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Retirement Plans Newsletter October 30, 2019 |
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Webcasts, Conferences Playing Well with Others in the Retirement Plan M&A Sandbox
ERISA Litigation and Regulation: The Current Landscape and What the Future Holds
Mid-Sized Retirement & Healthcare Plan Management Conference
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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]
DOL Proposes New E-Disclosure Regs (PDF) "The comment period is a relatively short 30 days. It is likely the DOL will hold a public hearing after the comment period closes ... The new rule is slated to be effective 60 days after the final regulation is published in the Federal Register. Its applicability date, however, will be January 1 of the calendar year following its publication. The DOL has asked for comments as to whether the applicability date should be sooner, since the new safe harbor is not a mandate, or later to ensure participants are at no risk of harm if plan administrators implement the changes too soon."
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[Sponsored]
Free Webinar -- Employee Benefit Plan Technical Hot Topics for 2020
Do you know the risks and opportunities for employee benefit plans in 2020? The HBL team abated more than $55 million in DOL and IRS penalties this year and will give examples of costly ERISA legal compliance issues and how to avoid them! Join us Nov. 6. |
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[Guidance Overview]
DOL Proposes to Ease Electronic Disclosure Burden for Retirement Plan Sponsors "Employers may want to gauge the interest of employees who don't already receive disclosures electronically and determine whether the Proposal would be beneficial to them. They may also want to start planning or developing a platform by which they could post the disclosures online, if one is not already available. When providing annual disclosures this year, employers may also want to consider the timing and potential to combine those disclosures in the future as part of a consolidated electronic notice."
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[Guidance Overview]
Pension Mortality Updates May Decrease Liabilities "Along with the [Mortality Improvement Scale MP-2019], the SOA's Retirement Plans Experience Committee (RPEC) also released a set of new mortality tables, [Pri-2012 Private Retirement Plans Mortality Tables] ... [The authors] do not expect that the minimum funding calculations, PBGC premiums, and lump sum calculations will use the Pri-2012 table in the near future. However, the 2021 plan year will likely incorporate the MP-2019 scale ... [T]his update will result in lower funding liability, PBGC liability and lump sum amounts for pension plans in that
plan year."
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[Guidance Overview]
SEC Publishes FAQs on Disclosure of Financial Conflicts Related to Investment Adviser Compensation "While much of the discussion focuses on 12b-1 fees (annual marketing or distribution fees associated with mutual funds) and revenue sharing, the FAQ is intended to apply more broadly to other forms of compensation that an investment adviser, its affiliates, or its associated persons receive in connection with the services it provides."
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[Guidance Overview]
Best Interest Standard of Care for Advisors, Part 15 "This article discusses how the Care Obligation in Reg BI applies to recommendations to roll over accounts in 401(k) plans to IRAs. When Reg BI applies, beginning June 30, 2020, rollover recommendations to participants in 'workplace retirement plans' will be subject to the Best Interest standard. It's important to note, though, that Reg BI still permits education and information that stops short of being a recommendation. However, the education and information cannot be a disguised recommendation."
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Predicting the Future of ERISA Compliance "The proposed [electronic disclosure] rule changes the default regulation. Acknowledging that technology and Internet access has become nearly universal, the DOL proposes adding a new safe harbor that flips the default rule in favor of electronic documents instead of paper documents."
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$18.1M ERISA Lawsuit Settlement Price Tag for MIT "In addition to the sizable monetary settlement, the defense has agreed to certain changes in the way it pays for recordkeeping and administrative services -- though MIT in the end admits no wrongdoing or further liability." [Tracey v. Mass. Inst. of Technology, No. 16-11620 (D. Mass. Sept. 4, 2019; settlement agreement Oct. 28, 2019)]
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Peaceful Coexistence: The Facts About Pensions and Education Funding (PDF) 72 pages. "Education financing has been growing much faster than costs for public pensions.... While pension costs do not crowd out education funding, there is a squeeze on state and local budgets to fund public education and other important public services, such as health care and public safety. The squeeze occurs because state and local budgets are out of sync with the economy."
