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Public Pension Mortality Study: An Overview of the Exposure Draft Report
September 6, 2018 WEBCAST
Society of Actuaries

Mo Money, Mo Problems: Lessons from Fee Litigation and Best Practices
September 19, 2018 in MO
Worldwide Employee Benefits Network [WEB] - St. Louis Chapter

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Text of FASB Accounting Standards Update 2018-14: Changes to the Disclosure Requirements for Defined Benefit Plans

39 pages. "The amendments in this Update modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. [Certain] disclosure requirements are removed from Subtopic 715-20 ... The following disclosure requirements are added to Subtopic 715-20: [1] The weighted-average interest crediting rates for cash balance plans and other plans with promised interest crediting rates. [2] An explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. The amendments in this Update also clarify the disclosure requirements in paragraph 715-20-50-3[.]"
Financial Accounting Standards Board [FASB]

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.

IRS Private Letter Ruling OKs 401(k)/Student Loan Repayment Program But Issues Remain

"[1] Participant student loan repayments will not count toward [ADP] testing and the related employer non-elective contributions will not count towards [ACP] testing.... [2] The right to receive a non-elective contribution as a result of making a student loan repayment must be both currently and effectively available on a nondiscriminatory basis.... [3] [T]he fact that [generally non-highly compensated employees] are making student loan repayments rather than 401(k) elective contributions may negatively affect ADP or ACP testing results, reducing the amount that could be contributed by/for highly compensated employees.... [4] [S]tudent loan repayments ... would generally have to be made on an after-tax basis. As a result ... student loan repayments will, in effect, 'cost more' (to the participant) than regular 401(k) contributions." October Three Consulting

IRS Extends Temporary Nondiscrimination Relief for Closed Defined Benefit Plans Through 2019

"[In Notice 2018-69 ,] IRS is extending nondiscrimination relief for an additional year because it anticipates that the final regulations under Code Section 401(a)(4) providing nondiscrimination relief for closed defined benefit plans will not be published in time for plan sponsors to make plan design decisions before the expiration of the nondiscrimination relief provided under Notice 2014-5 , as extended by Notice 2017-45."
Thomson Reuters Practical Law

IRS Publication 4286: SARSEP Checklist (PDF)

Revised Aug. 2018. "Every year it's important to review the requirements for operating your Salary Reduction Simplified Employee Pension (SARSEP) plan. Use this checklist to help you keep your plan in compliance with many important rules. For additional information (including examples) on how to find, fix and avoid each mistake click on [a link in the text of this Checklist].' " Internal Revenue Service [IRS]

DOL Fiduciary Rule Post-Mortem: How Long Will the Taste Linger?

"The DOL's Fiduciary Rule has been vacated. In its stead we now have the SEC's 'Best Interest' proposal.... The concept of 'fiduciary' has moved from the regulators domain to the marketer's tool kit. There, it will be more difficult to ignore." Fiduciary News

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Duke University Case Reshuffles Human Resources Priorities

"Revenue sharing arrangements like those revealed in the Duke case are common and widespread throughout the higher education community, according to many legal observers. Scores of institutions that sponsor 403(b) plans adhere to such a revenue sharing design strategy in order to augment their human resources budgets.... The Duke University cases, combined with similar lawsuits filed against dozens of other institutions, have provided the plaintiff bar with a thorough education about the flaws that exist in multi-vendor 403(b) plan models." Roland|Criss

Voluntary Supplemental 403(b) Created in Illinois

"[ Public Act 100-0769 provides] that: [1] the public employee benefit system shall offer a defined contribution benefit to its active members; [2] the defined contribution benefit shall collect optional employee and optional employer contributions into an account and shall offer investment options to participants; ... [3] the system shall utilize generally accepted practices in creating and maintaining the benefit for the participants' best interest; ... and [4] the system must report annually on participation in the benefit and make that report public."
National Tax-Deferred Savings Association [NTSA]

Understanding Risk in Governmental Pension Plans (PDF)

"[T]he investment risk appetite of the plan sponsor factors into the actuarial determination of contributions through the setting of actuarial assumptions. The assumptions employed in an actuarial valuation, which determine the contribution recommendation, generally fall in one of two categories: economic assumptions or demographic assumptions" Findley

Unfunded Liabilities for 50 States Jump to $1.6 Trillion in Fiscal Year 2017

"Total ... unfunded liabilities for fiscal year 2017 reached $1.6 trillion, or 147.4% of state revenue, up from $1.3 trillion and 122%, respectively, in fiscal year 2016 ... [T]hat unfunded liability is expected to improve.... due to the impact of positive investment returns for fiscal year 2017 (a median 12.4% for U.S. public pension plans) and for fiscal year 2018 (a median 8.2%)." Pensions & Investments

U.S. Public Pension Plan Mortality Assumptions

"Mortality assumptions for teachers tend to result in larger annuity factors than for other job categories, as is consistent with the Pub-2010 tables. Mortality assumptions for male safety employees tend to result in larger annuity factors than for general employees, while assumptions for female safety employees tend to result in lower annuity factors than for general employees. However, the Pub-2010 tables indicate lower annuity factors for safety employees than for general employees across gender and age combinations, except for males age 55." Society of Actuaries

