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IRS Clarifies Federal Tax Reporting and Withholding for Escheated Funds from IRAs

"The IRA owner's ability to reclaim these monies from the state unclaimed property fund is noted in the ruling but does not figure in the analysis. For Form 1099-R reporting, the ruling does not prescribe a unique reporting code or other designation that the IRA has been escheated to the state. The ruling by its terms is inapplicable to simplified employee pensions (SEPs), SIMPLE-IRAs and deemed IRAs." Eversheds Sutherland

Proposed Legislation Could Allow Small Plans to Duck Fiduciary Responsibility

"H.R. 4523 -- also known as the Automatic Retirement Plan Act of 2017 -- was introduced by Rep. Richie Neal (D-MA) last December. Among other elements (including requiring all employers above a certain size to offer a retirement plan with specific conditions), employers with fewer than 100 employees who participate in a new type of multiple employer plan (MEP) would basically be absolved of all fiduciary responsibility -- including no responsibility for the selection and monitoring of the Pooled Plan Provider (PEP)." National Association of Plan Advisors [NAPA]

Is the Suitability Standard Still Suitable?

"The [NAIC] Annuity Suitability Working Group is ... [attempting] to finalize an annuity transactions model law to send to the states for adoption. On one side, liberal states such as New York and California were joined by consumer groups in arguing for tougher standards. The other side featured conservative states such as Iowa and Idaho and industry groups who say suitability is working well." InsuranceNewsNet.com

SEC Fiduciary Rule Applies to Workplace Plan Advice

"[T]he proposed SEC rules probably don't apply to advice given to retirement plan sponsors but would apply to advice given to participants in a workplace plan, especially as it pertains to rolling over their retirement accounts into an individual retirement account.... Where the SEC's proposed rulemaking gets confusing is that it uses much of the terminology that was part of the DoL's fiduciary rule, without saying they want advisers to be fiduciaries." Employee Benefit News

Self-Directed Brokerage Account Indicators: Schwab's Key Observations for First Quarter 2018

10 pages. "The average account balance for all participants in the Schwab Personal Choice Retirement Account (PCRA) was up 23.4% to $261,900 from $212,178 a year ago and slightly down by .3% from last quarter. Trading volumes were up 21% from last quarter to 7.8 average trades per quarter from 6.4.... Mutual Funds held the majority of participant assets and were slightly up at 38.2%.... Large Cap Stock Funds had the largest allocation at 28.0%, down 2% from last year.... Millenials had the lowest PCRA balance at $59,548, followed by Gen X at $188,176 and Baby Boomers at $359,568, very similar to last quarter." Charles Schwab

Pension Funding's 7-Year Itch

"What the [Pension Protection Act (PPA)] actually said was that the original funding shortfall of 2008 would be amortized over seven years as part of the annual funding requirement.... The 2012 credit base that has reduced contributions for many through 2018 will drop out of the 2019 calculation, resulting in a higher contribution requirement even if the funding shortfall doesn't increase next year." The Principal Blog

Assessing the Risk of Fiscal Distress for Public Pensions: A Stress Test Analysis of 10 State Funds (PDF)

147 pages. "This paper summarizes the results of a stress test simulation analysis on the largest government pension plans in 10 states under different economic scenarios and assumptions for policymaker behavior.... [S]tates with well-funded pension systems have achieved this result through a combination of fiscal discipline and adherence to policies specifically designed to manage the impact of market volatility in low-return scenarios." The Pew Charitable Trusts

California Proposal Would Make Member Agencies Liable for Pension Obligations of Joint Powers Authority

"The California Legislature is considering legislation that would, if enacted, prohibit public agencies that form a Joint Powers Authority (JPA) from contracting out of liability for the JPA's pension obligations.... CalPERS appears to be more concerned with retroactive rather than future application of these JPA financial liability requirements.... CalPERS can already refuse to contract with an employer if neither the state nor a political subdivision is liable for its debts." Hanson Bridgett LLP

Taxpayer Lawsuit Aims to Strike Down CalSavers Retirement Plan

"The Howard Jarvis Taxpayers Association contends the so-called CalSavers plan violates a federal consumer protection law that sets standards for retirement plans offered by employers.... The advocacy group's director, Jon Coupal, also argues the state is incapable of managing the program ..., pointing to the state's two underfunded public pension systems as evidence that private-sector workers are better off finding their own retirement accounts." The Sacramento Bee

Hardship Request Involving Principal Residence: Participant Wants to Buy Ownership Interest of Soon-to-Be Ex-Spouse

A participant requested a hardship distribution to buy out his soon to be ex-spouse from half of the principal residence. There is no DRO involved here at this point. The plan sponsor indicated they didn't see any problem with this request as a "purchase of principal residence" purpose for hardship. The Plan Sponsor believes this is a purchase of his principal residence from the other owner. I realize a DRO request is the way to go here for many reasons, but my question is, in the general case can a participant request and obtain a hardship withdrawal to buy out a second owner of a principal residence? He will be 100% owner at the end of the transaction. BenefitsLink Message Boards

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Provident Trust Group Listed as Wealth Advisor 2018 Best IRA Custodian Ascensus

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