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Retirement Plans Newsletter January 9, 2020 |
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Webcasts, Conferences SECURE for Service Providers
Examining the Nest Egg: The Sources of Retirement Income for Older Americans
SECURE for Plan Sponsors
SECURE for Pooled Employer Plans
Social Security and Medicare: Communication and Compliance Challenges as Employees Approach Retirement Age
ADP / ACP Testing Techniques
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Discussions |
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This Newsletter:
BenefitsLink Health & Welfare Plans Newsletter:
Message Boards Digest:
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[Official Guidance] "The Board of Trustees of the Bricklayers & Allied Craftsmen Local 7 Pension Fund ... has submitted an application to reduce benefits under the plan in accordance with [MPRA]. The purpose of this notice is to announce that the application ... has been published on the website of the Department of the Treasury, and to request public comments on the application from interested parties[.]" U.S. Department of the Treasury |
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[Guidance Overview] SECURE Act Brings Sweeping Changes to Retirement Plans and IRAs (PDF) "One of the most common failures for qualified plans is the failure to timely make minimum required distributions. The delay in having to start minimum required distributions may help compliance with this rule and helps individuals with tax planning in order to delay the required receipt of taxable payments.... Plan sponsors will now be able to implement a safe harbor nonelective contribution provision toward year-end (or even after year end)[.]" Hunton Andrews Kurth |
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Important SECURE Act Provisions for Financial Advisers "[1] Traditional IRA owners can now contribute after age 70-1/2.... [2] Traditional IRA required minimum distributions (RMDs) will now start at age 72.... [3] 'Stretch IRAs' as we now know them are disappearing.... [4] Employers may adopt a qualified retirement plan up until their tax return due date, plus extensions.... [5] Safe harbor 401(k) plans now have more contribution flexibility.... [6] Tax credits for small employers may help jump-start retirement plans." Ascensus |
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Deadline Approaching for 403(b) Plan Document Compliance Relief "In 2017, the IRS established a 'remedial amendment period' and provided guidance on plan amendment deadlines for sponsors of 403(b) plans. Nongovernmental and governmental employers who sponsor 403(b) plans will be able to correct any plan document issues retroactively, without penalty, if such corrections are made by March 31, 2020." Morris, Manning & Martin, LLP |
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Retirement Plan Terms to Avoid "Common retirement plan terms ... scored terribly when deployed in participant communications -- with some even commenting that they were 'mumbo-jumbo!' ... [S]ome of the worst fairing terms in regard to participant engagement: 'Glide Path' ... 'Target Date Fund' and 'Lifecycle Fund' ... 'Leaving Money on the Table' ... 'Retirement Income Options'." Cammack Retirement Group |
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Judge Tosses Church Plan Lawsuit Against Adventist Health System "The lawsuit, amended three times, accused fiduciaries of the DB plan of failing to fund the plan and provide reporting per ERISA rules. As with the dismissal of previous iterations of the complaint, U.S. District Judge Gregory A. Presnell ... found that in many counts, the plaintiff did not sufficiently allege an injury or did not specify which defendant to which the count applied." [Sheedy v. Adventist Health System Sunbelt Healthcare Corp., No. 16-1893 (M.D. Fla. Jan. 7, 2020)] PLANSPONSOR; free registration may be required |
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Lawsuit Against Trade Association's 401(k) Plan Moves Forward "[Federal district judge Liam O'Grady] found the plaintiffs' allegation that the plan's increasing administrative costs in a marketplace which is exhibiting a down trend shows imprudent administration is plausible. He said the comparison showing a similarly situated plan incurs 25% of the administrative expenses, per participant, than their 401(k) 'nudges the claim over the line from merely possible to plausible.' " [Intravaia v. National Rural Electric Cooperative Assoc., No. 19-973 (E.D. Va. Jan. 2, 2020)] PLANSPONSOR; free registration may be required |
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Second Circuit Prohibits Retroactive Changes to Withdrawal Liability Interest Rate Assumptions "The Court reasoned that retroactive changes to the actuarial methods and assumptions used to calculate withdrawal liability are inconsistent with the legislative history of ERISA Section 4214, which requires the fund to provide advance notice to employers of any 'plan rules and amendments' that affect withdrawal liability. The Court also observed that withdrawal liability estimates provided under ERISA Section 101(l) would be of 'no value' if such retroactive changes were permitted." [The National Retirement Fund, et al. v. Metz Culinary Management, Inc., No. 17-1211 (2d Cir. Jan. 2, 2020)] Proskauer |
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Latest Sun Capital Decision Offers Little Relief to Private Equity Funds (PDF) "The First Circuit's decision ... is of limited precedential value for private equity funds and their counsel. There remains a risk that, under different circumstances, a multi-fund ownership structure like the one used by Sun Capital (with no one investor owning more than 80%) might still constitute a partnership-in-fact. And, the First Circuit left untouched its prior controversial determination that the Sun Capital Funds were 'trades or businesses' under their 'investment plus' analysis." [Sun Capital Partners III, LP v. New England Teamsters & Trucking Industry Pension Fund, Nos. 16-1376, 19-1002 (1st Cir. Nov. 22, 2019)] Morrison Cohen LLP |
