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Text of PBGC Interest Rate Update for Benefits Payable in Terminated Single-Employer Plans, July and Third Quarter 2018

"The third quarter 2018 interest assumptions under the allocation regulation will be 2.53 percent for the first 25 years following the valuation date and 2.64 percent thereafter. In comparison with the interest assumptions in effect for the second quarter of 2018, these interest assumptions represent an increase of 5 years in the select period ... an increase of 0.26 percent in the select rate, and an increase of 0.05 percent in the ultimate rate ... The July 2018 interest assumptions under the benefit payments regulation will be 1.25 percent for the period during which a benefit is in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. In comparison with the interest assumptions in effect for June 2018, these interest assumptions represent no change in the immediate rate and no changes in i1, i2, or i3." Pension Benefit Guaranty Corporation [PBGC]

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The IRS Employee Plans Work Plan for 2018 -- A Compliance Checklist for Plan Sponsors

"The Work Plan makes clear the IRS wants to facilitate the [Voluntary Compliance Program (VCP)] by providing more online guidance to the public on practices that lead to quick closures of VCP applications. The IRS expectation is that more applications will be perfected before they are submitted.... The IRS continues to develop data driven models to produce targets for examination by plan type and by sampling results of data queries ... The IRS continues to pursue referrals received from sources within and outside the IRS that allege possible non-compliance by a retirement plan." Fiduciary Plan Governance, LLC

It's Official: DOL Fiduciary Rule Is Dead

"[On June 13], the last deadline for resuscitating the fiduciary rule passed when the government declined to ask the U.S. Supreme court to reconsider the appeals court's decision. The prospect of holding advisers accountable to retirement savers hasn't disappeared entirely, though. The [SEC] is considering its own version of the fiduciary rule, known as the best-interest rule." Bloomberg

Minimizing Fiduciary Liability Exposure for 401(k) Plan Sponsors

"The incremental fees for an actively managed mutual fund relative to its incremental returns should always be compared to the fees of a comparable index fund relative to its returns. When you do this, you'll quickly see that the incremental fees for active management are really, really high -- on average, over 100% of incremental returns." The Prudent Investment Fiduciary Rules

Does Age Impact Usage of Default Investments in Defined Contribution Plans?

"[W]hile older workers are using default investments less than younger workers, age is not really the primary attribute driving this behavior ... [D]efault investments created for older participants should be calibrated to the types of participants more likely to use them -- specifically, shorter plan tenures, lower savings rates, lower salaries, and lower balances." Morningstar

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Are Multiple Employer Plans Right for You?

"While 92 percent of large businesses with 500 or more employees routinely offer a 401(k) or similar plan, only 53 percent of small to mid-sized firms with 5 to 250 employees do.... [C]ost was cited by 37 percent and lack of organizational resources by 22 percent of companies as reasons for not offering a retirement savings plan. MEPs could eliminate these obstacles and make it easier for firms to offer a 401(k), 403(b) or a comparable plan." PlanPILOT

Ninth Circuit's Expansion of Successor Liability May Make Asset Purchases More Costly

"Purchasers can no longer rely on the representations of sellers regarding the funded status of multiemployer pension plans and whether withdrawal liability exists. Under a constructive notice standard, asset purchasers are deemed to have knowledge of facts which reasonable care or diligence would disclose." [ Heavenly Hana LLC v. Hotel Union & Hotel Industry of Hawaii Pension Plan , No. 16-15481 (9th Cir. June 1, 2018)]
Ogletree Deakins

The Multiemployer Pension Plan Crisis: Businesses and Jobs at Risk (PDF)

15 pages. "The funding problems that currently exist are unprecedented in the more than 70 years that these plans have been in existence. While most of the focus, and rightly so, has been on the catastrophic effect pension plan insolvencies will have on plan participants ... the employers that employ these participants (and in many cases, that employ many more people than just the plan participants) are at extreme risk of being put out of business." U.S. Chamber of Commerce

