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Retirement Plans Newsletter

August 12, 2022

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2023 IRS Limits Forecast Update

"With only two months remaining for federal fiscal year (FFY) 2022, [Milliman's] forecast of the 2023 IRS limits will most likely show that FFY 2022 will set the record for a one-year increase, both in dollars and percentage."  MORE >>


Employee Deferrals and Employer Contributions on Bonus Payments May Pose Challenges (PDF)

"[A] plan will sometimes provide a separate employee elective deferral election on bonuses when the plan already includes bonus payments in its definition of compensation. This article provides background on this issue and discusses the consequences of providing separate deferral elections on bonuses, the potential risks of permitting such separate elections, and related considerations that are important to maintain the tax-qualified status of a plan."  MORE >>

Groom Law Group, via Bloomberg Tax Management Compensation Planning Journal

BlackRock 401(k) Investment Suits Send Message 'Nobody's Safe'

"A flurry of new 401(k) lawsuits challenging companies that offer their workers conservative, low-cost target-date funds has enraged retirement industry insiders who say the complaints mean no retirement plan is safe from litigation. The class actions are leveled at major companies defaulting employee investments into a suite of BlackRock Inc. index funds that automatically de-risk investments according to a specific target date -- usually when investors are expected to retire."  MORE >>

Bloomberg Law

CommonSpirit Decision Inspires Another Motion for Reconsideration in Excessive Fee Suit

"Recent decisions in the Sixth Circuit have inspired yet another fiduciary defendant to request a reconsideration of their motion to dismiss a plaintiff's excessive fee suit. This time it's the fiduciary defendants of Michigan's Spectrum Health System 403(b) plan[.]" [McNeilly v. Spectrum Health System, No. 20-0870 (W.D. Mich. Jul. 16, 2021; motion for reconsideration filed Aug. 3, 2022)]  MORE >>

American Retirement Association [ARA]

ERISA Lawsuit Against New York Life Insurance Allowed to Proceed

"[T]he plaintiffs alleged that fiduciaries violated ERISA by retaining nine MainStay funds that were poor performers compared with benchmarks and cost more than comparable investments in the marketplace. These funds are proprietary New York Life investments. [The judge] rejected defendants' motion to dismiss for eight of the nine funds, saying the plaintiffs' allegations 'support a reasonable inference' that the fiduciaries used a flawed process to retain the funds." [Krohnengold v. New York Life Ins. Co., No. 21-1778 (S.D.N.Y. Aug. 10, 2022)]  MORE >>

Pensions & Investments

Payroll Auditing 101 for Trustees of Multiemployer Plans

"In addition to helping insulate trustees from DOL audit risk by supporting plan financial statements, effective payroll audit programs help level the playing field for all contributing employers.... To be effective, the payroll audit program must be aligned with the trust collection policy, and both testing procedures and reporting should be tailored to specific plan needs."  MORE >>

Withum Smith+Brown, PC

Risk Sharing in a Voluntary Retirement Plan (PDF)

35 pages. "This study looks at the feasibility and fairness of adding two risk sharing mechanisms -- automatic annuitization and a reserve fund -- to Auto IRA and similar plans in the absence of other needed reforms.... Does it make sense for state-sponsored Auto IRA plans to offer guaranteed lifetime benefits ... if it is not politically possible to adopt other key features ... especially mandatory contributions and a progressive subsidy?"  MORE >>

Economic Policy Institute

Retirement Planning: Generating Lifetime Income, Leaving a Legacy, and the Components of Net Worth Throughout Retirement (PDF)

21 pages. "Various strategies using home equity in conjunction with retirees' securities portfolios have been analyzed and compared, using Monte Carlo simulation.... The previous articles have not considered, in any detail, the legacies left by the retirees, nor compared them ... This article ... provides that analysis and comparison.... The previous articles have not considered the composition of the retirees' net worth during retirement ... This article ... quantifies the extent to which the Coordinated Strategy results in greater proportions of securities in the retirees' net worth than the Last Resort Strategy."  MORE >>

