Defined Benefits Client Relationship Manager
Goldleaf Partners
in MN, NC, Telecommute

Sr. 401(k) Plan Administrator
Guidant Financial
in AZ, FL, ID, NC

Pension Plan Onboarding Coordinator
Ascensus
in NJ

Retirement System Administrator (Senior Principal Financial Analyst)
Alameda-Contra Costa Transit District
in CA

Senior Retirement Plan Consultant - ERISA
Nationwide
in OH

Retirement Plan Consultant
DWC - The 401K Experts
Telecommute

Implementation Consultant
DWC - The 401K Experts
Telecommute

Project Manager
AIG
in TX

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Legal & Regulatory Update for Retirement Plan Professionals
September 20, 2018 in CA
Western Pension & Benefits Council - Orange County Chapter

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Text of PBGC Submission for OMB Approval: Survey of Multiemployer Pension Plan Withdrawal Liability Information

"PBGC is proposing to collect information about withdrawal liability that is owed by withdrawn employers of terminated and insolvent multiemployer pension plans.... On June 21, 2018, PBGC published a notice of its intent to request OMB approval of [a] survey of multiemployer pension plan withdrawal liability information ... No comments were received on the proposed submission of information collection. PBGC is requesting that OMB approve PBGC's use of this survey for three years."
Pension Benefit Guaranty Corporation [PBGC]

Don't let lost participants stop your plan termination process.

PBI's Fiduciary Locate Service ensures you have all the documentation guidance set forth by the DOL, IRS and PBGC. Contact us now to ensure your diligence obligation is completed and you can move ahead with your plan termination by year end.

IRS Eases Restriction on Student Loan Repayment Benefit in 401(k) Plans

"Historically, the contingent benefit rule ... has restricted plan sponsors from making any benefit, other than matching contributions, conditioned (directly or indirectly) upon the employee electing to make (or not) deferrals in a 401(k) plan. As a result, many plan sponsors struggled to implement a student loan program that coordinates with the 401(k) plan. [ Private Letter Ruling 201833012 ] provides some relief for plan sponsors seeking to implement such a benefit."
Callan

States May Escheat IRAs, But Who Gets the Tax Bill? (PDF)

"[ Rev. Rul. 2018-17 states] that the escheat of a traditional individual retirement account or annuity over to a state unclaimed property fund will now be subject to federal tax withholding and reporting. Escheat will be treated as a 'designated distribution' to the IRA owner subject to withholding as a nonperiodic distribution at a 10 percent rate absent a withholding election by the IRA owner, and reporting on Form 1099-R."
Eversheds Sutherland, via Law360

Claims in T. Rowe Price Self-Dealing Suit Survive Motions to Dismiss

"Claims that survived included fiduciaries breached their duties of loyalty and prudence in their selection and monitoring of investments, fiduciaries failed to monitor other fiduciaries, plan trustees failed to remedy actions of predecessors, and the fiduciaries engaged in prohibited transactions." [ Feinberg v. T. Rowe Price , No. 17-427 (D. Md. Aug. 20, 2018)]
planadviser

Charles Schwab 2018 401(k) Participant Study (PDF)

17 presentation slides. "Two in three participants would sacrifice past spending to save more for retirement ... Unexpected expenses and quality of life spending are the top obstacles to saving for retirement ... Saving enough for a comfortable retirement is the top source of financial stress for participants ... Participants believe their quality of life in retirement will be better than that of both the previous and the next generation[.]" Charles Schwab

Now is a great time to join Worldwide Employee Benefits Network (WEB)

Worldwide Employee Benefits Network represents more than 30 areas of expertise within the Benefits Industry. Join today .

Defined Contribution Plan Participants' Activities, First Quarter 2018 (PDF)

"Defined contribution (DC) plan withdrawal activity in the first quarter of 2018 remained low and was similar to the first quarter in the prior year.... The commitment to contribution activity in 2018:Q1 continued at the high rate observed in 2017:Q1.... Most DC plan participants stayed the course with their asset allocations as stock values edged down during the first three months of the year.... DC plan participants' loan activity edged down in the first quarter of 2018, following a seasonal pattern observed over the past several years." Investment Company Institute [ICI]

Changes to State Mandatory IRAs Help Employers Comply (PDF)

"Oregon recently indicated plans to integrate employer Form 5500 filings with its own registration program starting in December 2018.... [T]he governor of Illinois amended its Secure Choice program, changing the retirement law from saying employers 'shall' offer Secure Choice to 'may.' This seems to take away the mandate entirely." Lockton

Single Premium Pension Buy-out Sales Exceeds $8.2 Billion in the Second Quarter 2018

"U.S. single premium pension buy-out product sales surpassed $8.2 billion in the second quarter 2018, more than doubling the sales totals in the second quarter 2017. This is the 13th consecutive quarter of sales over $1 billion and the highest second-quarter results on record for the past 15 years ... Year-to-date, buy-out sales were $9.6 billion, 76 percent higher than prior year." LIMRA