Top 10 Issues Found in 403(b) Plans

"[1] Universal availability Issues ... [2] Excess 402(g) contributions ... [3] Plan loans that violate IRC Section 72(p) ... [4] Financial hardship distribution failures ... [5] Ineligible plan sponsors ... [6] No plan document by 12-31-2009 ... [7] ERISA vs. non-ERISA ... [8] No discrimination testing ... [9] The definition of compensation in the plan document is not followed ... [10] Multiple 403(b) plans and 403(b) annuity contract limitations and correlation."
QBI

Retirement Jargon Confusion

"Fiduciary Liability Insurance vs. Fidelity Bond ... Roth Contributions vs. Roth Conversions ... Multiemployer Plans vs. Multiple Employer Plans." Cammack Retirement Group

Testimony of U.S. Chamber of Commerce to Joint Select Committee on Multiemployer Pension Plans: Employer Perspectives

"[R]escue legislation is urgently needed. Congress can no longer kick the can down the road.... Our recommendation is for long-term, low-interest loans that will protect taxpayers from financial liability.... [W]hile the PBGC may ultimately need more money, in the form of increased premiums paid by employers, these increases must be evaluated after tools to restore the solvency of these plans are put in place.... [C]omposite plans must be authorized so that healthy multi-employer plans can stay that way." U.S. Chamber of Commerce

The New Rx for Retirement: Maximizing Retirement and Health Savings (PDF)

16 pages. "[This paper] presents a savings optimization model to help determine how to allocate funds between retirement plans and HSAs for maximum spending power in retirement.... [1] The relevance of HSAs; [2] The retirement savings optimization model; [3] The savings optimization model in action; [4] Putting it all together." Great-West Financial and Empower Retirement

#MeToo: Sexual Harassment and Executive Compensation (PDF)

10 pages. "Whether ... 2017 was a harbinger of an enduring change in employers' attitudes towards, and approaches in addressing, allegations of sexual harassment relating to key executives remains to be seen. If it is true that #TimesUp, and in particular if customers (and members of the public more generally) favor harsher treatment of executives engaged in sexual harassment or assault, compensation committees may find value in reflecting this new attitude in the structure of their companies' executive compensation programs and agreements." Utz & Lattan, LLC

NUA in KSOP; Triggering Event

Employer stock is held in a KSOP. Is Net Unrealized Appreciation treatment available in 2018 if the participant terminated employment in 2015 at age 67 but received a small ADP testing refund in March, 2016 and no other distributions have been processed? If the participant wanted to elect NUA treatment, should he have elected to take a lump sum distribution of his entire account in 2016 (the year of the small refund) because his 2015 separation from service was his triggering event, or is NUA treatment an option available in 2018? BenefitsLink Message Boards

Contents of Notice to Trustee About Allocations under Cross-Tested Plan

A plan decides upon a profit sharing contribution for 2017 that allocates a different dollar amount and percentage to each participant. This complies with the cross-tested formula in the plan document and passes testing. When preparing the notification from the employer to the Trustee, do we have to list each employee separately? Can we refer to an attachment, which would be our allocation spreadsheet? Alternatively, can we combine the 3% safe harbor and profit sharing when referencing the amount on the trustee notice? BenefitsLink Message Boards

Wrong Interest Rate Used for Participant Loans

We have two loans that were taken with an incorrect interest rate, the plan uses the prime rate plus 1%. The prime rate had changed but the loans were taken at the old loan rate. I am looking for a correction procedure to fix the loans in question but cannot find one. Do we need to re-amortize these loans at the correct rate? BenefitsLink Message Boards

Removing a Roth Deferral Option from a 401(k) Plan

Are there any legal issues with removing a Roth elective deferral option from a 401k plan? BenefitsLink Message Boards

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Press Releases

Ascensus Appoints Robert Kaplan as Chief Compliance Officer Ascensus

VisionPoint is Certified for Fiduciary Excellence Centre for Fiduciary Excellence [CEFEX]

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