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ESOP Succession Planning
February 5, 2019 WEBCAST
National Center for Employee Ownership [NCEO]

Financing an ESOP Transaction
February 12, 2019 WEBCAST
National Center for Employee Ownership [NCEO]

Controlled Group Liability and Successor Employer Rules After PBGC v. Findlay Industries Inc.
March 5, 2019 WEBCAST
Strafford

ERISA Fiduciary Institute: Know Your Responsibilities
April 4, 2019 in DC
American Bar Association Joint Committee on Employee Benefits [JCEB]

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Text of IRS Rev. Proc. 2019-4: Revised Procedures for Determination Letters and Letter Rulings

"This revenue procedure is a general update of Rev. Proc. 2018-4 ...

"[4] Section 8.03(1) is modified to add Section 414(b), (c) and (m) to the list of sections for which a determination is not made when a determination letter is issued in accordance with this revenue procedure.

"[5] Section 9.03 is modified to clarify that in order for a plan to be reviewed for, and a determination letter relied upon with respect to, whether the terms of the plan satisfy one of the design-based safe harbors in Sections 1.401(a)(4)-2(b) and 1.401(a)(4)-3(b) ... the plan document must provide a definition of compensation that satisfies Section 1.414(s)-1(c)....

"[8] Section 24.03 is modified to provide that Employee Plans Rulings and Agreements will consider a request for an extension of time for making an election ... to recharacterize annual contributions made to a Roth IRA. Employee Plans Rulings and Agreements will also consider recharacterization requests ... that relate to a conversion or rollover contribution to a Roth IRA but only if the rollover or conversion was made prior to January 1, 2018.

"[9] Section 24.03 is modified to clarify that SB/SE Exam will be notified if a request for an extension of time for making an election or other application for relief under Section 301.9100-1 is submitted when the return is under examination....

"[11] Section 30.07(2) is modified to provide that beginning April 1, 2019, VCP submissions and the applicable user fees must be made using www.pay.gov. Section 30.07(3) is modified to clarify that the payment of user fees for pre-approved plan submissions and letter ruling requests may not be made using www.pay.gov and that such requests must still be accompanied by a check in the amount of the applicable user fee....

"[15] Appendix A .06(1)(c) is modified to reflect that the user fee for Form 5310 will increase from $2,300 to $3,000 for submissions postmarked on or after July 1, 2019." Internal Revenue Service [IRS]

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Text of 2018 IRS Publication 590-A: Contributions to Individual Retirement Arrangements (IRAs) (PDF)

61 pages; Dec. 21, 2018. "For distributions made in tax years beginning after December 31, 2017, you have until the due date (including extensions) for your tax return for the tax year in which the offset occurs to roll over a qualified plan loan offset amount ... A conversion of a traditional IRA to a Roth IRA, and a rollover from any other eligible retirement plan to a Roth IRA, made after December 31, 2017, cannot be re-characterized as having been made to a traditional IRA." Internal Revenue Service [IRS]

Text of 2018 IRS Publication 721: Tax Guide to U.S. Civil Service Retirement Benefits (PDF)

32 pages; Dec. 26, 2018. "For distributions made in tax years beginning after December 31, 2017, you have until the due date (including extensions) for your tax return for the tax year in which the offset occurs to roll over a qualified plan loan offset amount." Internal Revenue Service [IRS]

Puerto Rico Treasury Announces Retirement Plan Limits for 2019

"The limitation on the annual benefit under a defined benefit plan ... is $225,000. The limitation on annual additions to a participant's account under a defined contribution plan ... is $56,000. The annual compensation limit ... is $280,000.... The elective deferral (contribution) limit ... for an employee who participates in a dual-qualified retirement plan ... as well as for an employee who participates in a retirement plan sponsored by the federal government is $19,000." McConnell Valdes

New Class Action Lawsuit Examines How a Common Definition of 'Compensation' Was Applied

"According to the complaint, the plan provided that participants could elect to make pre-tax and after-tax elective contributions, while the employer was required to make matching contributions ... equal to a percentage of a participant's compensation. Also according to the complaint, the plan defined 'compensation' to include certain post-termination payments ... The plaintiff then alleges that the plan fiduciaries re-interpreted the plan to exclude such bonuses in 2016, thus failing to take elective deferrals from such payments and not matching such deferrals." [Karlson v. ConAgra Brands Inc., No. 18-8328 (N.D. Ill., complaint filed Dec. 19, 2018)]
Groom Law Group

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Blackrock Enters Annuity Business with Microsoft to Create 21st Century DB Pension System

"Microsoft is more than aware of what crosstown rival Amazon might be thinking. BlackRock can now look across the East River to Queens at an Amazon campus, too, and wonder what'll happen if the bookseller gets its hooks into investors. So here we have a big stick and a big carrot ... in a joint-venture that could have implications for RIAs in a bigger sense than anything the robos have done thus far." RIABiz

PBGC Premiums Rise Again in 2019; Other Minor Filing Changes Noted

"The flat-rate premium rises to $80 per participant, up from $74. The variable-rate premium for these types of plans is also now higher, at $43 per $1,000 of unfunded vested benefits ... The flat-rate premium for [multiemployer] plans is $29 per participant, rising from $28.... The PBGC also revised the instructions regarding disaster relief to reflect recent changes made to the agency's practices in this area." HR Daily Advisor

