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Understanding and Addressing 403(b) Plan Operational Issues
October 3, 2017 WEBCAST
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Text of IRS Notice 2017-49: Hurricane Harvey and Hurricane Irma Disaster Relief for Defined Benefit Plans (PDF)
10 pages. "The [IRS, EBSA and PBGC] are providing relief in connection with certain employee benefit plans because of damage caused by Hurricane Harvey and Hurricane Irma. The relief provided by this notice is in addition to any relief already provided by the IRS, EBSA, and PBGC to victims of Hurricanes Harvey and Irma.... [1] Relief for Single-employer Defined Benefit Plans.... [2] Relief for Multiemployer Defined Benefit Plans.... [3] Relief Related to Funding Waivers." [Additional description from PBGC website: "Among other things, this notice extends the contribution due date for affected defined benefit plans. As a result, contributions made more than 8-1/2 months after the end of the prior plan year may, in certain instances, be designated as being for the prior plan year. The relief in [IRS] Notice 2017-49 applies to PBGC requirements that key off the contribution due date (e.g., whether a contribution is timely, whether that contribution is included in market value of assets). This relief is in addition to PBGC-provided disaster relief related to waiving certain penalties and extending certain deadlines for affected plans."]
Internal Revenue Service [IRS]

70-1/2 Year Olds NOT in Pay Status?

Don't risk plan disqualification. Both the DOL and IRS are focused on RMD. Proactively address your deferred vested population with PBI's compliance based solutions. Give yourself peace-of-mind through a PBI auditable trail. Visit us at pbinfo.com .

Interesting Angles on the DOL's Fiduciary Rule, Part 61
"The best interest standard requires that an advisor obtain the information that is relevant to making a prudent and loyal recommendation about a distribution. The [DOL] has said that, at the least, that includes the services, investments, and fees and expenses in both the plan and the IRA.... The information about the services, investments, and fees and expenses in the plan is the most difficult to obtain. Fortunately, that information can be found in the participant's plan disclosure statements. Additional important information is in the participant's quarterly statements. But, what if the participant can't locate the information?"
FredReish.com

Lawsuit Alleges Voya Charged Big Fees to Small 401(k)
"Voya Financial Inc. is accused in a new lawsuit of charging excessive record-keeping and administrative fees to a small 401(k) plan... The participant seeks class treatment for 47,000 plans and 4.5 million individual investors. Based on certain fees charged to the plan, Voya 'potentially earns over $1 billion in excessive compensation at the expense of the individual plans and their participants,' the lawsuit said." [Goetz v. Voya Financial, Inc., No. 17-1289 (D. Del., complaint filed Sept. 8, 2017)]
Bloomberg BNA

401(k)/403(b) Loan Borrowers: Check Your Paystubs!
"[T]he employer deducted none of the loan repayments from Ms. Frias' paychecks while she was on leave. Ms. Frias did not know of this failure until she returned to work ... She immediately made a $1,000 payment ... and authorized an increase in her repayments ... [T]he plan's record keeper accepted all loan repayments and in July 2014 wrote Mrs. Frias that her loan had been repaid in full. But in 2012 Mutual of America issued a Form 1099-R, reporting a deemed distribution because of the late ... loan repayment.... The tax court disagreed with Ms. Frias that a deemed distribution should not have been reported because she was on an unpaid leave of absence." [ Louelia Salomon Frias v. Comm'r , TC Memo 2017-139 (July 11, 2017)]
Foley & Lardner LLP

IRS Modifies Preapproved Retirement Plan Program
"The modifications are designed to further the IRS's stated intention to encourage sponsors of individually designed plans to transition to a preapproved plan format. However, the changes are relatively modest and most large plan sponsors will likely find other ways to mitigate their higher compliance risk since the curtailment of the individually designed determination letter program. The IRS plans to continue enhancing and expanding the preapproved plan program 'in whole or in part, from time to time, with some of the changes based on comments from program users."
Willis Towers Watson

SPARK Forum - November 5-7, 2017 -- The Breakers, Palm Beach, FL

Join us at the retirement services industry's leading event for top marketing, sales, administration and record keeping professionals. Comprehensive agenda to meet the needs of 401(k) Plan Providers, Financial Advisors and Third Party Administrators.

