FIS Relius Education

Senior Retirement Plan Consultant
Henderson Brothers, Inc.
in PA

Analyst
MN Legislative Commission on Pensions and Retirement
in MN

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PBGC Updates Premium Rates for 2019

"The per-participant flat premium rate for plan years beginning in 2019 is $80 for single-employer plans (up from a 2018 rate of $74) and $29 for multiemployer plans (up from a 2018 rate of $28).... For plan years beginning in 2019, the variable-rate premium (VRP) for single-employer plans is $43 per $1,000 of unfunded vested benefits (UVBs), up from a 2018 rate of $38. This $5 increase consists of $4 provided in The Bipartisan Budget Act of 2015 (BBA 2015) and $1 resulting from indexing. For 2019, the VRP is capped at $541 times the number of participants (up from a 2018 cap of $523). Plans sponsored by small employers (generally fewer than 25 employees) may be subject to a lower cap." Pension Benefit Guaranty Corporation [PBGC]

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Text of PBGC Interest Rate Update for Benefits Payable in Terminated Single-Employer Plans, November 2018

"The November 2018 interest assumptions under the benefit payments regulation will be 1.25 percent for the period during which a benefit is in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. In comparison with the interest assumptions in effect for October 2018, these assumptions represent no change in the immediate rate and are otherwise unchanged." Pension Benefit Guaranty Corporation [PBGC]

PBGC Provides Enhanced ERISA Section 4062(e) Web Page

PBGC has expanded and modified the information related to liability that may arise when an employer ceases operations at a facility under ERISA section 4062(e). The revised web page provides basic information about 4062(e), answers to frequently asked questions, and information on reporting to PBGC. Pension Benefit Guaranty Corporation [PBGC]

2019 Estimated Limits for Retirement Plans

"IRS will soon release limits applicable to retirement plans for various purposes in 2019, based on a 2.64% increase in CPI-U between the 3rd quarter of 2017 and the 3rd quarter of 2018. Based on this increase, we expect increases in some, but not all, limits applicable to retirement plans in 2019. The table below summarizes our calculations for 2019, along with values for 2018 and 2017[.]" October Three Consulting

401(k) Recordkeeper Consolidation Spurs Innovation

"[I]ncreasing visibility into lawsuit activity and regulatory scrutiny are creating a greater awareness of fiduciary responsibilities and specific scenarios that warrant changes. Some firms are responding to the impact of consolidation, as well as this greater awareness of fiduciary responsibilities, with new solutions." 401K Specialist

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How Can We Keep Loan Defaults from Draining $2 Trillion from America's 401(k) Accounts? (PDF)

12 pages. "As economic factors play a key role in job changes for participants, it is imperative that plan fiduciaries educate their participants about the risks incurred should they be unable to repay a loan.... The most common solutions that exist today to limit future retirement setbacks from retirement loan defaults include policy changes to plan design, loan education programs, debt consolidation, payroll program automation, and 401(k) loan insurance." Deloitte

Best Interest and Best Practices, Part 5

"Plan committees should benchmark their service providers or issue RFPs on their service providers at appropriate intervals. But that begs the meaning of 'appropriate intervals.' ... [C]ommittees should use RFPs, benchmarking, and negotiations to ensure that their plans are reasonably priced as compared to comparable plans ... While the Court looked at a number of benchmarks, and considered other factors, it appears that the committee's attention to the unique nature of the fund, the on-going discussions in that regard, and the assistance of the adviser were critical factors." [ Sacerdote v. New York Univ. , No. 16-6284 (S.D.N.Y. July 31, 2018)]
FredReish.com

Fidelity Sued Again Over Alleged 401(k) Plan Mismanagement

"The lawsuit filed against Fidelity ... is similar to a separate case filed against the firm about five years ago, which was settled for $12 million in 2014. Plaintiffs claim that Fidelity breached its fiduciary duty by loading its $15 billion 401(k) plan with proprietary mutual funds, causing the firm and several affiliated entities to benefit financially." InvestmentNews

How Fidelity Used a Robo-Advice Exemption to Land as a Fiduciary to 401(k) Participants After the Tumult of the DOL Rule

"When the smoke cleared from the DOL rule's demise in June, Fidelity emerged as one of the largest fiduciary advisors on the planet. Even though it backed out of the fiduciary plan sponsor business, the Boston-based 401(k) giant had an ace up its sleeve -- participant advice. Fidelity continues to succeed as a quasi-robo advisor offering advice to participants, thanks to the Pension Protection Act of 2006[.]" RIABiz

House GOP Sends Letter to White House on DOL Enforcement Tactics

"The Representatives stated they are concerned that the DOL's practice of regulation through litigation is harming small businesses and their employees, that the DOL has released very little guidance on substantive issues including, for example, valuation, and that the DOL has employed counter-productive enforcement tactics, including taking inconsistent positions on legal issues."
Kaufman & Canoles, P.C.

Flat Returns Through First Half of 2018 Have Dampened Funding Progress for Multiemployer Plans (PDF)

"The estimated investment return for our simplified portfolio for the first six months of 2018 was about 0.2%, below plans' investment return assumptions. This has resulted in noncritical plans 'giving back' some of the funded status gains made in 2017, and critical plans falling further behind. The aggregate funded percentage for multiemployer plans is estimated to be 81% as of June 30, 2018, down from 83% at the end of last year. The gap between the funded percentages of critical versus noncritical plans is widening." Milliman

A Sears Bankruptcy Could Cause One of the Biggest Pension Defaults Ever

"Sears entered into a five-year pension protection plan with the [PBGC] in 2016, agreeing to set aside certain assets for pension funding. In November, Sears amended the agreement to sell up to 138 properties to finance a $407 million contribution to its pension plans. Last year, [PBGC] paid $5.7 billion to nearly 840,000 retirees from 4,845 failed single-employer plans ... Taking over the Sears pension plans would be one of the largest defaults in its 44-year history." Chicago Tribune; subscription may be required

HATFA Section 2003(c) Amendment Deadline

For bankrupt employers, HATFA Section 2003(c) generally revised IRC Section 436(d)(2) to provide that the AFTAP is determined without regard to the adjustment of the segment rates under IRC Section 430(h)(2)(C)(iv) to determine benefit restriction under Section 436(d)(2). For non-collectively bargained plans, the statutory amendment deadline was the last day of the 2016 plan year with the IRS having authority to extend this deadline. Has this deadline been extended by the IRS, and if so, to when? Also, what is the remedial amendment period that applies here if the deadline was missed? For example, even though non-collectively bargained, would this plan be eligible for the extended remedial amendment period under Notice 2016?80, i.e., 12/31/2018? BenefitsLink Message Boards

Amount of Distribution from 457b Plan Counts as Compensation for 401(k) Plan?

Employer has 401k and 457b plans. An HCE will terminate 1/1/19. He thinks he can take a distribution from the 457b plan, and have that count as compensation for the 401k plan (which he could defer on and get matched.) I don't work on 457b plans but that doesn't seem right. The document says compensation excludes payments received by a nonqualified unfunded deferred compensation plan, only if the payment would have been paid to the employee at the same time if the employee had continued in employment. How do the 457b and 401k rules integrate with respect to compensation? BenefitsLink Message Boards

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Most Popular Items in the Previous Issue

Social Security Announces 2.8 Percent Benefit Increase for 2019 U.S. Social Security Administration [SSA]

Professional Firm Retirement Plans and the New QBI Tax Deduction Van Iwaarden Associates

Retirement Plan Providers: Defining a Growth Strategy (PDF) FIS