Retirement Plans Newsletter

September 24, 2019

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Professional Capital Services
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Goldleaf Partners
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Ascensus
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Ascensus
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Webcasts, Conferences

Establishing and Amending IRAs
November 5, 2019 WEBCAST
Ascensus

Eligibility and Penalties Based Around the New VA Benefits Rules
November 13, 2019 WEBCAST
Lorman Education Services

2019 Legal & Legislative Update for Retirement Plans
November 21, 2019 WEBCAST
ISCEBS - Pacific NW Chapter

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[Official Guidance]

Draft of 2019 IRS Form 5500-EZ (PDF)

Sept. 23, 2019 draft (not for filing). "This form is required to be filed under section 6058(a) of the Internal Revenue Code. Certain foreign retirement plans are also required to file this form[.]"
Internal Revenue Service [IRS]

[Advert.]

ASC CE Webcast: 457(b) Plans for Tax Exempt & Governmental Entities

Sponsored by ASC

Learn the rules & regulations of 457(b) plans and how they differ from 401(k) plans with regard to governmental entities and tax-exempt organizations. Register Now!


[Official Guidance]

Text of IRS Notice 2019-51: Weighted Average Interest Rates, Yield Curves, and Segment Rates for September 2019 (PDF)

"This notice provides guidance on the corporate bond monthly yield curve, the corresponding spot segment rates used under Section 417(e)(3), and the 24-month average segment rates under Section 430(h)(2) ... In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under Section 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008 and the 30-year Treasury weighted average rate under Section 431(c)(6)(E)(ii)(I)."
Internal Revenue Service [IRS]

[Guidance Overview]

I'm Late! I'm Late! For a Very Important Form 5500 Date!

"Name a way that plan sponsors traditionally make mistakes and blow the Form 5500 deadline: [1] Completely ignores communications from service vendor; [2] Doesn't get started early enough on mandatory audit; [3] Starts audit, but finds major problems and can't fix them timely; [4] Has an owner-only plan and doesn't realize it needs a Form 5500; [5] Change of personnel causes communication breakdown.... The good news here is that, even when a Form 5500 is not filed timely, there is an easy way to fix the problem."
Ferenczy Benefits Law Center

Kisor v. Wilkie and Judicial Deference to Agency Determinations: implications for Employee Benefits Litigation and the DOL Fiduciary Rule

"While Kisor does not deal with Chevron deference expressly, as the Justices made clear, its commentary on Chevron principles surely is suggestive of the Court’s possible views about the application of this doctrine in future cases. That commentary is far more consonant with the probing approach the Fifth Circuit took to deference in its decision on the fiduciary rule, as distinguished from the more superficial approach taken by, e.g., the Tenth Circuit[.]"
Eversheds Sutherland

No Class Certification in Nationwide Asset-Based Fee Suit

"A judge ultimately decided the plaintiff can only assert an action against Nationwide and her plan sponsor, and each of the 250,000 putative class members can only assert causes of action against Nationwide and their own plan sponsors." [Brown v. Nationwide Ins. Co., No. 17-558 (S.D. Ohio Sept. 19, 2019)]
planadviser

Understanding Behavior Biases Can Help Plan Sponsors with Investment Communications

"The top five behavioral biases that advisers observe significantly impacting their clients' investment decisions are: [1] Recency bias (being easily influenced by recent news events or experiences): 35%; [2] Loss Aversion bias (playing it safe or accepting less risk then they can tolerate): 26%; [3] Confirmation bias (seeking information that reinforces their perception): 25%; [4] Familiarity/home bias (a preference to invest in familiar/U.S. domiciled companies): 24%; and [5] Anchoring bias (a tendency to focus on specific reference point when making investment decisions): 24%."
PLANSPONSOR; free registration may be required

Fiduciary Breach Lawsuits Often Involve Multiple Recordkeepers

"Out of the twenty-three lawsuits involving primarily the 403(b) plan of healthcare and/or higher education organizations, sixteen of them included the claim that the fiduciaries breached their responsibilities by allowing multiple recordkeepers to be active vendors in the plan. According to the lawsuits, having multiple providers allegedly led to significantly higher recordkeeping fees and subsequently lowered the account accumulations for the plan participants."
Cammack Retirement Group

