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Envoy Financial
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BlueStar Retirement Services, Inc.
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Just Because You Can Design a Plan This Way Doesn't Mean You Should
November 1, 2018 WEBCAST
ASPPA College of Pension Actuaries [ACOPA]

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Claims by Bondholders Against Puerto Rico Pension System Ruled Unenforceable

"U.S. District Judge Laura Taylor Swain ... ruled that any security interest over [The Employees Retirement System of the Government of the Commonwealth of Puerto Rico (ERS)] revenues, including employer contributions, held by the bondholders was 'invalidated and unenforceable,' since Congress gave authority to the Financial Oversight and Management Board to make changes.... ERS, the largest public retirement fund, has no assets and is funding benefits as revenues come in." [ In re The Financial Oversight and Management Board for Puerto Rico , No. 17-213 (D.P.R. Aug. 17, 2018)]
Pensions & Investments

Transform your business relationship with your Plan Sponsors!

Discover how Gemini Web Portal Technology improves your year-end data collection. Reduce manual effort, increase process efficiency and exchange data securely with your Plan Sponsors via a customized website tailored to their needs. See video here!

Voya Again Wins Dismissal of Stable Value ERISA Lawsuit

"[T]he district court's second take concludes the lead plaintiff's underlying allegations do not provide 'more than a sheer possibility that a defendant has acted unlawfully.'... [T]he decision points out ... [that] ERISA requires a fiduciary's 'complete loyalty,' but fiduciaries 'do not violate their duties to a pension plan by taking action which, after careful and impartial investigation, they reasonably conclude is best to promote the interests of participants and beneficiaries,' even if the decision 'incidentally benefits' the fiduciary. " [ Dezelan v. Voya Retirement Ins. and Annuity Co. , No. 16-1251 (D. Conn. Aug. 17, 2018)]
planadviser

Bank Not Required to Disgorge Alleged Profits from Improperly Commingling DC and DB Plan Funds

"[T]he trial court rejected the participants' claim that they were entitled to a share of the return on all the commingled funds, in proportion to the share of the commingled fund comprised of the unlawfully obtained assets[.]" [ Pender v. Bank of America Corp. , No. 17-1485 (4th Cir. June 5, 2018)]
Wolters Kluwer Law & Business

IRS Approves 401(k) Plan Strategy to Tackle Student Loan Debt

"How does the student loan repayment [SLR] program work? ... What are the benefits of an SLR program? ... What does the IRS ruling say about SLR programs? ... What issues remain for employers who want to adopt an SLR program?" Bradley

Few Sponsors Very Confident in Workers' Retirement Security

"Only 16% of employers are very confident their employees will achieve a financially secure retirement, and just 18% of workers share the same view ... Among employers that do not offer a 401(k) or similar plan, only 27% plan to offer one within the next two years. Asked why they do not offer a plan, 58% say they are not big enough, 41% say they are worried about the cost, and 22% say their employees are not interested." PLANSPONSOR

SPARK Forum - November 4-6, 2018 -- 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 includes topics of interest to Record Keepers, 401(k) Plan Providers, Financial Advisors and Cyber Security Professionals.

How Do Fees Affect Plans' Ability to Beat Their Benchmarks?

"The analysis, using new data for 2011-2016, found that plans that paid higher fees experienced worse performance relative to their benchmarks. This finding held across all major asset classes, but was particularly pronounced for alternative assets, such as private equity and hedge funds." Center for Retirement Research at Boston College

Can Arbitration Shield You from 401(k) Class Actions?

"To increase their chances of prevailing, plan sponsors could put mandatory arbitration language in their plan documents and clearly communicate those provisions in their summary plan description booklets.... However, a court might still conclude that such provisions were not enforceable because ERISA has its own claims and appeals procedures and no specific mention of arbitration.... Arbitrators tend to try to split things down the middle, which is typically not the way to resolve ERISA claims.... There may be no right to appeal a wrong arbitration decision involving a 401(k) plan." Cohen & Buckmann, P.C.

SEC Takes Stance on Advisor Conduct

"[T]he regulation of advice has been uneven and confusing. Divergent regulations for broker/dealers and RIAs have been overshadowed by converging business models.... That mismatch is a big part of the reason many in industry and advocacy groups called on the SEC to propose a uniform standard of advice. But the SEC did not do so. Rather, it proposed raising the standard of care for broker/dealers, while maintaining a different, higher standard for RIAs." Morningstar Advisor

Is It Time to Ramp Up Defined Benefit Plan Contributions?

"[M]inimum required contributions may rise over the next several years.... The dynamics that have resulted in muted pension contributions in recent years have been largely beneficial to plan sponsors by allowing cash to be allocated to other company uses. But this has also created a bit of complacency and unrealistic estimates of expected future contributions." CFO

Fixed Indexed Annuities Shatter Sales Record in Second Quarter 2018

"Fixed indexed annuity (FIA) sales were $17.6 billion, 17 percent higher than second quarter 2016 and 21 percent higher than first quarter sales results ... In the first half of 2018, FIA sales were 32.1 billion, 14 percent higher than the first half of 2017. Fee-based FIA sales were $67 million in the second quarter. Fee-based FIAs represent than one-half of one percent of the total FIA market." LIMRA

Whose Life Expectancy Is Used, When a Second-Generation (Successor) Beneficiary Inherits an IRA?

