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September 9, 2019 logo logo
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Pension Consultant and Administrator
BFP Associates, Inc.
in West Springfield MA / Telecommute

Retirement Plan Administrator
in Jacksonville FL / Telecommute

Retirement Plan Analyst 1
Retirement Plan Solutions, Inc.
in Cary NC / Telecommute

ERISA Attorney
Barclay Damon
in Syracuse NY

MEP Team Leader
Nova 401(k) Associates
in Houston TX / Dallas TX / Austin TX / Scottsdale AZ / Telecommute

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Considerations for Plan Sponsors Who Discover Unauthorized Workers in Their Retirement Plans: Tax Reporting, Withholding, and Missing Participants

"There are ... complications [for reporting requirements] if the plan sponsor is missing the participant's Social Security Number or has discovered it is invalid. This is frequently an issue when a sponsor discovers one or more unauthorized worker.... If the plan sponsor believes it will make a U.S.-sourced retirement payment (i.e., a retirement payment based on service performed in the U.S.) to a person who is not a U.S. Person, a plan sponsor may consider confirming that tax status by providing the participant with Forms W-8BEN, W-9, and W-7."

Dickinson Wright


Using IRAs and 401(k)s to Buy and/or Fund Real Estate Investments

Sponsored by Lorman and BenefitsLink

Sept. 18 webinar will review the legal and tax framework available for structuring real estate-related investments in self-directed IRAs and 401(k)s. BenefitsLink discount.

The Future is Now: SCOTUS and Putnam Investments, LLC v. Brotherston

"[At issue in the case is whether] an ERISA plaintiff bears the burden of proving that 'losses to the plan result[ed] from' a fiduciary breach ... or whether ERISA defendants bear the burden of disproving loss causation ... [T]he ultimate decision in this case could have a significant impact on the future of the 401(k) industry and the ability of plan participants to have a meaningful opportunity to work towards their goal of 'retirement readiness.' " [Putnam Investments, LLC v. Brotherston, No. 17-1711 (1st Cir. Oct. 15, 2018; cert. pet. filed Feb. 11, 2019, No. 18-926)]

The Prudent Investment Fiduciary Rules

Seventh Circuit Holds Accelerated Withdrawal Liability Assessment Cannot Be Decelerated

"The court rejected the trustees' argument that, as a 'general principle,' any accelerated debt can be decelerated. As the court explained, although some forms of accelerated debt such as foreclosed mortgages and bankruptcy debt can be accelerated under certain circumstances, they only can be decelerated when a contract or statute expressly so authorizes. Because ERISA is silent on the issue of deceleration, the court was not willing to create a 'deceleration mechanism' to fill in this gap in the statute." [Bauwens v. Revcon Technology Group, No. 18-3306 (7th Cir. Aug. 13, 2019)]

Slevin & Hart, P.C.

Pursue Fiduciary Risk Assurance Backward

"The most effective benefit plan committees approach fiduciary risk based on the results sought, not derived from old methods with which they were most comfortable but are out of date."


Discount Rate Hits Record Low as Corporate Pension Funding Drops by $87 Billion

"In August, the [pension funding index (PFI)] monthly discount rate dropped by 42 basis points to 2.95%, the lowest ever recorded in the 19-year history of the index.... [T]he funded status deficit ballooned from $219 billion at the end of July to $306 billion as of August 31, an $87 billion funding decrease for these plans. The projected benefit obligation (PBO) increased by a whopping $104 billion, though it was partially offset by $17 billion in investment gains for the month. During August, the funded ratio of the Milliman 100 PFI fell from 87.7% to 83.8%."



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GAO Report on Retirement Security: Income and Wealth Disparities Continue Through Old Age

"GAO was asked to examine the distribution of income and wealth among older Americans, as well as its association with longevity, and identify the implication that these trends may have on retirement security. This report examines [1] the distributions of income and wealth among all older Americans over time; [2] the association between income, wealth, and longevity among older Americans; and [3] how the distributions of income and wealth changed over time for a cohort of individuals as they aged." [GAO-19-587, pub. Aug. 9, 2019, released Sept. 9, 2019]

U.S. Government Accountability Office [GAO]

CBO Report on Potential Effects of H.R. 397, the Rehabilitation for Multiemployer Pensions Act of 2019

"CBO’s analysis supports the following conclusions: [1] The estimated subsidy cost under a fair-value approach is higher than that calculated using rules in the Federal Credit Reform Act of 1990 (FCRA). [2] If H.R. 1994 [the SECURE Act of 2019 were] enacted, the estimated increase in budget deficits from enacting H.R. 397 would be higher. [3] About one-quarter of the affected pension plans would be unable to repay their loans in full and most of the remaining plans would probably become insolvent in the decade after they repay their loans."

Congressional Budget Office [CBO]

How Secure Is Your Pension Plan?

"Increasingly, folks heading into retirement are feeling skittish about their pension security.... It’s not just private pension plans that are in trouble. ...  Being aware of the financial health of your plan is vital as you run the numbers for your retirement."

The Washington Post; subscription may be required

The Golden Handshake: Pension 'Air Time' Lives On

"Until a pension reform six years ago, CalPERS and CalSTRS members could boost their pensions by buying credit for up to five years of service without doing the work, thus the name 'air time.' ... Could cash or another debt-free incentive for early retirement be as effective as air time, if reducing or avoiding layoffs during a staff reduction is a goal? The question is not asked in the CalPERS and CalSTRS golden handshake programs."


MIT Motions Mostly Fall Short, Fiduciary Suit Set for Trial

"MIT’s efforts in pushing to set aside the suit have been consistent and persistent, but the pushback by the Schlichter-represented plaintiffs has arguably been extraordinarily aggressive, particularly on the unique (certainly to this litigation string) issue of the alleged quid pro quo between Fidelity and MIT. Up to this point, the arguments made by both sides appear to be equally compelling to Judge Gorton" [Tracey v. Mass. Inst. of Technology (MIT), No. 16-11620 (D. Mass. Sept. 4, 2019]

National Association of Plan Advisors [NAPA]

Benefits in General

Designing Benefits Packages That Attract and Retain Employees

"Designing such comprehensive, competitive benefits packages means looking beyond the old standards -- health insurance, retirement, paid time off (PTO) -- and embracing forward-thinking options like non-traditional and voluntary benefits, and improvements to a company's work environment and culture."


A Tale of Two Fiduciaries

"The court found that SmartCore had misappropriated plan participant contributions and used those funds for corporate purposes, resulting in the plan’s inability to pay medical claims.... SmartCore paid the balance on the medical claim the day before trial, but the court found that any payments made more than three years later do not constitute full compensation.... This case should serve as a cautionary tale for anyone who acts as a fiduciary to an ERISA benefit plan. " Kinsinger v. SmartCore, LLC, No. 17-643 (W.D.N.C. Aug. 27, 2019)]


Selected Discussions
on the BenefitsLink Message Boards

Too Many Loans Taken -- How to Fix?

Plan allows for two loans. A participant was mistakenly allowed a third loan. The loan policy specifically states that loan renegotiations are not allowed. Assume the participant cannot pay the third loan back in full nor does he want to default and claim on taxes. Any other options available? Can we still merge two loans together because it is for a correction despite the loan policy? Could we amend the loan policy to allow loan renegotiation, and then amend again "to go back," say, a month or two later? VCP?

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Press Releases

Most Popular Items in the Previous Issue

How Your Employer Uses Perks to Control Your Life
Elizabeth Tippett and Jesse Paul, for The Colorado Sun

403(b) Plan Enhancement Guide (PDF)
National Tax-Deferred Savings Association [NTSA], 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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