Pension Finance Update, December 2018

"December was the worst month for pensions in a decade, due to plunging stock markets and lower interest rates. Both model plans ... gave back all 2018 gains to date and then some -- Plan A lost 8% last month, ending 2018 down 1%, while the more conservative Plan B lost more than 2% in December, ending 2018 down almost 2%[.]" October Three Consulting

2018 Variable Annuity Pricing Survey Summary

"[W]hile model sophistication has generally advanced in recent years in areas such as the projection of hedging strategies, stochastic reserves and capital, and the use of predictive analytics for policyholder behavior -- considerable variation in practices still exists among different organizations. The importance of these variations becomes apparent when they lead to drastically different design and guarantee level decisions, and also have a broader long-term effect on downstream sales, profitability and volatility of financial results." Willis Towers Watson

The SEC Protects Brokers, Not Investment Advisers, and Not Consumers

"For decades the S.E.C. has diminished the line between 'product sales' (broker-dealer activities) and 'investment advice' (investment adviser activities). Without court intervention, there would be no line at all. And, even then, the S.E.C. refuses to draw common-sense lines, and to apply fiduciary standards of conduct to relationships that are advisory in nature." Ron A. Rhoades, JD, CFP

Text of GASB Exposure Draft: Implementation Guide -- Fiduciary Activities

37 pages. Includes amendments to existing Q&As, along with new Q&As covering: [1] Identifying fiduciary activities; ... [2] Reporting fiduciary activities in fiduciary funds ... [3] Statement of fiduciary net position ... [4] Statement of changes in fiduciary net position. Governmental Accounting Standards Board [GASB]

Habits to Create an Effective Benefits Strategy and Open Enrollment, Part 1

"Share your vision with your executive team early in the process to make sure you are staying aligned with the overall objectives of the company and meeting their expectations to prevent misguided efforts and work.... Never underestimate the importance of designating time for planning and prep work to prevent the urgent crises in the future -- make communicating early and often a top priority." Benefitfocus

SEC Adopts Final Hedging Policy Disclosure Rules

"The final rules require companies to disclose certain hedging policies or practices, but do not require companies to adopt any new hedging policies or to amend any existing hedging policies. Many companies had already adopted some form of hedging policy when the SEC published the proposed rules in 2015 ... and have been voluntarily disclosing their hedging policies as part of their corporate governance disclosure. SEC proxy rules ... have also required some hedging disclosure in the Compensation Disclosure and Analysis (CD&A) section." Goodwin Procter

Top Takeaways for Tax-Exempts from IRS Guidance on Executive Compensation

"Multiple employers within a tax-exempt system can each be separately subject to the excise tax.... Employees earning significantly less than $1 million can be covered employees and covered employee status never ends.... The determination of who is a covered employee is complicated.... Multiple entities within a tax-exempt system may be liable for a portion of the excise tax.... The excise tax can apply to governmental entities.... The excise tax is determined based on the calendar year.... Payments made upon separation from service that are less than $1 million can be subject to the excise tax." McDermott Will & Emery

Splitting Plans to Avoid Audit Requirement

We're splitting a plan into two plans so there won't be an audit required for either plan. The intent is that the effective date of the new plan and the amendment to the old plan (removing some employees) is 1/1/19. We know that audits are determined based on the number of eligible employees in the plan at the beginning of the plan year. So if the participant count shown on 2018 Form 5500 at end of year is 130 and on 1/1/19, 60 of these participants are now participants of plan 002 and no longer participants of plan 001. Am I correct that as of 1/1/19 the counts in both plans are now less than 100 and no audit is required?
BenefitsLink Message Boards

Failure to Allocate Transferred DB Assets - 4980 Reversion?

A 401(k) plan received transferred assets from the plan sponsor's terminated DB plan. The 401(k) plan has standard provisions allowing the sponsor to allocate, but at least as fast as the seven-year requirement under section 4980. The assets were put into a suspense account but were never allocated. Still within seven-year period but 401(k) plan is now terminating. VCP does not allow correction/relief specifically from 4980 reversion tax. Thoughts on whether to attempt VCP based on an "operational error" (i.e., failure to allocate as required by the plan) vs. allocating prior years now (plus plan termination allocation) and filing 5310? BenefitsLink Message Boards

Loan Offset/Repayment Under New Rules

Participant terminates in May 2018 with a $10,000 loan. Participant has until the due date of their 2018 1040 to repay the loan to avoid the taxes under the new tax rules. Question is, if that participant does NOT close his or her account, can they re-contribute the $10,000 to this plan if it is past the grace period? Our plans typically do not allow former employees to execute rollovers, which I think technically this would be. Thoughts? BenefitsLink Message Boards

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Text of 2018 IRS Publication 571: Tax-Sheltered Annuity Plans (403(b) Plans) for Employees of Public Schools and Certain Tax-Exempt Organizations (PDF) Internal Revenue Service [IRS]