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Retirement Plans Newsletter September 26, 2019 |
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Webcasts, Conferences Benefits Emerging Leaders Working Group
Celebrate Surviving Another Audit and 5500 Season
Generations in the Workforce: Creating a Welcoming Workplace for All Ages
Supreme Court Update
Employee Owned 2019 Conference
ASOP 27 and 35 Revisions and ASOP 51 Lessons Learned
Don't Do That With Your ESOP
Annual Members Social
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Discussions |
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This Newsletter:
BenefitsLink Health & Welfare Plans Newsletter:
Message Boards Digest:
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[Guidance Overview]
IRS and Treasury Department Release Final Regs on Hardship Distributions "[P]lan administrators do not have an obligation to inquire into the financial condition of employees who request a hardship distribution; however, if the plan administrator already has sufficiently accurate information contrary to an employee’s representation, then the financial need for a hardship distribution is not satisfied."
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[Guidance Overview]
Final Hardship Regs Published: Administrative Compliance Required January 1, 2020 "The final regulations provide that the limitation imposed on this deduction under the Tax Cuts and Jobs Act of 2017 (TCJA) -- that the deduction for personal casualty loss generally is available for taxable years 2018 through 2025 only to the extent the loss is attributable to a federally declared disaster -- does not apply in the context of hardship distributions. This effectively restores the pre-TCJA treatment of this expense."
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[Guidance Overview]
Best Interest Standard of Care for Advisors, Part 11 "Regulation Best Interest: An Overview of the Requirements ... The Care Obligation will increase the legal standard for recommendations to retail customers by broker-dealers and advisors. But, for those advisors who have focused on providing good advice to their customers, and used high quality and reasonably priced investments, there will be little change in how they do business. In that case, the burden will fall primarily on the broker-dealer to develop best interest processes, policies and procedures, and supervisory practices."
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'Exit Contribution' an End-Run Around De Minimis Withdrawal Liability "This case is of note because there was no dispute by the plan that the participating employer did not owe a withdrawal liability. However, the court ruled that the collective bargaining agreement and the trust agreement for the pension fund obligated the participating employer to pay an exit contribution before withdrawing from the plan.' [Sheet Metal Workers' National Pension Fund v. Four-C-Aire, Inc., No. 17-2295 (4th Cir. Jul. 3, 2019)]
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Class Action Challenging Hospital Authority's Governmental Plan Exemption Dismissed "[The court] clarified that the state itself was not required to create the Hospital Authority -- a city or county exercising its state-delegated authority was enough. Although unnecessary, the court further ruled that the second prong was satisfied because a public official -- the chairman -- by statute had appointment and removal powers with respect to the commissioners. " [Shore v. Charlotte-Mecklenburg Hospital Authority, No. 18-961 (M.D.N.C. Aug. 30, 2019)]
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[Advert.]
Pension Meets Profit Sharing: Equity Compensation for Results, Retention, and Retirement
Oct. 24 webinar. Equity compensation is not just for executives, employees at every level can benefit from an incentive plan that rewards individual performance, business unit performance, and company performance. BenefitsLink discount. |
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Deadlines to Deposit Elective Deferrals "[A] table summarizes the [DOL's] deferral deposit deadlines for various plan types."
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2019 Retirement Plans Regulatory Update (PDF) 12 pages. "[This year's] Regulatory Update features a steady stream of cases from the courts, including multiple cases making their way to the United States Supreme Court for review ... This update also includes new guidance from the regulatory agencies, including the [DOL, IRS, and PBGC]."
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Schwab Considering Automated Investment Advice for 401(k) Plans "Responding to Vanguard’s digital-only robo advisor pilot, Schwab is examining how its automated advice platform could work in the 401(k) plan space.... Analysts have been quick to forecast the entry of new digital platforms in the corporate retirement plan market, an area that paper-driven incumbents have primarily dominated."
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Half of Retirees Afraid to Use Savings "A 2009 study estimated that by the time middle-income retirees are in their 80s, they still had not touched about three-fourths of their savings, and 2016 research found that retirees with substantial assets are the most reluctant spenders. Vanguard recently reported that retirees with very modest savings turn around and reinvest a third of the money they’re required to withdraw under IRS rules after age 70-1/2. People saved all of their lives to make sure they will enjoy retirement. So why are they so reluctant to spend the money for the purpose it was intended?"
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[Opinion]
Who Will Be Responsible for Your Retirement? "Managing one’s retirement can be a complex task. Many retirement experts believe that, in general, people don’t have the necessary education to navigate the many retirement risks that households face. They believe that either the government or employers (or both) should take various actions to try to help people make better retirement decisions..... [W]ith a little bit of education, many individuals could become better equipped to make reasonable retirement decisions. "
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[Opinion]
What I Learned from Reading My Retirement Plan Fee Disclosure "[1] The standout of the disclosure was the net operating expenses of each plan investment.... [2] The disclosure failed to disclose the fees of the plan's fixed account, listing them as N/A.... [3] [In] addition to fees, fund performance was also disclosed.... [4] While I would have preferred there to be better disclosure of any fund revenue sharing and how it offset recordkeeping costs, for the average participant, this explanation would have amounted to gobbledygook ... [5] I learned about some transactional fees in my retirement plan that I previously did not know about."
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Selected Discussions |
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IRS Requesting Form 945 for 2016 Is anyone else receiving CP259 Notices from the IRS asking for a 945 form for 2016? I received copies of the notices from two completely unrelated clients, both of whom have plans on a recordkeeping platform in which distributions are processed under the recordkeeper's EIN. Because we have a small number of clients, I'm thinking this might not be just a coincidence.
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Handling Excess Match for One NHCE Traditional 401(k) -- not safe harbor. Plan sponsor had small system glitch in last half of 2018, so one NHCE received $86 more match that he should have. It was discovered during the audit. HCEs received refunds of excess deferrals for failed ADP. Plan sponsor would prefer not to ask for the $86 back from NHCE. Is that an option, or does that cause other problems?
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Full Vesting for Voluntary Separations During Plan Year in Which Partial Plan Termination Occurred? A company had a layoff where 30% of their employees were let go in February 2019, so it's a clear partial plan termination and they will be 100% vested. IRS guidance seems to indicate that any other participants who leave the company during the same plan year, even voluntarily, would also become 100% vested. Is that correct? "An affected employee in a partial termination is generally anyone who left employment for any reason during the plan year in which the partial termination occurred and who still has an account balance under the plan."
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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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