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Investment Fundamentals: Committee Member Responsibilities
RECORDED
Multnomah Group

IRS Audits and DOL Investigations of Plans and TPAs
April 23, 2019 WEBCAST
ASPPA [American Society of Pension Professionals & Actuaries]

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Surprise! You May Be Liable for Union Pension Plan Withdrawal Liability

"Shareholders of an incorporated business, partners in a partnership, or an alter ego or successor business may also be responsible for withdrawal liability if the participating employer does not pay the withdrawal liability to the pension plan. [This article provides] an explanation of the potential liability of individuals and entities, other than the employer, when the participating employer becomes insolvent and can't pay the withdrawal liability." Frost Brown Todd LLC

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IRS Provides Relief for 403(b) Plans Regarding Part-Time Employee Exception to Universal Availability Requirement

" Notice 2018?95 provides transition relief ... in response to comments indicating that many employers did not apply the ['once-in-always-in'] exclusion condition when an employee failed to meet the first-year or preceding-year exclusion condition.... The Notice provides for a 'fresh start opportunity' for plans after the relief period ends for exclusion periods beginning on or after January 1, 2019."
Thomson Reuters Practical Law

Governmental Plan Status is Key Issue in Pending Lawsuit

"The Complaint identifies the following reasons why Atrium's plans do not meet the governmental plan definition: [1] Atrium's board is not publicly nominated or elected; [2] Atrium's board is not controlled by a state, political subdivision, or any other governmental entity; [3] No state, political subdivision, or any other governmental entity has the powers and interests of an owner with respect to Atrium; [4] Atrium's employees are not treated as employees of any state, political subdivision, or any other government entity; [5] Atrium receives no funding from the state or any political subdivision; and [6] Atrium does not possess the sovereign powers of a state, political subdivision, or any other governmental entity." [Shore v. Charlotte-Mecklenburg Hospital Authority (d/b/a Atrium, f/k/a Carolinas Healthcare System), No. 18-961 (M.D.N.C. complaint filed Nov. 19, 2018)]
Ice Miller LLP

States Expected to Ramp Up 'Best Interest' Efforts Early in 2019

"As many as 14 states want to put a 'fiduciary duty' on insurance agents via new regulations ... The regulation chatter is heaviest in big, populous states where progressives are in key political posts -- such as California and New Jersey ... New York is furthest along with a best interest rule that covers annuities and life insurance. It is slated to take effect in August 2019 for annuities and six months later for life insurance." InsuranceNewsNet.com

States Boost Access to Retirement Plans, Seek to Close Savings Gap

"Feasibility studies for the programs project CalSavers could amass $28.4 billion in assets within six years and Oregon and Illinois could reach $5 billion and $10 billion, respectively, within a decade.... Oregonians have amassed $10 million, versus the at least $100 million projected by the feasibility study by the end of the first year. Of the 30,000 companies without a retirement savings plan, about 650 are currently making payroll contributions." The Wall Street Journal; subscription may be required

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CBO Cost Estimate for H.R. 88: The Retirement, Savings, and Other Tax Relief Act of 2018, and the Taxpayer First Act of 2018

"CBO and JCT estimate that enacting H.R. 88 would increase on-budget deficits by more than $5 billion in at least one of the four 10-year periods beginning in 2029. CBO and JCT estimate that enacting the legislation would not increase net direct spending by more than $5 billion in any of the four consecutive 10-year periods beginning in 2029." Congressional Budget Office [CBO]

Annuity Pricing in Public Pension Plans: Importance of Interest Rates

"This study examines the distribution options of 85 large public retirement plans covering general state employees, teachers, and local government employees.... [I]nterest rates used to price annuities vary considerably across the plans. As a result, retirees with the same monthly benefit if a single life benefit is chosen will have substantially different monthly benefits if they select the joint and survivor annuity offered by their retirement plan." National Bureau of Economic Research [NBER]

A Year-End Review and Planning Regime

"Viewing portfolio losses as a percentage of your net worth can be a lot less scary than looking at portfolio losses in absolute dollars. Frequent portfolio checking may be a sign of an equity allocation that exceeds your risk tolerance. When I do check my portfolio balance I also check my asset allocation, though I rarely do anything about it. In thirteen years of retirement, I have rebalanced perhaps three times. One of those times was a year in which I paid off a large mortgage balance, significantly changing my asset allocation. The other two times were years in which I took advantage of some tax-harvesting opportunities." The Retirement Cafe

How 401(k) Auditors Move People

"Auditors are the ones that see the overall operations of the plan, being able to see the forest through the trees. The third-party administrator sees what they are given from the plan sponsor, and the plan sponsor sees what is received from the third-party administrator. Many times, with this, the right hand does not see what the left hand is doing. Auditors investigate the greater detail from both parties, as well as the transactions taking place in the actual trust of the plan." Pooler CPA Group, LLC

Initial Guidance Issued on Section 83(i) Deferral Election for Private Company Equity Grants

"The IRS believes that the statutory language requires employers to meet the 80% requirement in the calendar year in which the stock options or RSUs are issued, finding that the interpretation that options issued in previous years can be counted on a cumulative basis with options granted in the current calendar year to be contrary to the statutory language and not a reasonable good-faith interpretation of the 80% requirement." Journal of Accountancy

Can Trustee Be Named by Job Title?

Sponsor wants to name the CEO and highest HR position as plan trustees, rather than naming names. They say they have incoming officers sign to accept trusteeship and notify departing officers of their removal as trustee. Is this OK? BenefitsLink Message Boards

Effect of Vesting Schedule on Minimum Funding for New Cash Balance Plan

A cash balance plan was established in 2015 with the plan year beginning 1/1/2015. The company has not made a contribution to the Plan in the first two years of its implementation. A contribution has been made for the 2017 plan year and the funded status is over 100% in 2017. It appears the company did not fund the Plan during the first two years because the vesting schedule is a 3-year cliff. Is that permitted (i.e., funding requirements are based only on retirement benefits that are vested)? BenefitsLink Message Boards

Governmental Employer Setting Up 457(b) with Separate 401(a) Plan Providing Matches

I have a governmental entity setting up a 457 plan and wants to provide a match as well. We are planning to have a paired 401(a) plan so employees get to defer up to the 457 contribution limit each year. Would the 401(a) document contain the employer non-elective language, with each person being in their own rate group? I may be over-complicating this. BenefitsLink Message Boards

Where to Provide for a Backup Trustee?

Does anyone have any experience naming a "backup" trustee for a 1-person profit sharing plan? The plan document only states that the business would name a subsequent trustee in the event of death, etc. The business owner/sponsor wants to have it stated somewhere exactly who would control the plan. BenefitsLink Message Boards

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Most Popular Items in the Previous Issue

Tax-Exempt Employers: IRS Issues Relief from Confusing 403(b) Eligibility Requirement Applicable to Part-Time Employees Seyfarth Shaw LLP

A Close Look at ERISA 403(b) Plans, 2015 (PDF) BrightScope and Investment Company Institute [ICI]

Advisor Best Practices: Providing Fiduciary Education to Plan Sponsors Newport Group