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[Opinion]
How MEPs Signal a Broken 401(k) Industry "A straightforward and transparent 401(k) plan has three features -- flat administration fees, passively-managed index funds, and basic administrative tasks for the employer to complete.... The problem with straightforward and transparent 401(k) plans? There's little profit in them.... [T]he push for MEPs signals a broken 401(k) industry that prioritizes profit ahead of the interests of retirement savers."
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[Opinion]
SPARK Comment Letter to EBSA on Open MEPs and Other Issues Under Section 3(5) of ERISA (PDF) "[T]he SPARK Institute strongly disagrees with the Department's existing restriction for financial institutions because: [1] it is unsupported by the text of ERISA; [2] it does not provide any meaningful benefits or protections that are not otherwise addressed by ERISA; and [3] it unfairly discriminates against financial services firms ... If a financial services firm is willing to act as the plan sponsor and administrator, and acknowledge its fiduciary status under ERISA in writing, we do not see any legal or policy justifications for limiting the ability of financial services firms to sponsor a defined contribution MEP."
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[Opinion]
Fiduciary Lessons from Ken Fisher Fallout "The fact that billions of dollars in institutional assets have left Fisher's firm since his confidential remarks were leaked out causes one to wonder if those institutions may have placed themselves in fiduciary jeopardy.... [If] the client doesn't get a vote -- if the institution has sole fiduciary discretion -- firing Fisher's firm becomes problematic if it has been offering effective value."
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Selected Discussions |
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CG/ASG Here? Owner Sells, Sets Up S Corp to Receive Installment Payments "50% owner sells ownership in C-Corp, will be paid $500,000 per year for next five years as payment. Continues to work for C-Corp and draws a salary. Can this person open up an S-Corp to receive the $500,000 per year and have the S-Corp start a qualified plan just covering himself?"
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Employee Works 50% for Business and 50% as a Domestic -- Plan Coverage Needed? "We have a client who is sole owner of a Sub-S LLC. She has no employees at this point and has K and DB plans. She informed us she is going to hire a personal assistant who will work for the business but also do domestic work in home -- likely split about 50/50 and will work over 1000 hours between business and domestic. Is a sole-owner business required to be aggregated with that owner's domestic employee?"
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K-1 Income and Contribution Calculations "In calculating the potential maximum contribution for the partners in a LLC, which number on a K-1 for Form 1065 is used as the equivalent of a regular employee's W-2 wages for purposes of calculating a contribution? We're working on a plan where a prior administrator in past years has used Item 14A, 'Self-employment earnings (loss)' as the magic number for the year upon which to make calculations. We'd like to know if this is the correct approach. Maybe I should clarify that Item 14 does not automatically come with the letter A attached. Whoever prepared the form has put that in there, which according to the list of codes, means that the number is 'Net earnings (loss) from self-employment'."
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Adding Retirement Distribution Option to Plan Subject to 409A "Current 409A plan does not allow participant elections of time or form of payment. The plan specifies that payment will be made at the earlier of: [1] Separation from service, [2] Disability, [3] Death, or [4] Change in control. The employer now wants to add a Retirement Age of 65 (currently no Retirement Age is specified in the plan) and add Retirement Age as a payment event. It is my understanding that this could be considered an acceleration of payments and is therefore not permitted for existing amounts already deferred. Can the plan be amended to add Retirement Age for future deferrals of compensation without violating 409A?"
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Press Releases |
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Fulcrum Partners Executive Benefits Hires Chief Administrative Officer
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Most Popular Items in the Previous Issue |
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What 401(k) Borrowers Can Add to the Loan Conversation (PDF)
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Tips and Traps of 'Compensation' Definition in Retirement Plan Documents
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David Rhett Baker, J.D., Editor and Publisher
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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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