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Retirement Plans Newsletter December 23, 2019 |
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Webcasts, Conferences A First Look at Secure's PEP, MEP, and 'Group of Plans' Provisions
Global Benefits Management: Tips for Building and Maintaining an Effective Program
SECURE Act - What You Need to Know
Understanding the SECURE Act, and More
Compensation, Retirement and Benefits Trends Report
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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] SECURE Act Finally Becomes Law "One source of revenue will be increased penalties for failure to file retirement plan returns.... These revenue raising provisions are overshadowed by the elimination of the 'stretch IRA,' although technically the provision applies to all tax qualified defined contribution plans as well as IRAs. Under the new rules, designated beneficiaries of IRAs and plans are required to draw down IRA and plan assets within 10 years of the death of the IRA owner or plan participant." The Wagner Law Group |
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[Guidance Overview] Holiday Gift to Plan Participants, Additional Work for Plan Sponsors in SECURE'd Retirement Benefits "Certain changes made by the SECURE Act take effect at the beginning of 2020, so it is critical for plan sponsors to determine as soon as possible whether immediate action will be required." Sidley Austin LLP |
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[Guidance Overview] SECURE Act: The Wait is Finally Over "New incentives to establish or enhance employer plans ... New ways to save more in employer plans ... More targeted provisions affecting employer plans ... New provisions affecting employer plans and IRAs ... More flexibility for IRA contributions ... New eligible expenses for 529 plans ... Disaster relief provisions ... Effective dates and amendment deadlines." Ascensus |
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[Guidance Overview] IRS Clarifies Deadline for Compliance with Hardship Distribution Regs "While some of the new rules were discretionary, there are several mandatory provisions that will take effect on January 1, 2020, including: [1] Plans are prohibited from suspending employee deferral contributions following hardship distributions that occur on or after January 1, 2020; and [2] Employees must represent in writing (including electronic representations) that they have insufficient cash or other liquid assets reasonably available to satisfy the need giving rise to hardship distribution requests that are made on or after January 1, 2020." Jackson Lewis P.C. |
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[Guidance Overview] SECURE Act Enables Retroactive Adoption and Contribution Deduction for Qualified Plans "Section 201 of the [SECURE Act] provides that if an employer adopts a qualified retirement plan ... after the close of the taxable year but before the filing date (including extensions) for the employer's tax return, the employer can elect to treat the plan as being adopted in the prior tax year. In other words, if the employer adopts the plan prior to the extended filing date for the employer's tax return, they can retroactively count the employer's contribution to such plan as deduction on that return. In the case of a partnership or LLC, that would be Sept. 15." American Society of Pension Professionals & Actuaries [ASPPA] |
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SECURE Act and Tax Extenders Create Retirement Planning Opportunities and Challenges "[A]lthough not nearly as sweeping as the Tax Cuts and Jobs Act of 2017, the SECURE Act of 2019 makes numerous updates to the rules around retirement plans in an effort to increase access to employer-sponsored retirement plans ... But ... what legislation may give with one hand, it takes with the other, and in practice, many financial advisors may spend more time dealing with what is lost under the SECURE Act -- in particular, the stretch IRA -- than what is gained." Nerd's Eye View |
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How a Prenup Can Trigger a Brawl Over Retirement Benefits "The spouse sought ... to bootstrap her right to retain the distributions she received by arguing that, because she did not sign a consent and waiver that complied with ERISA, the prenuptial agreement did not result in her renouncing the benefits. The Alabama Supreme Court ... concluded that the lack of a valid ERISA waiver only impacts to whom a retirement plan must pay benefits. It does not preclude a breach of contract action against a spouse who receives the benefits where the spouse agreed to take actions that would have permitted the payment of the benefits to someone else." [Moore v. Estate of Moore, No. 1180482 (Ala. Nov. 22, 2019)] Blank Rome LLP |
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401(k) Ideas That Seemed Good at the Time, But Look Bad Now (PDF) "401(k) plan sponsors ... can ill afford to implement practices and procedures that might have looked good at the time, but have terrible consequences once implemented. [1] Payroll and TPA services have little to do with each other ... [2] Revenue sharing paying funds reduce plan administrative expenses or does it?... [3] The participant-directed 401(k) plan is supposed to limit liability ... [4] They can wear all the hats, but should they?" The Rosenbaum Law Firm, P.C. |
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Unfunded Pensions Remain Large Local Governments' Biggest Liability "[A]djusted net pension liabilities -- Moody's method of calculating the unfunded pension liabilities of a municipal issuer -- amounted to $450 billion for the 50 largest local governments in aggregate. Individually, unfunded liabilities accounted for the largest long-term liability for 29 of the 50 surveyed governments in 2018." Pensions & Investments |
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Looking to Calm Those Retirement Spending Fears? "[According to] spending data from 2017/2018 from the U.S. Bureau of Labor Statistics Consumer Expenditure Surveys ... [1] Social Security and pensions represent a large proportion of income for all but the highest income group.... [2] Housing, Healthcare and Food expenses represent a higher percentage of expenditures for lower income groups than higher income groups. [3] Personal taxes represent a higher percentage of expenditures for higher income groups.... [4] Higher income groups appear to spend less of their income than lower income groups." Ken Steiner, FSA Retired |
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Summary of the Quarterly Survey of Public Pensions for 2019: Q3 (PDF) "For the 100 largest public-employee pension systems in the country, assets (cash and investments) totaled $3,974.6 billion in the third quarter of 2019, increasing by 0.9 percent from the second quarter of 2019 level of $3,938.7 billion. Compared to the same quarter in 2018, assets for these major public-pension systems increased 2.2 percent from $3,890.6 billion." U.S. Census Bureau |
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Executive Compensation |
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[Guidance Overview] IRS Issues 162(m) Proposed Regs "[C]orporations will now need to track the compensation of an individual categorized as a covered employee until all payments from the company have been made to that individual or his or her beneficiaries. It remains to be seen whether, in its final regulations, the IRS will adopt any of its proposed safe harbors, which may ease some of the compliance burdens." Shearman & Sterling LLP |
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[Guidance Overview] IRS Offers a 162(m)-Brace for the Holidays "The proposed regulations provide guidance on ... [1] the grandfathering rule, [2] changes to the definition of publicly held corporation, [3] changes to the definition of covered employee, and [4] changes to the definition of the compensation subject to the deduction limit." Eversheds Sutherland |
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Selected Discussions |
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Amend Safe Harbor Plan Now to Change from Pro Rata to New Comparability Method for 2020? "Can I amend a SH plan now to change PS method from pro-rata to new comparability for Jan. 1, 2020?" BenefitsLink Message Boards |
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Ineligible Employees Allowed to Defer; Timing of Corrective Amendment "In 2017 and in 2018, 16 employees were allowed to join the plan and defer before meeting the eligibility requirement (7 in 2017 and 9 in 2018). The client was told the document provider would draft an amendment to bring these 16 into the plan. An amendment will be done for each plan year listing the employees by name for the respective year. Vendor said this will correct the problem. Isn't this one time amendment a 'corrective amendment' and therefore needed to be adopted by 10/15/2018 (for the 2017 plan year) and 10/15/2019 (for the 2018 plan year)? Can the plan just adopt the amendment now to correct the eligibility errors for the past two plan years?" BenefitsLink Message Boards |
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Most Popular Items in the Previous Issue |
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Congress (Finally) Passes the SECURE Act
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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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