Proposed Legislation Would Allow Penalty-Free 401(k) Withdrawals for Victims of Hurricanes Harvey and Irma
"Federal lawmakers are considering a proposal to allow victims of Tropical Storms Irma and Harvey to withdraw money from their retirement accounts to rebuild their homes and lives without incurring penalties. Rep. Kevin Brady, R-Texas, is one of several lawmakers reportedly considering introducing a bill that would tweak the current tax code to aid victims."
USA TODAY

401(k) Contribution Limits: A Walk Down Memory Lane
"[T]he 401(k) plan has become the primary tax-deferral retirement savings vehicle in the United States... [This article looks] at the historical limits [to] see how they have evolved from allowing employees to defer up to the annual addition limit to limiting employee contributions to a portion of the permitted contribution total, then gradually increasing the gap between the total contribution limit and the deferral limits."
Belfint Lyons & Shuman, CPAs

Reputation Rather Than Fees Drives Most IRA-to-IRA Transfers
"16% of IRA owners switched to another firm because it was recommended by a friend or family member. This push was stronger among men (32%) than it was among women (24%).... 13% of IRA owners are about as likely to say that reputation and recommendations drew them to a specific IRA company as they are to say that they had an existing relationship with that company."
planadviser

IRA Balances, Contributions, Rollovers, Withdrawals, and Asset Allocation: 2015 Update of the EBRI IRA Database (PDF)
44 pages. "The average IRA account balance in the database was $99,017 at year-end 2015 and the average IRA individual balance (combining all accounts owned by the individual) was $125,045.... The overall IRA withdrawal percentage was largely driven by activity among individuals ages 70-1/2 or older owning a Traditional IRA -- the group required to make withdrawals under the required minimum distribution (RMD) rules.... [A]mong owners under age 60, fewer than 12 percent of any age group had a withdrawal."
Employee Benefit Research Institute [EBRI]

The Impact of Raising Children on Retirement Security
"The cost of raising children could make it harder for parents to save for retirement. On the other hand, if parents offset child-rearing expenses by spending less on themselves, they could still end up well prepared in retirement. The analysis uses the National Retirement Risk Index to look at what impact children actually have on retirement preparedness. The results show that children reduce household wealth and moderately increase the likelihood of retirement risk for older working households."
Center for Retirement Research at Boston College

Pension Funding Index, September 2017 (PDF)
"The funded status of the 100 largest corporate defined benefit pension plans decreased by $17 billion during August ... The funded status decline was only partially offset by a 0.85% investment gain and a $7 billion increase in pension assets. As of August 31, the funded ratio fell to 83.0%, down from 83.8% at the end of July. The funded ratio is now below the mark at the start of the year of 83.3%"
Milliman

Economic Policy Institute Comment Letter to DOL on Fiduciary Rule Delay (PDF)
"[EPI estimates] the cost to retirement savers of an additional 18 month delay to be between $5.5 and $16.3 billion dollars over the next 30 years, with a middle estimate of $10 .9 billion. Given the large, persistent losses suffered by retirement investors as a result of a further delay of these provisions, [EPI opposes] any delay of the full implementation and enforcement of the rule."
Economic Policy Institute

Morningstar Comment Letter to SEC: Fiduciary Rule Should Be Largely Positive for Investors
"[E]ven among experienced investors who hold investments outside of retirement accounts, most investors do not understand the distinctions between broker-dealers and Registered Investment Advisors and the conflicts of interest some financial advisors may have when recommending investments. There has also been a good deal of coverage of the recent [DOL] 'Fiduciary Rule,' mostly reporting that financial advisors are now acting in the best interests of their clients, even if they were not before. Further changes in the standards would likely further confuse investors, who have absorbed the news about the Fiduciary Rule."
Morningstar

