

"Given the low percentage of workers and families who had sufficient savings to cover a loss of income for any extended period, emergency savings programs could be directly beneficial to workers and indirectly beneficial to employers through higher employee satisfaction. Despite employees preparing for retirement through their participation in the DC plan, help is needed by a sizable share of these employees for short-term financial issues. The potential need is even more pressing for those who are eligible for the plan but do not participate."

Employee Benefit Research Institute [EBRI]

Amid Rocky Market, 401(k) Savers Eked Out Gains in Q2

"The average 401(k) plan balance rose 2% to $106,000 in the second quarter versus a year earlier ... Most of the gains came from employees setting aside more of their pay for their retirement plans. The average employee contribution rate rose to 8.8% in the second quarter, a record level. That's up from 8% a decade ago, "


IRS Ruling Could Alter RMD Timing

"[A] recent IRS ruling on uncashed distribution checks ... may require clients to take required minimum distributions (RMDs) early, warns IRA expert Ed Slott.... 'If the IRS really intends to apply the distribution rule to all company plan payouts,' Slott [said] ... 'advisors will need to advise clients to request distributions,' including RMDs, 'early enough in the calendar year to avoid any cross-year confusion, so the client will know that the distribution applies to the prior year, even if cashed or received early the next year.' "


Reasons to Focus on Employee Financial Wellness for a Healthy Retirement

"[1] Over 4 in 10 Americans 'will retire broke' ... [2] Over 1 in 4 Americans have spent from a retirement piggy bank ... [3] 25% of soon-to-retire Americans think Social Security is sufficient for the future... [4] Many employees don't take advantage of available retirement programs."

Tango Health

The Little Differences Between 401(k)s and IRAs Can Cost Big Bucks

"Because tax-favored retirement accounts are supposed to be for retirement, the rules often impose tax and a 10% penalty on withdrawals before age 59½. Younger IRA owners who take out up to $10,000 to purchase a first home don’t owe the penalty, while younger 401(k) participants do."

The Wall Street Journal; subscription may be required


Statement of Investment Company Institute to ERISA Advisory Council on Permissive Transfers of Uncashed Checks from ERISA Plans to State Unclaimed Property Funds (PDF)

15 pages. "[ICI believes that] expansion of the PBGC program generally offers a more optimal solution to the issue of missing participants, including the problems associated with uncashed distribution checks.  Until the adoption of that inter-agency solution ... [ICI] recommend[s] that the [DOL] issue guidance facilitating the use of state unclaimed property funds as one of several permissible options for the handling of uncashed distribution checks[.]"

Investment Company Institute [ICI]


Amicus Brief of Employer Organizations to Supreme Court in ERISA Statue of Limitations Case

"The plan here made the required disclosures, and the plaintiff actually received them. The Ninth Circuit held, however, that the plaintiff could avoid the three-year statute of limitations simply by disclaiming that he read (or could recall having read) those disclosures.... The decision below is wrong, it seriously undermines the important protections provided by the three-year limitations period, and it threatens to exacerbate the growing trend of meritless litigation against ERISA plans and plan fiduciaries. It should be reversed." [Sulyma v. Intel Corp. Investment Policy Comm., No. 17-15864 (9th Cir. Nov. 28, 2018; cert. pet. granted June 10, 2019)]

The American Benefits Council and five other employer and industry associations


Where Is 401(k) Leakage Really Heading?

"[O]ver a five-year period, as many as 40% of participants take a loan, [and] nearly 9 in 10 participants who lose their job with a loan outstanding will default. The reality is that employees continue to be financially stressed -- hence the continued employer focus on financial wellness programs -- and a large proportion will continue to borrow from their 401(k) to fight financial fires that arise."

