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Retirement Plans Newsletter

September 13, 2019



Sr. Benefit Plans Specialist

Wespath Benefits and Investments
Glenview IL

Account Manager / Client Service - 401k Plans

ABG Retirement Plan Services
Peoria IL / Telecommute

Retirement Sales Consultant

Alerus Financial
Minneapolis MN

Retirement Account Administrator, Sr

Alerus Financial
Albert Lea MN / Arden Hills MN / Bedford NH / East Lansing MI / Troy MI

RPS Compliance Consultant

Dubuque Bank & Trust
Dubuque IA

General Attorney - EXC

Pension Benefit Guaranty Corporation
Washington DC / Telecommute

Vice President, Sales Consultant

Chesterfield MO

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[Official Guidance]

Text of IRS Form 4852: Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, Etc. (PDF)

Rev. Sep. 2019. "Form 4852 serves as a substitute for Forms W-2, W-2c, and 1099-R and is completed by you or your representatives when (a) your employer or payer doesn’t issue you a Form W-2 or Form 1099-R or (b) an employer or payer has issued an incorrect Form W-2 or Form 1099-R. Attach this form to the back of your income tax return before any supporting forms or schedules."

Internal Revenue Service [IRS]


Bring Employee Benefits Education to You

Sponsored by International Foundation of Employee Benefit Plans [IFEBP]

With On-Site Education from the International Foundation, your staff can receive high-quality education in a customized, one-of-a-kind learning experience. Avoid the cost and inconvenience of travel, and let us bring the education to you! Learn More.

[Official Guidance]

Draft of 2019 IRS Form 8955-SSA: Annual Registration Statement Identifying Separated Participants with Deferred Vested Benefits (PDF)

Sep. 12, 2019 draft (not for filing). "This form is required to be filed under section 6057 of the Internal Revenue Code."

Internal Revenue Service [IRS]

IRS Now Accepting Some Determination Letter Applications

"[T]he IRS will accept a determination letter application for individually designed statutory hybrid plans ... But the IRS will not be doing so forever: under [Rev. Proc. 2019-20] ... it will accept these applications for just one year, Sept. 1, 2019 - Aug. 31, 2020."

National Tax-Deferred Savings Association [NTSA]

MIT, 401(k) Participants Reach Settlement 4 Days Before Trial Set to Start

"No terms were announced in the notice of settlement filed Thursday in U.S. District Court in Boston for the class-action lawsuit ... 'The parties have reached an agreement in principle to settle this case,' the notice said. 'Plaintiffs anticipate needing 45 days to file a motion for preliminary approval,' which will include details of the settlement. The deadline for the request is Oct. 28."

Pensions & Investments

Advantages and Disadvantages of Hiring a 3(38) 401(k) Retirement Plan Adviser

"Advantages of hiring a 3(38) adviser: [1] Reduces fiduciary liability. ... [2] An experienced fiduciary takes the lead.... [3] Investments can be personalized for individual participants.... [4] Continuous investment oversight.... [5] Frees up time.... Disadvantages of hiring a 3(38) adviser: [1] Higher cost. ... [2] Gives up control. ... [3] You won't necessarily get to have your favorite investment.... [4] Requires trust.... [5] Requires timely communication. ... [6] You can never really delegate 100% of your fiduciary liability."

Chris Carosa, via Forbes

Alight Solutions 401(k) Index: August 2019 Observations

"A volatile August on Wall Street spurred higher than normal 401(k) trading activity ... Net trading activity for the month was the highest in 2019 at 0.24% of balances. Additionally, there were six above-normal days, the highest monthly total since December 2018."

Alight Solutions

Editor's Pick Online IRS Tax Withholding Estimator Helps Retirees; Figures Tax on Social Security Benefits

"The new tool offers retirees, as well as employees and self-employed individuals, a more user-friendly way to check their withholding. Whether they receive wages or pension payments, it helps taxpayers estimate if the right amount is being withheld from their income to cover their tax liability. The estimator uses a simple, six-step question-and-answer format using information like marital or filing status, income, withholding, adjustments, deductions and credits."

Internal Revenue Service [IRS]

CBO's 2019 Long-Term Projections for Social Security: Additional Information

"CBO's latest long-term projections for Social Security are summarized in The 2019 Long-Term Budget Outlook (see pages 18-24). This data file provides additional information about those projections."

