Pension & Loan Distribution Specialist
Scholz & Friends Enlightened Retirement Group, Inc.
in TX

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Voluntary Fiduciary Correction Program and Abandoned Plan Program Seminar
August 29, 2018 WEBCAST
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

Automatic Enrollment: ACA, EACA, and QACA Requirements [2018]
September 17, 2018 WEBCAST
FIS Relius Education

Partial Termination and Plan Termination
September 24, 2018 WEBCAST
FIS Relius Education

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IRS Private Ruling on Student Loan Benefit Under 401(k) Plan Likely to Fuel Interest

"This IRS ruling provides helpful comfort for employers who provide a similar program for employees who may not be able to contribute to a retirement plan on account of their obligation to make student loan repayments, or to otherwise provide an incentive for employees to repay their student loans.... [D]epending on the scope of employees eligible for such a program, compliance with applicable IRS rules, including the nondiscrimination tests, should be carefully considered." Groom Law Group

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IRS Allows Student Loan Repayments to Be Linked to 401(k) Plans

"Tying the student loan repayments to 401(k) matches could provide an inducement for young employees to join a company or firm.... Only about 4 percent of employers provide assistance in repaying student loan debt, according to [one] survey ... However, a separate survey ... found that 86 percent of young employees said they would commit to stay with their employer for five years if it helped pay off their student loans." Accounting Today

IRS Allows 401(k) Match for Student Loan Repayments

"Unlike student loan repayment (SLR) dollars given directly to employees, which are treated as taxable income, employer 401(k) contributions are not taxable. As a result, this approach achieves tax advantages like those associated with traditional tuition-reimbursement benefits but generally denied to student loan repayment benefits. A lingering question, however, has been whether this is legal." Society for Human Resource Management [SHRM]

The DOL and ESOP Trustees: There's No Love Lost

"ESOP trustees and attorneys report that in recent DOL audits, trustees have even been asked whether their process follows the 'GreatBanc Agreement.' In effect, the DOL is regulating via litigation and investigation." Findley

Delta Pilots Lose Pension Appeal Against PBGC

"The ruling ... is a blow for more than 1,700 Delta pilots who in 2015 accused the PBGC of violating federal benefits law by allegedly favoring active pilots over retirees in an attempt to keep investment returns.... The lawsuit stems from Delta's 2005 bankruptcy filing and subsequent transfer of pension liability to the PBGC." [ Lewis v. PBGC , No. 17-5068 (D.C. Cir. Aug. 21, 2018)]
Bloomberg BNA

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Duke Retirement Fee Case Spawns Second Lawsuit

"Duke University is accused of using some retirement plan assets to pay employee salaries and fringe benefits, instead of returning them to plan participants, in violation of federal benefits law.... The new lawsuit was filed by the same three workers who filed the first one. It comes nearly two months after a federal judge in the first case denied the workers' request to file a third amended lawsuit to add new claims." [Lucas v. Duke Univ., No. 18-722 (M.D.N.C. complaint filed Aug. 20, 2018)]
Bloomberg BNA

Millennials Most Confident in Savings Accounts and Want More Personal Communication

"[T]his group finds in-person meetings and phone calls to be the best way to build trust with a financial advisor.... [O]nly 17 percent of Millennials view texting and only 9 percent view social media as trust-building communications.... Despite feeling stronger than other generations that the stock market offers opportunities for financial growth, Millennials are more confident investing in savings accounts than workplace retirement plans, tax advantaged plans or real estate." Broadridge

Implied Discount Rates for the U.S. Military Blended Retirement System

"[The authors] evaluate the 2018 option for U.S. military service members to switch from the legacy defined benefit (DB) pension to the new DB/DC hybrid Blended Retirement System [and] show that the required return on the pre-retirement matching and incentives in the new system is unrealistically high.... [The authors] construct [an] analysis and a calculator that takes a financial economics perspective missing from previous analyses of the decision as well as consider the positive attributes of the Blended Retirement System. [They] conclude that those facing the 2018 choice between the two plans should favor the current DB plan if they anticipate serving 20 years." The Journal of Retirement; subscription or purchase required for full article

SEC Announces Additional Investor Roundtable in Baltimore for Main Street Investors to 'Tell Us' About Their Investor Experience

"[An] additional investor roundtable to discuss the Commission's recently proposed rules regarding the obligations of financial professionals to investors will be held in Baltimore on the evening of Sept. 20, 2018.... Six roundtable discussions already have taken place in Houston, Atlanta, Miami, Washington, D.C., Philadelphia, and Denver. In these roundtables, Main Street investors have had the opportunity to speak directly with Chairman Clayton and senior staff about the SEC's efforts to enhance retail investor protection and promote choice and access to a variety of investment services and products." U.S. Securities and Exchange Commission [SEC]

