PLANSPONSOR - August/September 2018 - 10

Compliance Update
Summaries of the latest news from Washington and the courts-what's coming,
what's contemplated and what's critical for plan sponsors to know
President Trump's
Executive Order
On August 31., President Donald Trump
asked the Treasury Department to review
and potentially revise the calculation
for the required minimum distribution
(RMD) that individuals must begin by age
70.5, to stretch their retirement savings.
Also, he called on the Department of
Labor (DOL) to consider letting small
businesses jointly offer open multiple
employer plans (MEPs). The DOL was
asked, in addition, to evaluate how to
reduce the number and complexity of
employee benefit plan notices and disclosures,
to ease regulatory burdens.
Lawsuit Challenges Benefit
Cuts Under the MPRA
In a lawsuit that appears to be the first
to challenge benefit cuts under the
Multiemployer Pension Reform Act of
2014 (MPRA), the plaintiffs say that, if
the government allows benefits to be cut,
it must pay compensation to participants
who are " prevented from accessing their
own financial property. " The plaintiffs,
members of the New York State Teamsters
Conference Pension and Retirement
Fund, are seeking class action status to
represent all similarly situated multiemployer
plan participants. The complaint
notes that the Employee Retirement
Income Security Act (ERISA) expressly
prohibits a plan from reducing vested
pension benefits: Until and unless a
pension fund is broke, a retiree's monthly
payment may not be reduced.
'Sidecar' Savings Accounts
A bipartisan package of bills sponsored
by several Senators would increase access
to workplace retirement plans by allowing
for pooled employer plans (PEPs). Goals
for the plans would be: to make it easier
A 401(k) plan
sponsor is
proposing to
amend its plan
to offer a student
loan benefit
program.
for small business owners to offer retirement
benefits to their employees; to
boost retirement savings by incentivizing
employers to adopt plans with automatic
enrollment; to reduce emergency withdrawals
from retirement accounts; to
increase short-term savings by allowing
employers to automatically enroll their
workers in emergency savings accounts,
aka " sidecar " accounts; and to make it
easier for individuals to automatically
save their tax refunds.
In-Plan Student Loan
Benefit Approved
A 401(k) plan sponsor is proposing to
amend its plan to offer a student loan
benefit program, under which it would
10 PLANSPONSOR.com August-September 2018
Art by Claudi Kessels
make nonelective contributions on an
employee's behalf if that person makes
student loan repayments rather than
regular matching contributions; the
employee would still be able to make deferrals
to the plan. The sponsor requested an
IRS ruling confirming that its proposal
will not violate the " contingent benefit "
prohibition of Section 401(k)(4)(A) and
Section 1.401(k)-1(e)(6) of the Income
Tax Regulations. Because participants
receiving the student loan repayment
nonelective contributions may also make
deferrals to the 401(k)-the IRS ruled that
the benefit will not violate the regulation.
Opinion Deadline
for Preapproved
Plans Extended
The IRS has published Revenue Procedure
2018-42 to extend, until December 31, the
deadline to submit on-cycle applications
for opinion letters covering preapproved
defined contribution (DC) plans for the
third six-year remedial amendment cycle.
Under Rev. Proc. 2017-41, this submission
period is scheduled to expire on October
1. The IRS notes that Rev. Proc. 2017-41
modified the preapproved letter program
by combining the master and prototype
program with the volume submitter
program, creating a new opinion letter
program. Under it, providers of preapproved
plans may apply for new opinion
letters once every six years.
Pro-ESOP Bill
Is Signed Into Law
A bill that will make it easier for companies
to establish an employee stock
ownership plan (ESOP) was signed into
law by President Donald Trump. Among
other things, the Main Street Employee
Ownership Act focuses on increasing the
role of the Small Business Administration
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PLANSPONSOR - August/September 2018

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