Social Security: A Promise Breaking?
"While Social Security is not going 'bankrupt,' it's clear it will have to change in both a fundamental and disruptive way. For this reason, many financial professionals are telling their younger clients to plan on not receiving Social Security when they retire."
Fiduciary News

Text of IRS Information Release IR-2017-150: Tax Relief for Victims of Hurricane Irma; Additional Relief Planned
"Hurricane Irma victims in parts of Florida and elsewhere have until Jan. 31, 2018, to file certain individual and business tax returns and make certain tax payments ... This includes an additional filing extension for taxpayers with valid extensions that run out on Oct. 16, and businesses with extensions that run out on Sept. 15.... The IRS is offering this relief to any area designated by the Federal Emergency Management Agency (FEMA), as qualifying for individual assistance. Parts of Florida, Puerto Rico and the Virgin Islands are currently eligible, but taxpayers in localities added later to the disaster area, including those in other states, will automatically receive the same filing and payment relief.... [A]ffected individuals and businesses will have until Jan. 31, 2018, to file returns and pay any taxes that were originally due during this period."
Internal Revenue Service [IRS]

Second Circuit Holds ERISA Claim for Statutory Penalties Is Barred by One-Year Statute of Limitations
"Acknowledging that it was being asked to consider, for the first time, whether section 502(c)(1) was punitive in nature (as opposed to remedial), the Second Circuit held that this section of ERISA was punitive because the amount of the fine imposed by the District Court was both discretionary and meant to punish the ERISA administrator for its failings, rather than compensate the plaintiff for any loss.... Analyzing Connecticut's limitations periods for breach of contract and unfair trade practices, the Second Circuit ... upheld the District Court's decision dismissing Plaintiff's suit for failing to meet its one-year limitations period." [ Brown v. Rawlings Fin. Services, LLC , No. 16-3748 (2d Cir. Aug. 22, 2017) ]
Robinson & Cole LLP

How to Move Money from Employer's Old 457(b) Plan to Employer's New 457(b) Plan?
"We have an employer who wants to freeze their current 457(b) plan and start a new 457(b) plan. The employer also wants to allow participants to roll their account balances from the current 457(b) plan into the new one. The employer is tax exempt (not governmental) and the plan-to-plan transfer rules in 1.457-10(5) require that 'the participant has had a severance from employment with the transferring employer and is performing services for the entity maintaining the receiving plan.' This would seem to ruin our client's plans. Any other way?"
BenefitsLink Message Boards

OK to Limit an Alternate Payee's Permitted Forms of Benefit?
"I am looking at a DB plan with a very recent favorable determination letter; by its terms, the plan limits an alternate payee's distribution options under a separate share QDRO to less than what's available to a participant (e.g., the AP can't elect any of the joint and survivor options available to participants). Putting aside the fact that there is a favorable DL, is that permissible?"
BenefitsLink Message Boards

Proper Testing Age When Aggregating Two Plans?
"DC Plan's NRA = 65; Cash Balance Plan's NRA = 65 + 5. When combining these two plans for testing, is the testing age 65 because there is no uniform normal retirement age, in which case one uses 65? Or is it 65 + 5 because there are different uniform normal retirement ages provided, in which case one uses the latest NRA?"
BenefitsLink Message Boards

Law Students: Learn About the Practice of Employee Benefits Law and the Opportunity to Participate in Student Writing Competition American College of Employee Benefits Counsel

Cathy Baase named recipient of the Jerry Noyce Executive Health Champion Award Health Enhancement Research Organization [HERO]

Alera Group Acquires Zinn Insurance Alera Group

ICI?s Sean Collins Promoted to Chief Economist in 2018 Investment Company Institute

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