"Q: An individual inherited an IRA from her father, and had been taking distributions over her single life expectancy.... She (the original beneficiary) subsequently died, and her son now has to take distributions from the IRA which he has inherited. Should he take distributions over his life expectancy or over his mother's life expectancy? A: [H]is mother's life expectancy. The mother's life expectancy is determined in the year after the grandfather died, and 1 (one) is subtracted for each year that has passed. A second generation beneficiary's (or successor beneficiary's) life expectancy is never used to determine distributions from an [inherited IRA]." Appleby Retirement Dictionary

Am I Too Old to Convert My IRA to a Roth IRA?

"Given your life expectancy as you get older, say, after 70-1/2, the benefit you'll reap in your life expectancy won't be worth the upfront cost, probably.... But the real benefit if you are doing it as an older person is for the next generation, for you children or grandchildren, because the power of the Roth IRA can grow over their life expectancy." Morningstar Advisor

It's Time for Financial Advice Industry and Regulators to 'Pick a Lane'

"Why is the SEC living in the land of ambiguity? Lead, follow, or step aside.... Ken Fisher ... nailed it in his recent interview ... 'financial advice industry needs "disharmonization",' 'clear, bright, red lines so investors know exactly what they are getting. Advisers versus Advisors language is a start.' ... [The SEC shouldn't] do this in tentative baby steps. Pick a lane, folks." MoneyTrack's Pam Krueger, Interviewed in Fiduciary News

Text of IRS Notice 2018-67: Request for Comments Regarding the Calculation of Unrelated Business Taxable Income Under Section 512(a)(6) for Exempt Organizations with More Than One Unrelated Trade or Business; Interim and Transition Rules (PDF)

36 pages. " Section 512(a)(6) requires an organization subject to the unrelated business income tax under Section 511, with more than one unrelated trade or business, to calculate unrelated business taxable income (UBTI) separately with respect to each trade or business. This notice discusses, and solicits comments regarding, various issues arising under Section 512(a)(6) and sets forth interim guidance and transition rules relating to that section.... [B]ecause ... VEBAs, and SUBs are taxed differently than other exempt organizations under Section 511, the Treasury Department and the IRS request comments regarding how these exempt organizations' investment income should be treated for purposes of Section 512(a)(6).... [T]he Treasury Department and the IRS do not believe that the provision of the fringe benefits described in Section 512(a)(7) is an unrelated trade or business. Accordingly, any amount included in UBTI under Section 512(a)(7) is not subject to Section 512(a)(6)."
Internal Revenue Service [IRS]

Financial Wellness Programs: One Size Doesn't Fit All

"Financial wellness programs may not be the right fit for some organizations. There may be a moral imperative that drives commitment for some, while others require a business imperative to justify the investment. Regardless of the rationale, a logical starting point would be for an organization to survey its employees and assess the need." Strategic Benefit Services

Financial Wellness Programs Can Benefit from a Group Long-Term Care Option (PDF)

"For Gen-Xers and Baby Boomers, 'retirement readiness' is a pressing concern, and includes addressing retirement income, healthcare, and various related expenses.... LTC insurance can play a critical role in providing 401(k) insurance for those who see its value[.]" Employee Benefits and Wellness Excellence Presented by HR.com

What Does the CEO Pay Ratio Data Say About Pay? (PDF)

"Our analysis finds company size as measured by employee count is the primary driver of the CEO Pay Ratio; company revenue and market capitalization are secondary drivers. Deeper analysis uncovers industry trends that may provide companies additional context as they compare their CEO Pay Ratios to those of their peers. Ultimately, despite some interesting trends uncovered, analysis of the CEO Pay Ratio data provides little actionable intelligence for companies and questionable, if any, value for investors. More concerning, we find potential avenues for critics of executive pay to manipulate the data to serve their interests or constituencies." ExeQuity

Contribution Deadline for a C Corporation

For 2017, the filing deadline for a C Corporation was moved to October 15, 2018. Did that also move the deadline for making a contribution for 2017 to October 15? BenefitsLink Message Boards

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Most Popular Items in the Previous Issue

IRS Private Letter Ruling Will Help Clear the Way for 401(k) Plan Student Loan Benefits McDermott Will & Emery

IRS Weighs in on 401(k) 'Match' to Student Loan Repayments E is for ERISA

When Former Employees and their Retirement Plans Can't Find Each Other Pension Rights Center

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Cowden Associates, Inc. Hires Three Up-and-Coming Health and Benefits and Actuarial Analysts Cowden Associates, Inc.

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