Strategies to Manage Increasing Pension Costs for California Cities

"Changes in the actuarial assumptions used by CalPERS ... will lead to even higher employer rates ... Before PEPRA, negotiating a second tier of benefits was a common tool available to employers.... Public employees are very resistant to changes that could reduce their benefits.... Strategies to consider: [1] Share more of the burden with employees.... [2] Reduce 'PERSable' items.... [3] Restructure retiree health benefits." Liebert Cassidy Whitmore, via Western City magazine

Michigan Law Requires More Disclosure from Local Governments

"Some of the disclosure information will be available from various financial and actuarial reports that are already prepared each year for the units, some information is new with this law and will require the units to have additional work done by service providers ... For both retirement health systems and pension systems, if a unit is determined to have a system that is underfunded, it will be required to establish a corrective action plan. For fiscal years ending before December 31, 2017, the first reporting of funded status to the Treasury is due by six months after the end of the fiscal year, but no sooner than January 31, 2018." Watkins Ross

IRS Issues Key Guidance on Amended Code Section 162(m)

"Public companies must now carefully track any and all covered employees and those employees (and former employees) who may be determined to be covered employees at the end of the year, even if their employment terminates midyear, maintain a clear historical record, and retain that information until all payments of applicable remuneration have been made to the employee and his or her beneficiaries post-termination." Winston & Strawn LLP

IRS Notice Provides Initial 162(m) Guidance, Narrows Grandfathering Provision

"[ Notice 2018-68 ] provides examples in which the corporation retains a right to terminate or amend contribution or accrual of payments on a go-forward basis and clarifies that a portion of the total future payments may be considered binding under applicable law as of November 2, 2017 (e.g., the non-forfeitable amount accrued as of that date) and therefore only a portion of the total payments may be considered grandfathered while the remainder is not."
KPMG

IRS Issues Guidance on Section 162(m), as Amended by the 2017 Tax Act

"[If] negative discretion language exists in plan documents that govern compensation payments, the underlying compensation grants would be eligible for the Grandfather Rule only if taxpayers could affirmatively demonstrate that a court would not uphold the negative discretion language and that, in effect, the compensation committee has no authority under state law to reduce the compensation payable once the performance goals are met. Traditional 'bad act' or claw-back provisions presumably do not affect the Grandfather Rule." EY

Guidance on Section 162(m) 'Grandfather' Rules: IRS Torpedoes Negative Discretion Terms in Plans

"This conclusion penalizes taxpayers for utilizing negative discretion in performance-based plans, which is viewed as a best practice in designing compensation plans.... What is particularly punitive about the IRS position is that ... most plans provide that the compensation committee has unlimited negative discretion to reduce performance-based awards. There is no minimum bonus that is guaranteed and not subject to reduction. In arrangements such as these, any bonus paid will not be grandfathered because the plan creates no written binding contract." Wilkins Finston Friedman Law Group LLP

Matches Contributed in Current Year But ACP Test Failed in Prior Year

Client elected to make a matching contribution for the current plan year. For the prior plan year, the client chose not to contribute a match. Plan uses prior year testing. Because the prior year match rate for NHCEs was 0%, all match received by HCEs this year needs to be returned due to a failed ACP test; do you agree? Note that this is NOT the first year of the plan's existence, nor the first time that the client is contributing a match. BenefitsLink Message Boards

Can 401(k) Plan Exclude Employee Rewards from 'Compensation'?

We have a 401(k) plan that defines Compensation as Section 3401 comp, excluding:

• 414(s) Safe Harbor Exclusions
• Differential Wage Payments
• Stock-related compensation
• Nonqualified deferred compensation payments

Employees Get Advanced Earnings; What If Elective Deferrals Not Deducted?

Question about employees who are allowed to receive an advance on their earnings. What to do when the employee has over-advanced and will be negative (in the hole)? This is common in the transportation industry. Should the employer honor the elected deferral or take whatever earnings are available to cover that advance debt? We have a qualified plan that allows both pre- and post-tax deferrals. BenefitsLink Message Boards

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Most Popular Items in the Previous Issue

Text of IRS Notice 2018-69: Extension of Temporary Nondiscrimination Relief for Closed (Frozen) Defined Benefit Plans through 2019 (PDF) Internal Revenue Service [IRS]

Make Sure You Take Sufficient Steps to Find Missing Participants HR Daily Advisor

2018 National Cash Balance Research Report (PDF) Kravitz

Press Releases

EACH Enterprise and Chatham Partners Announce Joint Initiative EACH Enterprise

Transamerica Entities to Pay $97 Million to Investors Relating to Errors in Quantitative Investment Models U.S. Securities and Exchange Commission [SEC]

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