Retirement Plans Newsletter

November 19, 2019 logo logo
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Webcasts, Conferences

Telehealth Trends: Risks, Rewards and Reimbursement
November 14, 2019 WEBCAST
Nixon Peabody LLP

Diversity, Inclusion & Holiday Cheer
December 12, 2019 in NY
Worldwide Employee Benefits Network [WEB] - New York Chapter

What's Up in Washington? - Annual Legal and Regulatory Update
January 29, 2020 in OH
Worldwide Employee Benefits Network [WEB] - Greater Cincinnati Chapter

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[Guidance Overview]

PBGC Steps Up Rulemaking Activity

"[The PBGC] has become increasingly active with respect to rulemaking, issuing several final and proposed rules covering a wide variety of topics ... [1] Proposed rules or requests: Reportable events ... PBGC premiums reflecting risk transfers ... 4010 reporting ... Administrative review of agency decisions ... [2] Final forms approved: Shutdown liability reporting ... Coverage determinations."

Groom Law Group

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Sutherland Global Services Accused of ERISA Fiduciary Breaches Over Fees

"According to the complaint, 'certain responsibilities in connection with the plan' were delegated to CVGAS LLC during the proposed class period, including the responsibility to select and monitor the array of investment options to be included in the plan. Among other issues, the plaintiffs allege the defendants 'failed to properly minimize the reasonable fees and expenses of the plan.' " [Savage v. Sutherland Global Services Inc., No. 19-6840 (W.D.N.Y. complaint filed Nov. 13, 2019)]


Editor's Pick Is Mandatory Individual Arbitration Another Tool for the Plan Design Toolbox?

"[A]rbitrators are likely to be less familiar with ERISA's nuances and an errant arbitration decision could raise a number of difficult compliance questions for the plan's fiduciaries.... [It] is not clear whether prior arbitration decisions would have any preclusive or precedential effect on the plan's fiduciaries or its participants ... [W]hile federal courts may bind federal agencies, ... an arbitration decision may not have the same binding effect on an agency auditing the plan."

Morgan Lewis

Tips to Simplify Year-End Plan Administration

"Because the need for an audit is determined by the participant count on the first day of the plan year, ... obtain and review a participant census from your Recordkeeper.... If your plan allows you automatically to roll out terminated participants with balances of $5,000 or less, schedule this action for these participants before year-end."

Alliant Wealth Advisors

PBGC Releases FY 2019 Annual Report

"The [PBGC's] Fiscal Year 2019 Annual Report ... shows a record deficit of $65.2 billion in its Multiemployer Insurance Program at the end of FY 2019.... The Multiemployer Program, which insures the pensions of 10.8 million Americans, is highly likely to become insolvent during FY 2025.... [T]he financial condition of PBGC's Single-Employer Insurance Program continues to improve ... The program's positive net position of $8.7 billion as of September 30, 2019, is an increase from $2.4 billion at the end of FY 2018."

Pension Benefit Guaranty Corporation [PBGC]


Electronic Disclosure under ERISA: How to Effectively Use Technology without Sacrificing Compliance

Sponsored by Lorman and BenefitsLink

Dec. 3 webinar. Gain a better understanding of how to use technology while staying compliant under ERISA. BenefitsLink discountLearn more

Text of PBGC FY 2019 Annual Report (PDF)

141 pages. "The Single-Employer Program continues to see improvement; however, it still faces considerable risk.... Without reforms, our Multiemployer Insurance Program -- the backstop that is the last resort for retirees when a plan fails -- is very likely to become insolvent in 2025... In FY 2019, PBGC took responsibility for the benefits of more than 103,000 participants in newly trusteed plans. In order to provide the highest level of customer support, PBGC is modernizing its benefits payments processing and financial systems."

Pension Benefit Guaranty Corporation [PBGC]

Parsing the FedEx Decision to Move Away from Its Cash Balance Plan

"With the move away from the cash balance plan, employees will now receive an 8% potential match if they contribute 6% ... In fact, the switch will be mandatory for newly-hired employees, and existing employees will be able to chose whether to stay or switch. At first glance, it appears that the company is simply cutting its contribution by 0.5% to 3.5% by age/service group, in going from 5% + 3.5% or 8% + 3.5% to a simple 8%. But there are two wrinkles."


Interest Rates 2019 -- Signal or Noise?

"The question, particularly for DB plan sponsors for whom plan-related interest rate risk is a significant factor, is whether the lower rates we have experienced in the second half of 2019 represent a 'new normal' -- another downward step on the downward stairstep ...  or just a lower version of the current bottom, reflecting the issues typically talked about in current news (monetary policy and trade 'uncertainty')."

October Three Consulting

401k 'Father' Ted Benna Takes on State-Sponsored Retirement Plans

"[T]he Oregon business community is still largely oblivious, according to Benna, and could result in 'nasty' fines that could be put to better use as contributions and matches.... He's equally astounded by the lack of knowledge surrounding more effective and appropriate (as well as cheaper) alternatives, including one he's offering through his own company Benna401k, which includes a free 'Oregon Decision Guide' to help make employers more aware."

401(k) Specialist

Should You Offer Only Index Funds in Your 401(k) Plan?

"A number of retirement plan experts believe that 401k plan participants should only be allowed to invest in index funds. They say the additional cost that participants pay for actively managed mutual funds is not justified by better performance. Many 401k plan sponsors have agreed, offering only index funds in their fund lineups.... [This article provides] a discussion of the merits of both approaches and then [thoughts on what the author believes to be] the optimal solution."

