Experts in Personalized Retirement Plan Design & Administration Newsletter 01.08.18

Five Plan Sponsor Resolutions for 2018 Sometimes, you need to step back and see the big picture. This applies to advice to plan sponsors as well, because the recommendations they get are sometimes so detailed that big compliance issues get lost in the shuffle. Here are five resolutions to help plan sponsors get a grip on the most important compliance issues. Source:

Retirement Plan Trends to Watch in 2018 Plan sponsors are ramping up benefits education efforts and increasingly empowering employees to take charge of their healthcare and retirement savings. They’re doing this in a variety of ways outlined here. Source:

Why Auto Portability Makes Everything Better In the realm of retirement savings, auto portability is the public policy equivalent of bacon, great by itself, but even better when mixed with other retirement initiatives. In fact, for many public policy plans to be palatable, auto portability is an essential ingredient. Source:

New Yorker Cartoon Considers 401ks A New Yorker cartoon by Trevor Spaulding is cute, but — spoiler alert — it’s not quite right. Source:

Fiduciary and Plan Governance Material

Liquidity Fees and the Fiduciary Duty of Best Execution Retirement plan fiduciaries must understand the expenses their participants pay to make trades and access investments, but their duty to monitor and ensure reasonableness is not limited to the issue of pricing alone. Source:

Fiduciary Governance: Doing It Right Matters Any organization that sponsors a regulated retirement plan needs a blueprint for compliance and a system for governing the plan that integrates with its overall business risk strategy. This article presents five tips that are fundamental to an integrated compliance solution. Source:

How Can Fiduciaries Use New Tax Cuts to Nudge 401k and IRA Retirement Savers? There’s a chance for savers to increase the odds they’ll retire in comfort thanks to the 2017 tax law. Here’s how, but the window of opportunity will close fast. Source:

The Plan Committee: Should You Have One? Plan sponsors are not legally compelled to set up committees. Most standardized plan documents give plan sponsors the flexibility to set one up or not. But just because you are not required to do something doesn’t mean it’s not a good idea. Source:

Insight: Studies, Research, and White Papers

2017 Closes With a Bang for Average 401k Balances An analysis by the nonpartisan Employee Benefit Research Institute found that the average account balance for younger (25-34), less tenured (1-4 years) workers gained 43% in 2017. What about older workers? Well, the average 401k account balance of those aged 55-64 with more than 20 years of tenure ended the year nearly 20% (19.5%) higher than they began the year. Source:

Retirement Readiness — How Do We Compare? This article compares the retirement system of Australia, the United Kingdom, and the United States. The objective is to discover different areas where each country excelled and from which the other two could learn. Source:

Items of Special Interest to Service Providers

Time for SEC to Take Fiduciary Baton From DOL With the core of the DOL fiduciary rule in place and the rest of it delayed for 18 months, can advisers expect all to be quiet on the fiduciary front in 2018? In a word, no. The regulatory baton has been passed from the DOL to the SEC and it’s likely we will see an SEC fiduciary rule proposal by midyear. Source: (registration may be required)

Plan Automation

Major Problem Reported With 401k Auto Enrollment The benefits of automatic enrollment in 401ks are all but a given, and a major reason Richard Thaler, a behavioral economist at the University of Chicago, won last year’s Nobel Prize in economics. But now new research has arrived that could wreck it all. Source:

Legislative and Washington DC

Details From the Retirement Plan Simplification and Enhancement Act Alongside numerous proposed changes, employees who work for three consecutive years with at least 500 hours of service each year would have to be made eligible to participate in an employer’s plan, but would be excluded from top-heavy and nondiscrimination testing. Source:

Lesser-Known Tax Reform Provisions That May Affect Retirement Plan Sponsors President Trump signed into law the Tax Cuts and Jobs Act. While there are few provisions that directly affect retirement plans, there are a few lesser-known provisions of the new law that may indirectly affect retirement plan sponsors. Source:

Nationwide Spurred by Tax Law to Give Bonuses, Bump 401k Match Nationwide Mutual Insurance Co. will pay $1,000 bonuses to about 29,000 employees and increase matching 401k contributions for all its associates. The move is a response to the new tax law enacted by Congress and signed by President Donald Trump in December, a Nationwide spokesman told Bloomberg Law. Source: (registration may be required)

Tax Law’s Pass-Through Provision Could Harm 401k Plans The new tax law’s provision on pass-through businesses is proving to be one of the most challenging to dissect, and it’s one that some retirement pundits are eyeing with concern. Some industry groups say the pass-through rules could become the most impactful part of the law for 401k plans. Source: (registration may be required)


How Wall Street Hopes to Thwart 401k Hackers The industry-led project, called Sheltered Harbor, already is known to back up data for savings and checking accounts. But quietly, it’s wrapping in data on retail brokerage accounts at some of the nation’s largest firms, according to participants. And ultimately, the goal is to expand it to an even heftier pool of 401k accounts and pension funds, whose breach could upend global markets. Source:

Compliance and Regulatory

Some Benefit Limits for Puerto Rico Plans Are Different From U.S. Plans The Puerto Rico Treasury Department issued Circular Letter of Tax Policy 17-02 formally announcing the key pension limits for 2018, as required by the Puerto Rico Internal Revenue Code. Different limits and rules for retirement plans qualified in Puerto Rico may cause some operational issues for plan sponsors. Source:

Annual IRS Revenue Procedure Includes Surprising Change to User Fees This year’s update includes a significant fee change surprise for the VCP program; and while changes in past years typically went into effect about a month after they were announced, this year’s changes are effective immediately. Source:

DOL 2018 Inflation-Adjusted Penalties The DOL has published its final rule to adjust for inflation the civil monetary penalties assessed or enforced in its regulations. Source:

IRS Makes Major Change in Retirement Plan VCP Fees and Other Fees The IRS has issued Internal Revenue Bulletin (IRB) 2018-1, which is this year’s annual update describing procedures and user fees for obtaining agency guidance, including opinion and determination letters, private letter rulings, etc. It also updates fees for submissions under IRS correction programs. Source:

PBGC Issues Final Regulations for Terminating Defined Contribution Plans The Pension Protection Act of 2006 added ERISA Section 4050(d) which authorized the PBGC to establish a program similar to its existing Missing Participants Program for defined contribution retirement plans and professional service organizations with fewer than 25 active participants. On December 22, 2017, the PBGC issued final regulations making the program available to defined contribution plans and small professional service plans terminating on or after January 1, 2018. Source:

Hurricane Relief for Distributions and Loans to Participants in Puerto Rico Retirement Plans The Puerto Rico Treasury Department is providing special relief for distributions and loans from Puerto Rico qualified and dual-qualified retirement plans following Hurricane Maria. Under Administrative Determination No. 17-29, Puerto Rico residents affected by the hurricane may take distributions from their qualified retirement plans at lower tax rates. Additional relief is available for outstanding plan loans. Source:

DOL Extends QPAM Relief to Five Financial Institutions The DOL has recently extended the relief previously granted to five financial institutions which allow these banks to continue to rely on the QPAM exemption (Prohibited Transaction Exemption 84-14). The QPAM exemption permits ERISA plans and comingled funds to engage in transactions with “parties in interest” to those ERISA clients without running afoul of ERISA’s prohibited transaction rules. Source:

Voluntary Correction Program User Fees Changes The IRS has simplified the user fees charged for most submissions made under the Voluntary Correction Program. The total amount of net plan assets determines the applicable user fee. Most alternative or reduced fees that were part of previous revenue procedures no longer apply. Source:


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