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ESOP Administrator

Blue Ridge ESOP Associates
Charlottesville VA / Telecommute

Experienced Plan Consultant

Randall + Hurley
Liberty Lake WA / MT / Telecommute

Manager - North America Benefits

Air Products and Chemicals, Inc
Allentown PA

Consultant and Relationship Manager

Minneapolis MN

Health Insurance Specialist

Centers for Medicare & Medicaid Services [CMS]
Bethesda MD / Telecommute


Employee Benefits Security Administration [EBSA]
Silver Spring MD / Philadelphia PA / Telecommute

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[Official Guidance]

2018 IRS Form 4972: Tax on Lump-Sum Distributions from Qualified Plans of Participants Born Before January 2, 1936 (PDF)

"Use Form 4972 to figure the tax on a qualified lump-sum distribution (defined below) you received in 2019 using the 20% capital gain election, the 10-year tax option, or both. These are special formulas used to figure a separate tax on the distribution that may result in a smaller tax than if you reported the taxable amount of the distribution as ordinary income."
Internal Revenue Service [IRS]


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.

[Guidance Overview]

Final Hardship Distribution Regs: Key Changes and Deadlines for Plan Sponsors

"Individually-designed 401(k) plans that currently permit hardship distributions will likely need to be amended to reflect the final regulations by December 31, 2021 -- but operational changes will be needed to comply with the new regulations by January 1, 2020.... Effective January 1, 2019, employees are not required to take plan loans before receiving a hardship distribution."

[Guidance Overview]

IRS Finalizes Revised Hardship Regs

"Only expenses and losses of an employee who lived or worked in the disaster area qualify under the new safe harbor expense category.... [T]here is no specific deadline following the disaster during which a hardship distribution must be requested under the revised regulations.... The IRS does not anticipate issuing any further disaster-relief announcements in regards to hardship distributions."

DOL Issues Final Regs on Hardship Distributions for 401(k) Plans

"The final regulations: [1] expand the safe harbor list of expenses deemed to be made on account of an immediate and heavy financial need; [2] modify the rule for determining whether a distribution is necessary to satisfy an immediate and heavy financial need; [3] allow beneficiaries to apply for hardship distributions; [4] modify the rules for determining sources available for distribution; and [5] clarify that the new hardship distribution of elective contributions rules generally apply to section 403(b) plans."

Supreme Court Asked to Review Great-West Retirement Plan Annuity Case

"According to [the] complaint, Great-West had breached its general duty of loyalty under ERISA Section 404 by setting the credited rate of its Key Guaranteed Portfolio Fund for its own benefit rather than for the plans' and participants' benefit; setting the credited rate artificially low and retaining the difference as profit; and charging excessive fees." [Teets v. Great-West Life & Annuity Ins. Co., No. 18-1019 (10th Cir. Mar. 27, 2019; cert. pet. filed Sep. 19, 2019)]

Managed Account Provider Dodges Fiduciary Breach Suit

"A federal judge has refused to let plan fiduciaries off the hook in an excessive fee case -- but has dismissed claims against the plan's managed account provider.... [Judge William Ray of the Northern District of Georgia] noted that the plaintiffs didn't allege that [Financial Engines Advisors, LLC (FEA) and Alight Financial Advisors, LLC (AFA)] functioned as fiduciaries in any capacity other than by 'providing investment advice,' and 'yet they fail to allege facts sufficient to show that FEA and AFA breached their fiduciary duties to provide investment advice.' " [Pizarro v. Home Depot, No. 18-1566 (N.D. Ga. Sep. 20, 2019)]
National Association of Plan Advisors [NAPA]

Where Is 401(k) Leakage Really Heading?

"Some experts in the industry have suggested that any reduction in loan-taking may in part be due to an increase in hardship withdrawals, with this year's change to allow participants to withdraw not just their own contributions, but also their employers'. If this hypothesis is true, this dynamic is a step in the wrong direction for leakage. While many loan-takers default, at least there's a good chance that the loan will be repaid. With hardship withdrawals, the leakage is permanent. If this is what happens when you loosen the hardship rules, imagine if we eliminated the loan feature entirely."
Retirement Loan Eraser

Key Decisions for De-Risking Your Pension Plan (PDF)

12 pages. "Group annuities continue to be strong, viable options when considering a [pension risk transfer (PRT)] for pension plans.... The business of managing risk is a specialty and may not be considered a core competency of most companies sponsoring a Defined Benefit plan. Important considerations should continue to be made for: Federal vs. State oversight, PBGC Costs, [and] Interpretive Bulletin 95-1."