Student Loans Have Significant Impact on Retirement Preparation

"Nearly 4 in 10 survey respondents indicated they are paying toward a student loan for themselves or on behalf of someone else. Of those, an astounding 85 percent of respondents paying toward student loans reported that their obligation to repay the funds are impacting their ability to prepare for retirement. Of that group, 38 percent said that student loans are having a 'significant impact' on their ability to prepare for retirement." OneAmerica

The Surprising Way to Boost Your Retirement Savings: Get Healthier

"By making a few health-behavior modifications and taking prescribed medications, a 50-year-old man diagnosed with high blood pressure or type 2 diabetes could save around $2,000 a year in out-of-pocket health care costs pre-retirement and add three to eight years to his life expectancy. All told, he'd then have roughly $44,000 extra in retirement savings by age 65." Forbes

Employee Benefit Arrangements Potentially Affected by IRS Guidance on Revised UBIT Calculations

"[ Notice 2018-67 ] properly provides that any amount included in UBTI under section 512(a)(7) will not be subject to the new 'separate unrelated trade or business' rule.... The Notice seeks comments on any special considerations that should be taken into account in applying the 'separate unrelated trade or business' rule in this context, specifically including the treatment of investment income.... [T]he Notice also announced that the IRS intends to provide that the broader section 513(b) definition of 'unrelated trade or business' (which for UBIT purposes attributes a trade or business conducted by a partnership to its tax-exempt general or limited partner), rather than the general section 513(a) definition, will apply to IRAs as well as to qualified plans."
Eversheds Sutherland

IRS Releases New Guidance on Section 162(m) Covered Employees and Grandfathering Rules

"[ Notice 2018-68 ] clarifies that, for purposes of identifying a corporation's covered employees under Section 162(m), it is not relevant whether the SEC scaled disclosure rules for smaller reporting companies and emerging growth companies apply to the corporation. This may lead to some disconnects between which officers a company reports as its 'named executive officers' for a given year in its proxy statements and which officers are 'covered employees' for Section 162(m) purposes for that same year.... There may be additional disconnects where a public company's taxable year does not end on the same date as its fiscal year for SEC reporting purposes -- for example, in the case of a merger or acquisition."
McGuireWoods

Initial Post-Tax Reform 162(m) Guidance: A Reasonable Grandfather and a Covered Employee Surprise

"The definition of covered employees (the group for whom compensation deductions are capped at $1 million) has always been closely tied to the group of named executive officers who are reported in the proxy under SEC rules. Notice 2018-68 partly changes this.... On its face, the newly added language seems to provide for applying the SEC proxy rules when they otherwise would not apply -- but still applying the SEC rules. Notice 2018-68 goes further, however, and interprets this newly added language to disregard the SEC rules."
Kilpatrick Townsend

Former Employee Need Not Repay Severance Before Moving Forward with Discrimination Claim

"Under the common law of many states, ... the party seeking to invalidate a settlement agreement must first 'tender back' the monies received before proceeding in court. The Sixth Circuit majority concluded (in agreement with the EEOC, which submitted a brief in support of the employee's position), based upon policy and practical reasons, that the tender back doctrine does not apply to federal discrimination claims.... In eliminating a duty to pay back the money first, the opinion eliminates a deterrent to challenging releases." [ McClellan v. Midwest Machining , No. 17-1992 (6th Cir. Aug 16, 2018)]
Foley & Lardner LLP

FICA Taxes on Nonaccount (Defined Benefit) Top Hat Plan

We have a nonaccount balance plan (i.e. a defined benefit plan) that is a top-hat plan. Under the Plan, a participant is to receive a set amount per month for life, with a 50% survivor benefit to the surviving spouse for life. It appears we can take FICA into account from the offset, since the amount is readily ascertainable under Code Section 3121(v)(2). I get how that works for the set amount to the employee for life -- we just base FICA on the present value of is benefit. But how do we deal with the survivor benefit? Is the present value of that amount also taken into account for FICA purposes on the employee's tax filings? If so, how does the surviving spouse report the payments in the years they are paid? BenefitsLink Message Boards

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Press Releases

Milliman adds International Brotherhood of Electrical Workers Local Unions Savings and Security Plan as a Retirement Services Client Milliman

Commerce Street Peak Advisors is Certified for Fiduciary Excellence Centre for Fiduciary Excellence [CEFEX]

Lockton Retirement Heads West with Three Advisor Additions in Arizona Lockton

Vault Ranks Mercer as the #1 Human Resources Consulting Firm for the 16th Year in a Row Mercer

TRA Introduces Matt Solomon, New Regional Sales Consultant The Retirement Advantage [TRA]

Fidelity Adds More than $100 Billion to Workplace Benefit Platform through the First Half of 2018 Fidelity Investments

SEI Hires Scott Muench as Regional Director of Defined Contribution Sales SEI

Jackson Lewis Strengthens Employee Benefits Practice with Addition of Suzanne G. Odom Jackson Lewis LLP

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Most Popular Items in the Previous Issue

States May Escheat IRAs, But Who Gets the Tax Bill? (PDF) Eversheds Sutherland, via Law360

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

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