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November 8, 2019 logo logo
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[Official Guidance]

Present Value of PBGC Maximum Guarantee for 2020

"The values [in this table] apply to benefits with annuity starting dates in 2020. View a two-column spreadsheet version of the 2020 table. The 2020 table was developed using the 417(e) segment rates for August 2019 (2.09%, 3.00% and 3.61%, respectively) for plan years beginning in 2020 and the 417(e) applicable mortality table for 2020."
Pension Benefit Guaranty Corporation [PBGC]


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[Guidance Overview]

IRS Proposes New Life Expectancy Tables for RMDs

"The new tables are currently only proposed, and a hearing and comment period [have] been scheduled ... [T]hey would be used for calculating 2021 RMDs. RMDs for 2020 are not affected and cannot be calculated using the new tables.... The new tables account for people living longer and include older account owners.... IRA owners will be taking less each year as RMDs, allowing more tax-deferred growth over the years and resulting in more retirement savings."
Slott Report

[Guidance Overview]

How California Public Agencies Can Reform Pension Benefits

"Government Code section 20516 allows employers and employees to agree to have employees pay an even larger share of pension contributions.... Another option is to negotiate changes to employees' compensation and benefits to reduce the amount that is reportable to CalPERS ... Many agencies can potentially achieve significant savings by restructuring health benefit costs for current and future retirees, such as by moving retirees to more affordable plans or reducing the agency's contributions."
Liebert Cassidy Whitmore

Retirees' Mandatory IRA Withdrawals Would Shrink Under Treasury Proposal

"Retirees could take smaller mandatory withdrawals from their tax-advantaged accounts under a new Treasury Department proposal designed to adjust for rising life expectancy. If finalized, the rules would take effect starting in 2021, reducing tax collections and letting more money accumulate in tax-preferred accounts. The change amounts to a tax cut for retirees who don't need to tap their savings for living expenses."
The Wall Street Journal; subscription may be required

Editor's Pick Retirement Plan Cybersecurity

"[T]here is no clear ERISA regulatory structure governing the protection of financial information in retirement plans. Some states have started to create their own laws which typically address breach notifications and private rights of action for any unauthorized disclosures of protected personal information. While several state attorneys general have been active in enforcing these laws in cyberbreach cases, a state-by-state framework remains a patchwork solution."


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Ninth Circuit Will Not Rehear Schwab ERISA Arbitration Case

"The Ninth Circuit's decision supporting the application of the arbitration clause before filing suit stands -- at least in the Ninth Circuit.... Arbitration clauses have also been raised as a preemption to litigation in at least two of the university 403(b) fee suits[.]" [Dorman v. The Charles Schwab Corp., No. 18-15281 (9th Cir. Aug. 20, 2019; also unpub. memo. opinion; rehearing denied Nov. 7, 2019)]
National Association of Plan Advisors [NAPA]

Prudential Is Latest Recordkeeper to Face Self-Dealing Allegations in ERISA Lawsuit

"Plaintiffs challenge the use of proprietary products in Prudential's defined contribution retirement plans, an arrangement they say impermissibly benefitted the company at the expense of plan performance." [Cho v. The Prudential Ins. Co. of America, No. 19-19886 (D.N.J. complaint filed Nov. 5, 2019)]

Retirement Industry Facing 'Greatest Transition Since the Depression'

"Demographic changes, regulations, the technological revolution, the lingering effects of the Great Recession and the current political debates all spell tumult ... Larger firms are bidding fees lower, plan sponsors view services in a more commoditized way and increased engagement with participants are among the current trends[.]"
National Tax-Deferred Savings Association [NTSA]

A Multi-Manager Approach to Pursue Better Retirement Outcomes

"Employing a multi-manager approach allows for greater control of risk by: [1] Systematically identifying and selecting managers with favorable risk/return profiles and stable and consistent investment processes, and including them as sub-advisers. [2] Pairing industry leading managers with unique, yet complementary styles with low correlation ... [3] Monitoring managers to ensure they perform as anticipated[.]"

Comparing Asset Allocation Before and After a Rollover From 401(k) Plans to Individual Retirement Accounts

"When the individuals were 401(k) plan participants, they were much more likely to have assets in target-date/balanced funds than when their assets were moved to IRAs (27.5 percent on average in 401(k) plans vs. 13.4 percent on average in IRAs).... The share allocated to equities, on average, was very similar across plan types -- 46.2 percent in 401(k) plans and 43.4 percent in IRAs.... There were substantial differences in the asset allocations in IRAs with balances less than $5,000 and $5,000 or more[.]"
Employee Benefit Research Institute [EBRI]

California Governmental Employers Should Take Care When Cost-Sharing Under CalPERS

"Basically, there are two forms of cost-sharing agreements: section 20516(b) agreements, referred to as the Amendment Method ... and section 20516(f) agreements, referred to as the MOU Method ... Because the income tax treatment of affected employees could differ under these two approaches, it is important to understand the differences."
Best Best & Krieger LLP

Benefits in General

Best Practices in Administering Benefit Claims: Establishing (and Following) a Good Claims Process

"The claims process ... is not generally viewed by the courts to be an adversarial process ... The fiduciary should give careful consideration to the evaluation of a participant's claims and arguments, particularly since the participant is generally entitled to all documents that are considered by the claims fiduciary in making its decision -- even if the documents are not relied upon in reaching the decision."

What Employee Benefits Professionals Will Be Watching in 2020

"Health and Welfare preventive care services.... Protecting against identity theft in taxes.... Rehabilitation for Multiemployer Pension Act.... SECURE act on multiple employer plans.... Part-timers and 401k plans. "
Morgan Lewis

Selected Discussions
on the BenefitsLink Message Boards

Former Client's New Actuary Wants Explanation of Our Benefit Calculations

"Client with DB floor offset plan left and went to new firm. The new firm is asking for written explanation of the offset calculation (i.e., accrued benefits after offset was determined). [1] How much work and time are we required to spend in explaining how we administered the plan? [2] Can there be a charge for our time in putting together this information?"
BenefitsLink Message Boards

Fees by Service-Provider to Handle Distributions from the Plan: Can Pay from Plan Assets?

"We have a PS plan with pooled accounts and several terminated participants with small balances (under $200). We will be sending to PenChecks for check processing and the fee they charge is $35 per participant. The sponsor would like to pay the charges from the plan's forfeitures. Is this a legitimate plan expense?"
BenefitsLink Message Boards

Question for Those with CPC Designation; Get TGPC Designation Instead?

"I am contemplating whether to first get the TGPC designation or work towards my CPC designation (I have completed the pre-requisites). I see there is a governmental and tax-exempt module in CPC, but not sure how comprehensive it is. I have more experience on the private sector side and would like to gain more expertise on the public sector side. I would rather begin the CPC and take the governmental module unless that module is not very comprehensive. Thoughts?"
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Press Releases

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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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