A Lesson in ESOP Transactions: Don't Ignore Red Flags

"Fiduciaries need to act in the sole interest of participants. In this case, the independent fiduciary testified that he wanted a fair price for both the founder and the ESOP. It is not a duty of the independent fiduciary to be fair to the founder (or seller).... Fiduciaries need to review the work product of third-party 'experts' and ask questions when something does not make sense." [Pizzella v. Vinoskey, No. 16-062 (W.D. Va. Aug. 2, 2019)]
Drinker Biddle


Financial Asset Inequality and Its Implications for Retirement Security (PDF)

14 pages. "This issue brief ... finds that financial asset inequality has increased over time.... [U]sing 2016 data, this issue brief finds a similarly skewed ownership of financial assets among the Millennial and Generation X cohorts.... [T]hese households face an increasing retirement savings burden due to the decline of pensions in the private sector and longer life expectancy. The persistent concentration of financial assets among the wealthy, combined with anemic retirement savings among most households, poses a significant economic threat to the retirement security of many working Americans."
National Institute on Retirement Security [NIRS]

Benefits in General

Making Cents of Financial Wellness

"Offer solutions that support employees through all stages of their life and career. Consider offering small loan programs ... to prevent employees from borrowing against their 401k. Investigate the tax benefits for tuition assistance ... There are also non-traditional financial wellness benefits such as Health Savings Accounts (HSA) and parental leave benefits."
OneDigital Health and Benefits

Executive Compensation
and Nonqualified Plans

Delaware Court Signals Significant Change in Standard of Review of Executive Compensation Decisions for Controlled Companies

"In a case of first impression, the Delaware Court of Chancery has held that the entire fairness standard of review applies to compensation decisions made with respect to controlled companies, absent implementation of specified protections.... The court's refusal to grant Tesla's request to dismiss the lawsuit and its application of the higher judicial standard marks a substantial shift in the review of executive compensation decisions for controlled companies under Delaware law." [Tornetta v. Musk, No. 2018-0408 (Del. Ch. Ct. Sep. 20, 2019)]
Morgan Lewis

Delaware Chancery Court Applies Entire Fairness Review to Board's Grant of Incentive Compensation Award to Controlling Shareholder

"The court granted in part and denied in part the motion to dismiss. Regarding the breach of fiduciary duty claims, the court concluded that entire fairness was the appropriate standard of review. Under that standard, the plaintiff adequately alleged that the award was unfair, and therefore stated a claim for breach of fiduciary duty. The court also declined to dismiss the unjust enrichment claim but dismissed the waste claim." [Tornetta v. Musk, No. 2018-0408 (Del. Ch. Ct. Sep. 20, 2019)]
Thomson Reuters Practical Law

SEC Announces Settlements with Nissan and Former CEO Regarding False Disclosures Relating to the Former CEO's Compensation

"[T]he SEC viewed Ghosn's actions to be egregious enough to bring fraud charges even though: [1] The $140 million in undisclosed compensation and retirement benefits was never actually paid out to Ghosn. [2] Nissan does not have a class of securities registered with the SEC and does not file reports with the SEC."
Thomson Reuters Practical Law

Selected Discussions
on the BenefitsLink Message Boards

Land Purchased with 401(k) Assets

A client wants to purchase land with his 401k assets and have a non-related party develop it. It is my understanding that real estate held by a 401k plan can only be a passive investment and hence the deal wouldn't be legal. Correct?
BenefitsLink Message Boards

Filing an Anonymous VCP Submission Through

Has anyone done an Anonymous VCP submission through yet? I'm wondering how to handle the payment. They only take ACH and credit cards. Doesn"t seem very anonymous.
BenefitsLink Message Boards

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Press Releases

Most Popular Items in the Previous Issue

Draft of 2019 IRS Form 5500-EZ (PDF)
Internal Revenue Service [IRS], 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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