Conference of Consulting Actuaries, Public Plans Community

State and Local Workforce 2022: Challenges and Strategies for Recruitment and Retention of Employees (PDF)

24 pages. "53% report that employees are accelerating their retirement plans, while 41% say the largest wave of retirements is coming in the next few years ... Only 41% feel their employees are financially prepared for retirement  ... Top exit interview response: Compensation not competitive"  MORE >>

Mission Square Research Institute

Public Retirement Plans' Impact on Recruiting and Retention

"The survey does not make the case that an employer's retirement plan, whatever the design, has a substantial impact on recruiting or retention at all.... Plan sponsors should avoid treating retirement plan design only as a tool for retaining employees. Rather, they should focus on a retirement plan design that realistically meets the needs of a modern workforce."  MORE >>

Reason Foundation

Benefits in General

Impact of Eleventh Circuit Ruling Allowing Equitable Relief for ERISA Claim

"Though the apparent harm in Gimeno occurred during the enrollment process, its reasoning could be applied to statements, actions, or inactions that occur at any point during the plan administration process." [Gimeno v. NCHMD, Inc., No. 21-11833 (11th Cir. Jun. 28, 2022)]  MORE >>

Bloomberg Law

Employee Benefits Jobs

View job as Client Relationship Manager
          for Wespath Benefits and Investments Client Relationship Manager

Wespath Benefits and Investments

Remote / Glenview IL

View job as Client Relationship Manager
          for Wespath Benefits and Investments

Selected New Discussions

Affiliated Service Group?

"I really struggle with Affiliated Service Groups. A client asked me about the following scenario: Hospital wants to engage physician practice ("PP"). Hospital offers to hire all of PP's employees. Doctor will be the sole person that will remain behind in his entity. Hospital will then engage Doc as Independent Contractor, where he will provide all of the same services, using his former staff (now employed by the Hospital). Hospital will handle all of the back office functions for doctor (billing, insurance, etc.). The question was whether Doc, in his own entity by himself, can maintain his own retirement plan that provides very rich benefits; and not get lumped into testing that plan with the Hospital retirement plan. It seems to me that this is exactly why the ASG rules were created and that this seems like an A Org situation. But again, I am terrible at ASGs. Any thoughts?"

BenefitsLink Message Boards

Participant Elected After-Tax Roth Deferrals But Employer Deducted as Pre-Tax

"Participant elected to have Roth deferrals taken. Company deducted funds pre-tax. (However, the proceeds were 'correctly' placed in the Roth source at the record keeper.) Crossed tax years. What might the fix be here?"

BenefitsLink Message Boards

How Many ERISA-Governed Plans Have at Least One Participant's Account Balance Not Fed to a Recordkeeper's System?

"In recent months, some BenefitsLink discussions have remarked on ERISA § 105’s command for lifetime-income illustrations. These discussions assume recordkeepers provide a service to generate the illustrations. Some discussions observe that an illustration is not routinely furnished for a self-directed brokerage account. I guess those mentions refer to a situation in which there is a securities broker-dealer’s account AND there is not an arrangement that results in a computer feed of the SDBA’s balance (not the details) to the recordkeeper’s system. BenefitsLink neighbors, how much does this happen? How many ERISA-governed plans have this situation?"

BenefitsLink Message Boards

Press Releases

Blue Ridge ESOP Associates Acquires Crowe LLP ESOP Business

Blue Ridge ESOP Associates

Webcasts and Conferences
(Retirement Plans / Executive Compensation)

PBGC Update

September 28, 2022 WEBCAST

Conference of Consulting Actuaries

Last Issue's Most Popular Items

SECURE Act 2.0 Would Bring Significant Changes for Retirement Plan Sponsors, IRA Providers, and Service Providers

Morgan Lewis

DOL's Proposed QPAM Amendments May Amount to an Effective Revocation of the Exemption

Eversheds Sutherland

Participant Loans: Common Errors and How to Fix Them


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BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587.

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