Retirement Plans Newsletter

October 21, 2019

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USI Consulting Group
Glastonbury CT

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Ascensus
Roseville CA

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IPAT Industry Pension Fund
Hanover MD

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TRG Administrative Services, LLC
Dallas TX / Buffalo NY / Telecommute

View job as Benefits/COBRA Specialist Benefits/COBRA Specialist

Ascensus
Champaign IL

View job as Executive Director Executive Director

Employers Council on Flexible Compensation (ECFC)
Roanoke VA / Telecommute

View job as Director of Plan Sponsor Relations Director of Plan Sponsor Relations

Wespath Benefits and Investments
Glenview IL

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Participant Claims Nearly $100,000 Stolen from Estee Lauder 401(k) Plan Account

"Under one allegation, the defendants breached their fiduciary duties by allowing the plan to make unauthorized distributions, failed to confirm the requests for the money, failed to provide timely notice of the distributions by phone or email, failed to identify suspicious requests that were wired to different bank accounts, failed to have in place processes to safeguard against unauthorized withdrawals, and failed to monitor the distribution process." [Berman v. Estee Lauder, No. 19-6489 (N.D. Cal. complaint filed Oct. 9, 2019)]
Treasury & Risk; free registration required

Pay Attention to Requests for ERISA Plan Documents or Risk the Con$equence$

"[T]rain plan and human resources personnel to forward to the plan's administrator all participant/beneficiary requests for plan related documents immediately upon receipt ... Determine whether the requested documents exist and where they are located.... Consult with experienced employee benefits legal counsel to confirm what documents the law requires be provided upon request.... Prepare and maintain a file of plan related documents so that the administrator can quickly respond to document requests." [Kinsinger v. SmartCore, LLC, No. 17-643 (W.D.N.C. Aug. 27, 2019)]
Dickinson Wright

PBGC Proposes Updates to Administrative Review Rules

"The changes will not affect most plan sponsors, though employers contesting an unfavorable determination will have to follow the new procedures once the final rule takes effect.... The proposal would change which PBGC personnel perform a second review of certain agency decisions."
Mercer

Surprising Facts About Target Date Funds

10 pages. "[1] People who use TDFs contribute less than people who don't use them.... [2] Half of people who were fully invested in them ended up switching out of them within 10 years.... [3] When companies offer more funds outside of target date funds, people are less likely to use target date funds as intended.... [4] Among those who stopped using TDFs altogether, 46% invested their entire portfolio in equities, while 14% went all-in on fixed income. [5] Investing in multiple TDFs is common."
Alight Solutions

What Are Employers Doing to Boost Financial Wellness?

"The most common type of emergency assistance offered is an employee relief or compassion fund (44 percent), followed by part-time donations or leave-sharing (36 percent) and matching contributions to employees' personal accounts (35 percent). Among those that already offer an emergency fund, the average number of such benefits offered was 2.5."
Voya

Actuarial Observations on Retiree Income Approaches (PDF)

"Lifetime income planning requires [1] sound assumptions for life expectancy and investment return, [2] consideration of possible risk mitigation relating to life expectancy and investment returns, and [3] a sound approach for determining available income. A steady income can be derived through one of several approaches for structured withdrawals from investment income, an annuity that provides a lifetime income, or some combination of the two."
American Academy of Actuaries

Implications of Money-Back Guarantees for Individual Retirement Accounts

"This paper explores the consequences for savers’ wellbeing of implementing market-based retirement account guarantees, using a life cycle consumption and portfolio choice model where investors have access to stocks, bonds, and tax-qualified retirement accounts." [Working Paper WP2019-19, Oct. 16, 2019]
Pension Research Council, The Wharton School of The University of Pennsylvania

GAO Report on Military Pensions: Servicemembers Need Better Information to Support Retirement Savings Decisions

"GAO recommends [1] DOD assess its course evaluations to improve its financial literacy training on retirement for servicemembers, [2] DOD provide key information on the calculation of retirement lump-sum payments, and [3] Federal Retirement Thrift Investment Board explore alternatives for servicemembers to receive their TSP passwords."
U.S. Government Accountability Office [GAO]

[Opinion]

A Focus on Fees: Seven Years Later

"The EBSA's regulations state that individual account retirement savings plan participants would see a net benefit in the form of a savings of time.... By now, we should have adequate data to confirm actual results -- who paid, how much, who benefitted, etc. In fact, before issuing any more mandated disclosures, let's have the agencies confirm the accuracy of their estimates regarding regulations affecting benefit plans, if only because costs are generally paid by plan participants."
Plan Sponsor Council of America [PSCA]

Benefits in General

Remembering a True Public Servant: Alan Lebowitz

Photo of Alan Lebowitz"In September, [EBSA] lost a true pioneer, its greatest individual influence, and dearest friend, Alan D. Lebowitz. Alan was the first Deputy Assistant Secretary of EBSA and its preceding agencies. He spent nearly three decades of his 43-year federal career crafting and shaping the agency's regulatory, compliance assistance, public outreach, education, and enforcement programs. When he retired in 2013, he left his influence on nearly every part of the agency."
U.S. Department of Labor [DOL] Blog

Executive Compensation
and Nonqualified Plans

CEO and Executive Compensation Practices: 2019 Edition

10 pages. "In 2018, for the second year in a row, total CEO compensation grew in the Russell 3000 at a markedly higher rate than in the S&P 500. In fact, rises were even higher than in 2017 ... In the S&P 500, the portion of CEO pay represented by stock awards exceeded 50 percent for the first time in 2018, while stock options, perks, and change in pension value continued their decline. ... While perks and benefits comprise 7.6 percent of the total pay value of CEOs at the largest companies by annual revenue, they are almost absent in the CEO compensation structure of smaller businesses."
The Conference Board

Selected Discussions
on the BenefitsLink Message Boards

Does Surviving Spouse Have Legal Basis to Challenge Designation of a Non-Spouse as the Beneficiary of an IRA?

This is in NJ, so not a community property state. If a person names a non-spouse beneficiary on a rollover IRA, does the spouse have any legal basis to claim half or all of this account? No spousal consent form was signed. My dad left his traditional IRA (with Vanguard, a rollover from an employer sponsored 401k) to me when he passed away. My mother, to whom he was married but estranged from, has hired a lawyer and is challenging this beneficiary designation.
BenefitsLink Message Boards

Tax Withholding Requirements on Hardship Distributions

Is it true that the default federal income tax withholding is 10% of the hardship amount? The result is a check for 90% of the participant's requested hardship amount. If 10% is the default, is it required that the participant file a W4-P to either opt-out of tax withholding or elect an amount greater than 10%?
BenefitsLink Message Boards

403(b) Hardship Distribution Made But No Suspension of Deferrals

A client issued a hardship distribution but payroll failed to suspend their contributions for 6 months. They have not (yet) adopted the amendment to dispense with this requirement and have issued other hardships where the contributions were suspended appropriately. What is the recommended remedy/correction for the Plan Sponsor in this situation?
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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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