Lawton Retirement Plan Consultants

Are Social Security's Actuarial Adjustments Still Correct?

"The question is whether the adjustments, set decades ago, are still correct, given the decline in interest rates and increase in life expectancy. For the average worker, the analysis shows that the reduction for claiming early is currently too large while the increase for claiming late is about right. Higher earners - who live longer and claim later - get a really good deal under the current system"

Center for Retirement Research at Boston College


PBGC Report Re-Enforces Need for PBIA Passage and Multiemployer Pension Reform

"ERIC is pleased the PBGC report shows that the single-employer defined benefit system continues to increase its funding levels, leading to a $8.7 billion surplus on the PBGC single-employer program. This surplus underscores ERIC’s push for the [Pension and Budget Integrity Act (PBIA)] which will stop Congress from using the single-employer pension system as a piggy bank for government spending unrelated to the retirement system."

The ERISA Industry Committee [ERIC]


When Is an Annuity Not an Annuity? When It's Lifetime Income

"Deservedly or undeservedly, annuities come with a reputation for being bad, complex investments.... [S]ales of simple fixed annuities now outpace those of complicated variable annuities, and insurtech startups now offer simple, direct-to-consumer annuities. But traditional annuity firms are also turning to a new weapon in the war of public opinion: euphemisms."

Corporate Insight


TD Ameritrade Trust's President Says Public Today 'Much More Aware' of Need to Work with Fiduciary

"There’s still plenty of evidence that consumers could be better educated on these issues. Surveys show about half of investors don’t know how much they’re paying for advice, and about one in six think they pay nothing. Yet ... progress is being made with respect to consumer education and awareness. ... [Q]uite a few investment advisers [have reported] that their clients and prospects are for the first time asking them about their fiduciary status. That’s a result of the DOL effort and the resulting publicity."

Fiduciary News

Benefits in General

[Official Guidance]

Agencies Release Advance Copies of Form 5500 Annual Return/Report for 2019

"[EBSA, IRS and PBGC have] released advance informational copies of the 2019 Form 5500 Annual Return/Report and related instructions.... The advance copies of the 2019 Form 5500 are for informational purposes only and cannot be used to file a 2019 Form 5500 Annual Return/Report."

Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]; Internal Revenue Service [IRS]; and Pension Benefit Guaranty Corporation [PBGC]

Best Practices in Administering Benefit Claims: Distinguishing an Inquiry from a Claim

"Careful consideration should be given to whether a participant's (or beneficiary's) communication triggers the plan's claims process. ... [D]oes the plan require claims to be in writing, or are telephonic claims accepted? Has the participant or beneficiary submitted all required documentation with the claim? Should an inquiry, although not technically a claim, be processed through the plan's claims procedures? When is it appropriate to do so?"


Executive Compensation
and Nonqualified Plans

The Wealth Tax in Three Acts

"Three scholars [recently] discussed the feasibility and tradeoffs of the wealth tax proposed by Senator Warren and other Democratic presidential candidates. [This article presents] a few highlights from each speaker's talk."


Employee Stock Purchase Plans: The Introductory Course (PDF)

34 presentation slides. Topics: [1] Overview of Employee Stock Purchase Plans (ESPPs); [2] Basic requirements of qualified ESPPs; [3] Basic overview of securities requirements for ESPPs; [4] ESPPs in the context of a global workforce; [5] A newly available method for boosting enrollment in ESPPs.

Hunton Andrews Kurth

Selected Discussions
on the BenefitsLink Message Boards

Revenue Sharing Paid to TPA Exceeds Current Fees

"Suppose you have a TPA whose engagement letter specifies that revenue sharing paid to the TPA by the investment firm will offset TPA billings to the Plan Sponsor. At some point, due to asset growth, the revenue sharing paid to the TPA starts to exceed the amounts charged, so is basically placed in a holding account with the TPA.... The amounts accumulating in the holding account start to become substantial, and the TPA is uncomfortable with this ... The gist of a recent discussion about this was that the TPA should issue a new engagement letter, so that the TPA would keep all future revenue sharing fees, even if in excess of what would normally be charged.... Plan Sponsor is apparently fine with this. A couple of questions were kicked around, however, which were interesting, and I'm soliciting opinions."

BenefitsLink Message Boards

Borrow Using My Defined Benefit Pension as Collateral?

"I have a lifetime defined benefit pension from a plan whose funding status is rated "green." It has $3 billion in assets, and is 86% funded. Are there any lending entities who will lend against the monthly payment, if I have it contractually designated to be deposited in the lender's account each month, and back it with a term life policy?"

BenefitsLink Message Boards

Terminated Employee with Undeposited Match But Account Already Completely Paid Out

"I have a terminated employee who was due an employer match after termination. The entire participant account balance was distributed prior to the match deposit and the account closed. There has been a lot of hassle trying to get an account reopened in order for the match to be deposited and then distributed to the participant. The broker is saying that the plan sponsor can just write the check directly to the participant and there is no reason to reopen the account. I have searched and searched but cannot find any guidance on how to handle this."

BenefitsLink Message Boards

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Press Releases

IRI Announces New Board Members
Insured Retirement Institute [IRI]

Most Popular Items in the Previous Issue

Who Leads in PBGC Single-Employer Program Claims?
American Society of Pension Professionals & Actuaries [ASPPA], 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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