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10 pages. Topics include: [1] Section 404 issues; [2] Executive orders (EOs); [3] Filings under Rev. Proc. 2017-57; [4] Hybrid determination letters (DLs); [5] More hybrid DLs; [6] Employer discretion; [7] Substitute Mortality Tables (SMTs); [8] Funding balance elections; [9] Phased retirement; [10] Mortality for IRC Section 430/Section 436; [11] Weekend/holiday rule for funding; and [12] Multiemployer plans. American Academy of Actuaries, Conference of Consulting Actuaries, Society of Actuaries, and ASPPA College of Pension Actuaries [ACOPA] |
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7 pages. Topics include: [1] PBGC changes; [2] Pilot Mediation Program; [3] Discussion of PBGC Regulatory Agenda; [4] Plan termination issues; [5] Multiemployer plans; and [6] Other PBGC topics. American Academy of Actuaries, Conference of Consulting Actuaries, Society of Actuaries, and ASPPA College of Pension Actuaries [ACOPA] |
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Ethics, ESG, and ERISA: Ethical-Factor Investing of Savings and Retirement Benefits, Part 2 "Fiduciaries making investments on behalf of ERISA plans, other than Top-Hat plans, may use the Incorporation approach, and must use it, to the extent it is part of prudent investing.... Participants and beneficiaries of individual retirement arrangements or of self-directed ERISA savings and retirement plans, such as most 401(k) plans, may use any of the three ethical-factor investment approaches. Sponsors of Top-Hat plans may do the same." [See also: Part 1 of this series.] Albert Feuer, via SSRN |
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Pension Funds Adjust Investment Return Targets as Economic Growth Slows "[M]any plans lowered their assumed rates of return over the past 10 years to reflect [expected GDP growth and interest rates], despite the near-term budget challenges they face as contribution requirements rise. Only nine of the 73 funds studied had an assumed rate below 7.5 percent in 2014, but about half had adopted rates below that percentage by the end of fiscal year 2017." The Pew Charitable Trusts |
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Optimal Default Retirement Saving Policies: Theory and Evidence from OregonSaves "The optimal default contribution rate is shaped by the social benefits of increased savings due to adherence to the default that keeps workers from undersaving ... The optimal default contribution rate is also counterbalanced by the social benefits of action when an undesirable default option compels workers to make an active decision.... [Using] individual-level administrative and survey data from OregonSaves, ... [the authors] suggest the optimal default contribution rate to be 8%." Pension Research Council, the Wharton School of the University of Pennsylvania |
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Massachusetts Governor Breaks with State Officials Over Fiduciary Reg "Massachusetts Gov. Charlie Baker is asking the state Securities Division to pull its fiduciary proposal off the table, citing concerns it will cause 'confusion' in the financial services industry.... [The] Securities Division conducted a hearing on the proposal [January 7]." InsuranceNewsNet.com |
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Nearly 40% of Illinois Education Spending Now Consumed by Pension Costs "In the coming school year, 36% of the money the state allocates to education will be diverted away from teachers and students to meet required pension payments for retirees. This represents a 200% increase in spending on teacher pensions since 2000, compared with a mere 20% increase on classroom spending during that period.... Since 2010 alone, spending on educators' pensions more than doubled, jumping to over $5 billion from less than $2.5 billion. Classroom spending, meanwhile, grew modestly to $8.8 billion from $8.5 billion." Illinois Policy Institute |
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Fidelity Wrests High-Profile Amazon 401(k) Business from Vanguard "Fidelity now has the existing $5.7 billion in its recordkeeping and that unbelievable built-in growth of 2,000 new participants a week as it grows with Amazon.... The bad news is that winning recordkeeping means ... you win recordkeeping in the brave new world, with no managed assets thrown in to pay for it all through kickbacks and other fun. The good news is that a firm like Amazon is more interested in having good service than scraping every penny[.]" RIABiz |
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Benefits in General |
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[Guidance Overview]
15 pages. Topics: [1] Introduction to ERISA statute of limitations issues; [2] ERISA statute of limitations for benefit claims; [3] Resetting a statute of limitations, tolling, waiver, and estoppel; [4] Statute of limitations standard for breach of fiduciary actions; [5] Intel Corp. case expected to crystallize the actual knowledge test. The Wagner Law Group |
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63 presentation slides. Topics include: [1] ACA marches on during appeals; [2] HSA updates; [3] 401(k) plan quick updates; [4] California state law updates; [5] San Francisco ordinance updates. ABD Insurance & Financial Services |
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Selected Discussions |
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Audited Plan (Schedule H) -- Use Cash Basis Instead of Accrual Basis? "Every audited plan I have seen used accrual accounting where you would indicate receivables on the Schedule H. Can an audited plan use cash basis accounting for 5500 purposes?" BenefitsLink Message Boards |
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Press Releases |
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Groom Launches The SECURE Act Resource Library Website
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IMA Select Joins Forces with Colorado Insurance Advisors (CIA)
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Most Popular Items in the Previous Issue |
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Details of the SECURE Act: Covering Long-Term Part-Time Employees
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SECURE Act and Guaranteed Income, Part 1
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SECURE Act Means It's Time to Review Estate Plans
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