Retirement Loan Eraser

Benefits in General

[Official Guidance]

Text of EBSA Meeting Notice for Advisory Council on Employee Welfare and Pension Benefit Plans

"[T]he 198th meeting of the [ERISA Advisory Council] will be held as a teleconference on September 25, 2019.... The purpose of the open meeting is to discuss reports/recommendations for the Secretary of Labor on the issues of: [1] Beyond Plan Audit Compliance: Improving the Financial Statement Audit Process and [2] Permissive Transfers of Uncashed Checks from ERISA Plans to State Unclaimed Property Funds. Descriptions of these topics are available on the [Advisory Council page of the EBSA web site]."

Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

[Guidance Overview]

Editor's Pick Comprehensive FAQs on Benefits and Other Issues Relating to Hurricanes and Other Workplace Disasters

"This article addresses many employment-related issues facing employers in the wake of hurricane-related disasters; ... in addition to federal laws, [it focuses] on certain state laws, especially those in the areas most impacted by the storms.... [T]he information here is of more widespread applicability than just the current hurricane season, and may be helpful following any unexpected natural catastrophe."

Fisher Phillips

U.S. Supreme Court Will Hear Three ERISA Cases This Fall

"After more than two years without one, three ERISA cases will come before the US Supreme Court in 2019-2020.... [Each case] presents issues of practical consequence for plan sponsors, fiduciaries, and participants in ERISA plans across the country."

Morgan Lewis

Court Awards $41,000 in ERISA Penalties for Failure to Provide Plan Documents

"The litigation arose after the plan administrator misappropriated participant contributions for corporate purposes and mishandled a beneficiary's claim involving a major surgery." [Kinsinger v. SmartCore, LLC, No. 17-643 (W.D.N.C. Aug. 27, 2019)]

Thomson Reuters Practical Law

Executive Compensation
and Nonqualified Plans

[Guidance Overview]

The Code Section 4960 Excise Tax on Excess Executive Compensation and Potential Tax Mitigation Strategies

"Questions [addressed in this article] include the following: [1] What entities will be considered applicable tax-exempt organizations? [2] Which employees will be considered covered employees? [3] What types of compensation are taken into account? [4] When is compensation considered paid for excise tax purposes? [5] Who pays the tax, and how can the tax be apportioned? [6] How can applicable tax-exempt organizations mitigate exposure to the tax?"

Bond, Schoeneck & King

Selected Discussions
on the BenefitsLink Message Boards

Fixing a 401(a)(26) Design Failure

We set up a traditional DB plan -- not cash balance -- for a restaurant with 50 employees. We excluded bartenders and service people while covering the chefs, kitchen and dish washers and the vice-president of the business. Although the plan satisfies 70% coverage RPT and initially met the 40% participation rule, this year the minimum participant count is too low: 39.2%. It's not clear to me how this can be fixed at minimum cost to the client. Can I just cover 1 or 2 members of one of the excluded groups?

BenefitsLink Message Boards

Non-Profits and New Comparability -- Employer Gets to Vary Contribution Among Employees?

We have a 401(k) plan for a non-profit entity with a new comparability formula for the profit sharing. The intention in the design was to have each participant in his own group and to vary the contribution level at will. There are no HCEs and of course no "owners." Can the employer give 10% of pay to the 3 oldest employees and nothing to the 3 youngest employees? Can the contribution be literally whatever they want to give to each person?

BenefitsLink Message Boards

IRS Audit -- Power of Attorney

One of my clients is going through an IRS audit and is getting frustrated. We have been supplying her with everything but she now wants us to take over speaking with the auditor. Years ago, I would complete the Form 2848 as an unenrolled return preparer and using my CAF number. Looking at the 2848 now, it appears that I can no longer do this? Do I need to apply for a PTIN? Am I no longer allowed to speak with the auditor at the client's request?

BenefitsLink Message Boards

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Press Releases

Most Popular Items in the Previous Issue

Protecting Retirement Assets from Creditors (PDF)
Greensfelder, via Journal of the Missouri Bar

Fast Facts and Figures About Social Security, 2019 (PDF)
U.S. Social Security Administration [SSA], 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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