Congressional Budget Office [CBO]

Over 50 and Freelancing to Fill the Gaps in Retirement Funds

"The stereotype of today’s freelancer is a young, scrappy urbanite hustling for gigs in a shared work space or coffee shop. And while it is true that millennials make up the largest chunk of the freelancer population in the United States, another demographic may soon catch up: their parents."

The New York Times; subscription may be required


American Academy of Actuaries Letter to EBSA Regarding ERISA Advisory Committee Report on Lifetime Income Solutions (PDF)

"There has been a reluctance for DC plan providers to utilize insurers due to concerns that they have fiduciary liability for the selection of insurers.... Consideration needs to be given to the special needs of smaller plan sponsors.... [Y]our considerations should include a safe harbor for educating participants[.]"

American Academy of Actuaries

Benefits in General

Ninth Circuit Reverses District Court, Sends Fiduciary Dispute to Arbitration

"The Ninth Circuit's opinion notably eschewed the anti-arbitration effusions of the court below and instead concentrated on the question of what party's consent was needed to create an enforceable arbitration agreement. The obvious lesson is that arbitration clauses are most effective when included in the terms of the plan rather than left to individual participants' employment agreements." [Dorman v. The Charles Schwab Corp., No. 18-15281 (9th Cir. Aug. 20, 2019; also unpub. memo. opinion)]

Steptoe & Johnson LLP

Household Spending on Personal Insurance and Pensions Increased the Most from 2017 to 2018

"Average expenditures per consumer unit for 2018 were $61,224, a 1.9-percent increase from 2017 levels. During the same period, the Consumer Price Index (CPI-U) rose 2.4 percent, and average pretax incomes increased by 6.9 percent. From 2017 to 2018, a 7.8-percent increase in personal insurance and pensions expenditures was the largest percentage increase among all major components. This compared with a decrease of 0.9 percent from 2016 to 2017."

U.S. Bureau of Labor Statistics [BLS]

Selected Discussions
on the BenefitsLink Message Boards

Can 401(k) Plan Have Individual Trustees None of Whom Is a U.S. Citizen?

We serve as TPA for a small 401k plan whose parent company is actually from the UK. The plan only covers the US employees. We had three trustees for the plan, 2 of which were not US citizens while one was a based in the US and was a US citizen. The US trustee left the company a few days ago. He will be removed as a plan trustee. Is there a problem if there are no US trustees for this plan?

BenefitsLink Message Boards

One-Participant Plan Aggregated for Coverage

Plan covers only the 100% owner and his wife. The Plan has to be aggregated with another plan to pass coverage (i.e., the other plan covers nonexcludable employees). What's really happening is there are leased employees who are benefiting in a plan that has an identical design (which is why we can aggregate). But is my plan a one-participant-plan eligible for the 5500-EZ? Is it exempt from ERISA?

BenefitsLink Message Boards

New Form 5310-A Required Due to Change in Controlled Group Members?

An employer previously filed Form 5310-A notifying the IRS of its two QSLOBs. In that filing, the employer included an attachment listing each member of its controlled group and assigning each member to either QSLOB #1 or QSLOB #2. Does the employer need to file a new Form 5310-A if it adds a subsidiary to the controlled group?

BenefitsLink Message Boards

Recently Divorced Participant Wants Full Distribution Despite Settlement Agreement Giving Half to Ex-Spouse

Have you ever had a case where no DRO or QDRO was ever done, yet the participant is demanding a distribution? One of our clients has a 401(k) plan with a participant who was an unwilling party to his divorce. He says his ex wife "did it all" -- hired the lawyer and paid for the divorce. The lawyer made a one paragraph passing reference to the participant's retirement account in the Marital Settlement agreement. "Respondent has a retirement plan with XX Company. Upon distribution of the funds in this plan, Respondent will direct the Plan Administrator to divide the funds equally between the Respondent and the Petitioner, that being 50% to each party, however distributed." That's it. The participant has now terminated employment and claims to be in very dire straits and wants his half of his money RIGHT NOW so he can move in two weeks.

BenefitsLink Message Boards

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Press Releases

SOA Announces Election Results
Society of Actuaries

Most Popular Items in the Previous Issue, Inc.
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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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