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Hamilton Capital Management
in OH

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Lee Jost & Associates
in WI

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Fifth Circuit Issues Mandate Vacating the DOL Fiduciary Rule (PDF)

"Asset managers who revised subscription documents, placement agent agreements, marketing materials and other documents to take advantage of the Fiduciary Rule's 'Independent Fiduciary Exception' may begin removing that language from those documents ... Asset managers who suspended investment by IRAs and other ERISA clients that were unable to meet the requirements of the Independent Fiduciary Exception may now admit those investors to applicable products, to the extent any such investors would have been admitted prior to June 9, 2017." Fried Frank

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Indexed Annuity Issuers Seek 401(k) Plan Default Investment Role

"QDIA regulations prevent employers from using many kinds of annuities, including indexed annuities, as QDIAs in 401(k) plans and other retirement plans governed by ERISA ... Indexed annuities protect holders against market downturns and but offer the holders a chance to share in investment market growth... [M]any experts believe that the typical indeed annuity would not qualify as a QDIA ... [R]egulators could add consumer protection requirements to make an indexed annuity suitable as a QDIA, such as new disclosure and surrender charge requirements." ThinkAdvisor

Rethinking Millennial Retirement: Policy Recommendations for a Gig Economy (PDF)

43 pages. "Millennials face a myriad of challenges in saving for retirement.... In response to the lack of accessibility and portability in retirement plans for workers in the gig economy, an ever-growing sector, we propose the creation of a 'MEP IRA'.... For those who participate in the gig economy and are in or near poverty, a reformed Saver's Credit can help them start to save for retirement.... The last element of our policy proposal is an expansion of financial literacy courses and resources for college students." [This paper is the winner of WISER's 2018 iOme Challenge .]
Evan Avila, in conjunction with Women's Institute for a Secure Retirement [WISER]

Current Population Survey: Issues Continue for Retirement Plan Participation and Retiree Income Estimates

"Compared with the 2013 estimate before the questionnaire redesign, the 2016 estimate shows a reduction of 13.5 percentage points in the percentage of full-time, full-year wage and salary workers ages 21-64 participating in a retirement plan ... Since the redesign, the survey has shown ongoing, substantial declines among full-time, full-year wage and salary workers with the highest likelihoods of participating in each of four important demographic groups.... Discrepancy in the participation trend relative to another government survey ... A higher percentage reporting pension income ... Generally, higher overall reported income." Employee Benefit Research Institute [EBRI]

Summary of Enrolled Actuaries Meeting Discussion of the Pension Protection Act: Successes, Shortcomings, and Opportunities for Improvement (PDF)

"PPA assaulted pension funding at the worst possible time ... Funding Relief delayed a return to historical funded status standards ... PPA added several administrative requirements creating time consuming computations with little added value and increased exposure to errors and missed deadlines.... Employer defaults to Section 401(k) and IRA-type arrangements as the path of least resistance these past few years is producing massive waives of retirees with little retirement income security."
H. C. Foster and Company

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Lawsuit Argues Health Provider Plan Lost Its Church Plan Status

"According to the complaint, [St. Joseph Health Services of Rhode Island (SJHSRI), which prior to the 2014 asset sale, owned Fatima Hospital,] no longer operates a hospital or otherwise provides health care. Instead, SJHSRI's business consists of defending lawsuits and workers' compensation claims, collecting certain debts and receivables, paying or settling certain liabilities which were excluded from the 2014 asset sale, and, until the Receiver was appointed, administering the plan." planadviser

UPS, Teamsters Reach Tentative Deal on Master Contract

"The union said it 'negotiated substantial increases to the employer contributions to the various benefit funds, and increased pension benefits under the part-time UPS Pension Plan and the full-time UPS/IBT Pension Plan.' It's not yet clear what those contributions will look like." Bloomberg BNA

An Actuarial Perspective on the 2018 Social Security Trustees Report (PDF)

10 pages. "Social Security's short-range OASDI financial projection is worse than the projection made a year ago.... Moving the short-range estimate period forward one year reduced the fund ratio by 18 percentage points ... The actuarial balance worsened, from a negative 2.83 percent to a negative 2.84 percent, from the 2017 to the 2018 Trustees Report." American Academy of Actuaries

FINRA Hits Betterment with $400,000 Fine

"The Financial Industry Regulatory Authority has imposed a $400,000 fine on robo-advisor Betterment Securities for a series of supervisory and compliance issues, including problems with how it protected customers as it was growing at a rapid pace -- from about $120,000 in sales in 2011 to over $1.2 million in 2014." ThinkAdvisor

Stop Politicizing Pensions: The Sole Duty of Politicians Should Be to Deliver Maximum Return to Retirees

"In the latest movement to force political agendas into the management of public pension funds, [Mayor de Blasio and City Controller Scott Stringer] proposed in January 2018 to divest $5 billion in energy stocks from the city's pension funds.... New York City stands to lose $25 million immediately in frictional costs, and up to $1.5 billion over the next 50 years if it goes ahead with this plan." Christopher Bancroft Burnham, via New York Daily News

Primary Components to an Effective Long Term Incentive Plan (PDF)

"[1] Determine business drivers that trigger awards....[2] Determine what level of executive should be eligible to participate.... [3] Determine Share Rates.... [4] Allocation of Award among Eligible Group.... [5] Award Distribution." Fulcrum Partners LLC

Running ACP Test with Safe Harbor Match and a Discretionary Match

The ERISA Handbook tells me that I need to combine the match under both the safe harbor formula (basic formula; 100% of first 3%, 50% of next 2%) and the discretionary match to see if it meets the ACP safe harbor requirements. I don't understand why. If someone defers 5% and a plan does the basic safe harbor match formula but also wants to do a 100% of the first 4% discretionary match, would ACP testing need to be done or does it meet the ACP Safe Harbor Requirements? Do I apply the 6% rule (matching contributions may not be made with respect to elective deferrals in excess of 6% of comp) independently to the discretionary match, or do I need to combine the safe harbor and the discretionary together and then apply the 6% rule? BenefitsLink Message Boards

Prohibited Transaction Due to Payment into Plan Sponsor's Checking Account -- So What?

Pooled account. Plan apparently didn't have a checking account. Check for $X sent to the Trustee to use in making a distribution to a terminated participant. Trustee deposited it into the EMPLOYER's checking account and simultaneously wrote a check to the terminated participant for the appropriate amount, and submitted the 20% withholding to the IRS. Yeah, it's a PT, but what is the penalty? There is zero loss or gain to any party involved, and no "amount involved" if one were to try to pay a 15% excise tax anyway. What do folks do with this on a practical level, rather than a theoretical level? Or is there an exemption I'm missing? BenefitsLink Message Boards

Self-Employed: What's Net Income for Purposes of 401(k) Plan?

The client sponsoring the 401k plan is a partnership. Throughout the year, the partners deferred on their draw and calculated the 3% safe harbor calculations. They put in the maximum of $24,000 (both over age 50). When I received their K-1s, box 14a only had $24,000 as self-employment earnings. There's a Section 179 deduction of $2,035. So I see a problem. Am I wrong in using box 14a (Schedule K-1, Form 1065)? They had draws of $192,000 and $108,000 so their 3% was calculated by their payroll department based on the draws.
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