Senate HELP Subcommittee Hearing on Financial Literacy: The Starting Point for a Secure Retirement

Video of the August 21 hearing, with written testimony of witnesses: [1]  Jovita Carranza , U.S. Department of the Treasury; [2]  Vishal Jain , Prudential Financial, Inc.; [3]  Lynn Dudley , American Benefits Council; and [4]  Scott B. Astrada , Center for Responsible Lending.
Committee on Health, Education, Labor and Pensions, U.S. Senate

Calculating ADP 401(k) Fees Using Their 408(b)-2 Disclosure

"One of the largest small business 401(k) providers in the country is the payroll company ADP.... [This article will encourage a] 401(k) plan sponsor to total their ADP fees and evaluate them for 'reasonableness' -- an important 401(k) fiduciary responsibility.... Step #1 -- Confirm the ADP 408-b2 disclosure covers all of your 401(k) fees ... Step #2 -- Total ADP's direct fees ... Step #3 -- Total ADP's revenue sharing payments." Employee Fiduciary

Chicago Mulls Sale of Debt to Fill Pension Funding Hole -- Here's Why It's a Bad Idea

"Chicago is contemplating a bond sale of $10 billion to help pay down its $28 billion of unfunded pension liabilities. Its exploration of such a deal speaks to the city's dire financial straits. Chicago's general obligation bond ratings range from junk, in large part because of the pension burden, to single-A among the major credit ratings agencies, and it has struggled to fill budget gaps beyond pensions." Sunny Oh, in MarketWatch

Text of IRS Notice 2018-68: Guidance on Section 162(m) as Amended by the Tax Cuts and Job Act (PDF)

"Section 162(m)(1) generally limits the allowable deduction for a taxable year for remuneration by any publicly held corporation paid with respect to a covered employee. The [Tax Cut and Jobs Act of 2017] made significant amendments to Section 162(m), and provided a transition rule applicable to certain outstanding arrangements (commonly referred to as the grandfather rule). Stakeholders have submitted comments indicating that they would benefit from initial guidance ... on the amended rules for identifying covered employees and the operation of the grandfather rule, including when a contract will be considered materially modified so that it is no longer grandfathered. This notice addresses these limited issues. The Department of the Treasury and the [IRS] anticipate that further guidance ... will be issued in the form of proposed regulations[.]"
Internal Revenue Service [IRS]

IRS Issues Critical 162(m) Grandfathering Rules

" Notice 2018-68 provides guidance on: [1] What constitutes a written binding contract in effect on November 2, 2017 (hint, it may require a legal judgment). [2] What constitutes a material modification of a written binding contract. [3] The types of remuneration that may remain deductible (protected from the new rules under the grandfather exception). [4] The extent to which certain individuals employed in 2017 and the future will become and remain covered employees subject to the deductibility limit."
Winston & Strawn LLP

IRS Issues Initial Guidance on the Application of Section 162(m) After Tax Reform

"[T]he existence of a written binding contract on November 2, 2017, is not by itself sufficient to qualify the arrangement for the transition rule. The Notice clarifies that: Compensation is payable under a written binding contract that was in effect on November 2, 2017 only if the corporation is obligated under applicable law to pay the compensation under the contract if the employee performs services or satisfies vesting conditions.... The Section 162(m) amendments apply to a written binding contract that is renewed after November 2, 2017. [ Notice 2018-68 ] provides guidance on specific contractual terms that would result in a contract renewal and when a material modification would occur."
Thomson Reuters Practical Law

Partial Plan Termination When One of Three Participants Leaves?

Employer ABC sponsors a 401k plan. There are 3 participants. ABC sells practice location #1 of 2 to an employee Z (Non-HCE). The new owner Z does not continue the ABC Plan as a result of buying the practice location #1. Is this a partial plan termination and should Z's account in the ABC 401k be 100% vested? BenefitsLink Message Boards

Sledgehammer Penalty for Mismatched Reporting: IRS Says Rollovers Are Taxable Income

Five different participants rolled traditional IRA money into their 401(k) plans (4 separate plans, all different employers) in 2016. The 1099-Rs seem correct, showing a code G since they were all direct transfers, and zero taxable amount. Each of these individuals have received letters stating the amounts rolled over were taxable, listing the amount of tax and interest due. In at least one instance the letter even mentioned that the 1099 had a code G on it. The common denominator may be that none of these individuals reported the rollover on a personal tax return; rather than reporting the rollover with zero listed as taxable, I think it was left off the return completely. Has anyone else had a problem with the IRS issuing letters stating that an IRA rollover is taxable income? BenefitsLink Message Boards

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