Retirement Plans Newsletter

September 3, 2019 logo logo
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Plan Administrator
Retirement Plan Administrators, LLC
in Atlanta GA / Telecommute

Sales - 401(k)/DB
Farmer & Betts, Inc.
in Tualatin OR / FL / GA / IN / MO / OH / TX

Financial Management Specialist - DE
Pension Benefit Guaranty Corporation
in Washington DC / Telecommute

Defined Benefits Consultant
Loren D. Stark Company
in Houston TX / Telecommute

Call Center Specialist
Ingham Retirement Group
in Miami FL / Telecommute

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[Official Guidance]

Text of Final Regs: TSP Additional Withdrawal Options

"The TSP Modernization Act of 2017 ... permits the TSP to offer participants additional withdrawal options and flexibility. In addition, the Act eliminates the requirement that a TSP participant who has reached age 70-1/2 and is separated from federal service make a full withdrawal election with respect to his or her TSP account. On June 10, 2019, the FRTIB published a proposed rule with request for comments ... [T]he FRTIB is publishing the proposed rule as final without change."

Federal Retirement Thrift Investment Board [FRTIB]


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.

Arbitration Ruling Piques Sponsors' Interest

"A federal appeals court decision allowing The Charles Schwab Corp.'s 401(k) plan executives to compel arbitration in a fiduciary breach dispute will prompt more plan sponsors to examine this strategy to reduce their ERISA liability risks ... Unlike judges, arbitrators are not bound by precedent ... There's no guarantee an arbitrator is knowledgeable about ERISA; and, except in rare cases, binding arbitration cannot be appealed." [Dorman v. The Charles Schwab Corp., No. 18-15281 (9th Cir. Aug. 20, 2019; also unpub. memo. opinion)]

Pensions & Investments

CalSavers: Employers Should Remain Compliance-Ready, Despite Court Challenges

"How do business owners count employees in order to determine their applicable CalSavers effective date? What is the impact, if any, of being part of a 'controlled group' of businesses, or of using a staffing or payroll agency? What about out-of-state employers, or California-based employers with out-of-state employees? [This article is] a 'deep dive' on these and other CalSavers employer coverage issues."

E is for ERISA

Considerations for Plan Sponsors Who Discover Unauthorized Workers in Their Retirement Plans

"[G]iven that the DOL generally has taken the position that unauthorized workers must be treated the same as other common law employees for other employment law purposes, a prudent approach for employers is to follow the terms of their retirement plans regarding eligibility for benefits and to not assume an unauthorized worker in ineligible to participate. "

Dickinson Wright

Navigating Two Decades of Funded Status

"This paper examines the sources of funded status volatility seen over the past two decades and discusses how plan sponsors of DB pension plans have adapted. Numerous pension de-risking techniques are available for plan sponsors to use depending on their risk exposure and risk tolerance.... [This article] will cover the pros and cons of several popular de-risking mechanisms."



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Top 20 Pension Funds' AUM Declines for First Time in Seven Years

"Assets under management (AUM) at the world’s 300 largest pension funds fell in value by 0.4% to a total of $18 trillion in 2018, in sharp contrast to an increase of 15.1% in 2017 ... This is the first year since 2012 that the top 20 funds’ share of the total AUM has fallen. However, the top 20 funds’ growth rate of 4.7% during the period 2013 to 2018 remained higher than the growth rate of 3.9% for the top 300 funds during the same period."

Willis Towers Watson

Editor's Pick Mixed Target Date Fund Investors: Is There a Method to the Madness? (PDF)

"Overall, mixed target-date fund investors appear to have relatively diversified portfolios, but are more aggressive than the average target-date fund would be for a given age, especially at older ages The average allocation of mixed target-date fund investors is 37% target-date funds, 49% equity funds, and 13% bond funds."

Morningstar Advisor

FAS87 ASC715 Discount Rates and Moody's Rates, Updated September 1, 2019

An unofficial monthly report as of August 31, 2019, of the Moody's Daily Long-term Corporate Bond Yield Averages and Moody's Daily Treasury Yield Averages (used as benchmarks by some corporate pension plans).

David Rigby, via BenefitsLink Message Boards

How Do Public Plans Value Their Assets?

"A new government accounting standard requires state and local pension plans to categorize assets based on the method used to determine the fair market value. Level 1 includes frequently traded assets like equities. Level 2 includes less liquid assets like corporate bonds. Level 3 involves appraisals like real estate. For assets that lack a 'readily determinable' fair market value, plans can instead use the net asset value (NAV) per share. However, it is possible to assign these 'NAV assets' to Levels 1, 2, or 3 by matching them with comparable assets in each level. This reallocation shows that about one quarter of total assets are likely valued based on appraisals (Level 3), which, by definition, are more subjective."

Center for Retirement Research at Boston College

Pension Finance Update, August 2019

"Falling stock markets and record-low interest rates combined to produce a brutal August for pension finances. Both model plans ... lost ground last month, ending August at the low point for the year: Plan A lost more than 5% last month and is now down almost 7% for the year, while Plan B lost more than 1% and is now down 1% through the first eight months of 2019."

October Three Consulting

Heirs Can Use NUA Tax Break for Inherited 401(k)s

"If the heir rolls assets from the 401(k) to an inherited IRA, she can split off the appreciated employer stock and roll that into a taxable brokerage account. The heir will owe ordinary income tax on the original cost basis. When she later sells the appreciated stock from the taxable account, the NUA -- the difference between the cost basis and the current market value of the employer stock -- will be taxed at long-term capital-gains tax rates."


Benefits in General

Three Benefits Job Seekers Can't Afford To Overlook

"It's easy to get distracted by the excitement of unusual perks. Nonetheless, it's essential (especially for 20- and 30-somethings) to pay close attention to three important, seemingly obvious employer offerings -- the ones that translate into a strong personal brand built on true stability, not fads that may end up giving you the jitters.... [1] Robust retirement plans ... [2] Opportunities for promotions and raises ... [3] Health, life, and disability insurance."


Selected Discussions
on the BenefitsLink Message Boards

Rollover of Payments from a Term Certain Annuity?

If a participant in a Defined Benefit Pension Plan chooses to take a 5 year (60 month) term certain annuity, can those payments be directly rollover over to an IRA? What if the participant is over 70-1/2?

BenefitsLink Message Boards

Rebalance 401(k) Account / Participant Loans

Participant has $10,000 of Fund A in his 401(k) account and $5,000 of a participant loan in his 401(k) account. He also has $7,000 of Fund A in his Match account. Can I have the participant sign an investment election to rebalance his portfolio and shift $5,000 of Fund A from his Match Account to his 401(k) account, and then transfer $5,000 of his loan from his 401(k) account to his match account?

BenefitsLink Message Boards

Professional Corps Didn't Adopt Plan -- What Are Odds of Success in Fixing Situation?

Taking over a 401(k) set up by one of the payroll companies in 2017. It's a law firm organized as a partnership of professional corporations. The three partners did make 401(k) deferrals both years, but the processing payroll company did not include the individual PCs as adopting sponsors of the plan. Think IRS would approve a correction for them to adopt the plan now retroactive to 2017?

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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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