Case Study: Focus on Fees, Fairness, and the Future

"In the past five years, [Worcester Polytechnic Institute (WPI)] has negotiated a reduction of over 57% in their overall recordkeeping costs. This was due in part to the annual benchmarking of fees and the resulting negotiations. Also contributing to the reduction was the comprehensive request for information (RFI) that the committee issued to existing and outside recordkeepers in 2018.... Despite no changes being made to the existing arrangement, the RFI encouraged competition between the two existing recordkeepers, which resulted in lower fees."
Cammack Retirement Group

Washington Update: The DOL Regulatory Agenda

"The [DOL's] recent regulation regarding association retirement plans could significantly affect retirement plan policy for many years to come. However, the most recent guidance plan ... reveals several other guidance projects that could also have a significant impact.... [A] proposed regulation [to improve the effectiveness of participant notices and reduce the costs of furnishing disclosures] is expected to be published in the Federal Register any day now."
Trucker Huss

Mayor de Blasio Wants Retirement Plans for All

"More than a million employees in New York City who don’t have access to a retirement savings program could enroll in a worker-funded program under a newly proposed city legislation.... There are 3.5 million private-sector employees in New York City and an estimated 1.5 million people of them don’t have access to any retirement savings program[.]"
The Wall Street Journal; subscription may be required

IRS Issues Final Regs on Hardship Distribution Rules

"The final regulations require the employee-participant to represent only whether the employee has cash or other liquid assets that are 'reasonably available' to satisfy the immediate and heavy financial need and not earmarked for other short-term financial needs such as rent payments."
Thomson Reuters Practical Law

Benefits in General

Health Care Costs Are Top Concern for Future Retirees (PDF)

"3 out of 4 Future Retirees say they're somewhat or very concerned about the cost of health care.... 55% of Future Retirees with an HSA available don't contribute to it.... 67% of Future Retirees wish they understood Medicare coverage better.... 47% of Future Retirees couldn't even estimate  what their annual health care costs would be in retirement."
Nationwide Retirement Institute

U.S. Employers to Focus on Employee Wellbeing, CSR Policies, and More Flexibility

"When asked about their highest priorities, 80% of respondents cited incorporating employee wellbeing into their benefit programs. That includes physical, emotional, financial and social wellbeing programs. Nearly two-thirds (64%) cited aligning benefit provisions with employee wants and needs ... 70% of employers plan to focus on enhancing corporate social responsibility (CSR) policies and aligning them with their benefit strategy over the next three years, nearly double the percentage of respondents who focused on CSR policies in the past three years. ... [O]nly four in 10 respondents said their programs are effective at offering significant choice and flexibility in benefit selection, while just under half (49%) are effective at tailoring their benefit packages to support their employees' needs."
Willis Towers Watson

Executive Compensation
and Nonqualified Plans

Compensation Committees: Quiet Before the Storm?

"[W]hen a company’s performance eventually softens, ... criticism from proxy advisors and shareholders is more likely to surface. So when things are quiet, that’s precisely the time when committees want to challenge management and themselves to ensure they have a sound pay program in place that incents the right behavior, supports the business strategy and has good governance practices in place to minimize risk."
Meridian Compensation Partners, LLC

Selected Discussions
on the BenefitsLink Message Boards

Non-Equity Partners in a CPA Firm: Leased Employees? Part of an Affiliated Service Group?

A CPA firm has several non-equity (CPA) partners each of whom is paid from his or her own PA (professional association). Neither do these CPAs, nor their own PAs, own any of the CPA firm, and the CPA firm has no ownership in the non-equity partners' PAs. Because there is no common ownership, I don't see this as an affiliated service group. But I'm having trouble classifying them as leased employees.
BenefitsLink Message Boards

Uncashed Checks Following Plan Termination

Would uncashed checks still be considered assets of the plan if they remained uncashed into a new plan year? For example, 401(k) plan terminates on September 15, 2018. Someone doesn't cash their check until January 2020. Does the plan need a 2020 5500 and audit? Does the uncashed check mean all assets are not out of the plan within 12 months and the termination date is no longer valid?
BenefitsLink Message Boards

RMDs Required for Former Owner Whose Son is Now 100% Owner?

Participant turned 70-1/2 on 9/1/2019. In 2018, he was an over-5% owner, but sold his ownership in June 2019, prior to turning 70-1/2. He is still working. It seems clear that he would not have to take an RMD because he was not a 5% owner upon attainment of age 70-1/2 -- but his son (with whom he formerly shared ownership) is now the sole owner. Is this 70-1/2 participant still considered an over-5% owner due to family attribution, and therefore needs to start taking his RMDs?
BenefitsLink Message Boards

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American College of Employee Benefits Counsel

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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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